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Friday, July 23rd, 2010
1:20pm (EST)
The market is near the breakeven line after Europe’s bank stress results were revealed a little while ago. There are lots of moving parts and Wall Street is still digesting the news but the headline is that 7 out of the 91 banks failed the stress test. The European Union say the results show the “resilience” of their banking system and we will bring you more of this story in our Weekly Wrap.
Corporate news is also hitting the wire with another mixed bag of earnings.
Microsoft (MSFT, $25.34, down $0.50) is trading lower despite reporting better-than-expected earnings on the top and bottom lines. The company said profits came in a at $4.5 billion, or $0.51 a share, versus $3 billion, or $0.34 a share, in the same quarter last year. Revenue came in at $16 billion for the quarter last year. Analysts were looking for earnings of $0.46 a share on sales of $15.3 billion.
SanDisk (SNDK, $40.10, down $3.00) is also lower but not because of its numbers. The company, which is a big player in the flash memory market, reported earnings of $258 million, or $1.08 a share, up from $53 million, or $0.23 a share, in the year ago period. Revenue shot up to $1.2 billion from $731 million a year earlier. Analysts were looking for $0.90 a share on sales of $1.16 billion. The company also announced its CEO is leaving them after 22 years of service.
As we head to press, the Dow is higher by 11 points to 10,333. The S&P 500 is off by a point and is at 1,092 while the Nasdaq is down 7 points to 2,239. Once again, the S&P 500 cannot clear 1,100 while the Nasdaq is having trouble at 2,250.
We will be back Sunday night with our Weekly Wrap and an in-depth look at what the EU bank stress tests mean for the market. Our trades are holding up well and we will be looking to add new positions on Monday.
Tags: call options, how to trade options, momentum options trading, Momentum stocks, option picks, option stock picks, options alerts, options newsletter, options track record, put options, stock options trading, volatile options
Posted in Company Commentary, Earnings, Yahoo / Microsoft | Comments Off
Tuesday, April 20th, 2010
1:05pm (EST)
The bulls are adding to Monday’s gains as the market continues to recover from last Friday’s sell-off. There is no economic news out today and stocks are rallying following a number of good earnings reports.
There are a couple of announcements we are watching after the bell today and they are Apple (AAPL, $246.46, down $0.61) and Yahoo (YHOO, $18.30, down $0.09).
Apple is expected to post numbers of $2.25 billion, with earnings per share coming in at $2.45, according to Wall Street’s suit-and-ties. In the same period last year, the company earned $1.2 billion, or $1.33 a share. Revenue is forecast to jump nearly 30% to $12 billion.
Yahoo is expected to come in at 9 cents a share on revenue of $1.6 billion.
Earlier this morning, International Business Machines (IBM, $129.51, down $2.72) said its profits rose to $2.6 billion, or $1.97 per share, versus $2.3 billion, or $1.70 a share, in the year earlier period. Analysts had expected earnings of $1.93. Revenue rose 5% to $23 billion which beats projections of $22.7 billion.
IBM is down 2% despite raising its 2010 profit target (again) to $11.20+ from a previous forecast of $11. It was the second straight quarter IBM raised guidance and has done so more than this if you count them upping guidance during the previous quarters.
As we head to press, the Dow is currently enjoying a 33 points gain and is at 11,125 while the S&P 500 is back over 1,200 as the index a has added 9 points and is at 1,206. The Nasdaq is at 2,498, up 18 points.
Tags: Apple (AAPL), IBM, option picks, option signals, options alerts, stock options trading, Yahoo (YHOO)
Posted in Company Commentary, Earnings, Yahoo / Microsoft | Comments Off
Friday, December 4th, 2009
1:30pm (EST)
“Momma’s got a squeezebox she wears on her chest and when Daddy comes home he never gets no rest”…
“Come on and squeeze me…”
This song by The Who has to sum up how the bears are feeling today.
The bulls have been singing all morning after the Dow rushed out to a 150 point gain and reached a high of 10,516. However, the bears clawed their way back and actually took the Dow lower to 10,311. Folks, that is a 200-point swing and we are only at halftime. Currently we are at 10,385, up 19. The S&P is holding 1,104.
We still have a target of 10,800 for the Dow but remember the market always looks forward and can turn on a dime. Having said that, while we continue to be bullish, January could get ugly if and when volatility gets insane…and it will.
Folks, it’s been a busy day and a busy week but we thought we would spend a little time talking about our service today instead of the market.
We know some of you are new and some of you have just been with us for 90 days or less. Well, the past few weeks have been rough and some of you may not have gotten the results you have been hoping for with our service.
The first thing to remember is that options are all about momentum which is where we came up with our name. For those subscribers that have been with us for months and since our inception (18 months) know that we have been pretty dead on with our market analysis. We were right when we called for the crash in late 2008 and we were right when we called for a rebound from the March lows. Check out our 2008 and 2009 portfolios and really analyze it. Take a look at the option positions we started in March 2009. We weren’t sure of a market bottom but we were acting as if it was by going 2 or 3 months out on our call option picks. They returned our subscribers some incredible profits.
Just recently we have been calling for Dow 10,800 and back in August and September we said the market would still rally. But what happened last Friday was an EVENT that can happen to all good option traders. We were stopped out of 4 of our trades when the market tanked on the Dubai news. By Tuesday of this week we told you Wall Street has put that in its rearview mirror.
The point is we had stops in place and nobody knew last Friday just how bad the Dubai news was. The picture brightened, unemployment came down and the market is rallying.
One of the trades we were stopped out of was Microsoft (MSFT, $30.06, up $0.23). We were in the December calls (MSQLF, $0.55, up $0.07) for 65 cents and we showing a profit but the stock kept having trouble at $30. However, we said once this level broke the call options could do well. Well, they hit a high of 87 cents this morning as the stock traded to a high of $30.37 this morning. This would have represented a 34% gain but instead we show a 54% loss for the portfolio as we were stopped out.
The point is, we are incredibly accurate with market direction and you buy call options in a bull market and put options in a bear market. Of course, it’s a little harder than that but you get the general idea. The fact that last Friday took us out of some great trades didn’t let it affect our mental toughness. We are still trading.
There is also the fact that some subscribers take some trades but not ALL of them. So, one subscriber could be selective and have all losing trades which would lead them to believe we don’t know what the heck we are talking about and want to cancel their service. Another subscriber might be selective and have all winners and think we are the best thing since two-piece bikinis.
Folks, we will have losing trades. And we are not ashamed to admit them. But, if we show in our track record and one trade was a 100% winner and one was a 100% loser in the same week you would think we lost money. Well, that would not be the case.
If we did a full position on one trade and invested $2,000 on 10 contracts and a half of a position (5 contracts) on an earnings trade that could go either way, then we still made money. And we explain the trades this way in our Members Area. Earnings trades are all or nothing. They can make you over 400% like our Priceline.com (PCLN, $220.24, up $0.23) did or they can lose 97% in a day. However, if you did a full position on Priceline.com like we recommended and a half position on Aerospostale (ARO, $29.05, up $0.10) then you felt little impact on your portfolio. If you did the trades in reverse, then your results could be worse.
FedEx (FDX, $87.21, up $1.27) is pushing $90 and we were in a trade that got stopped out as well. FedEx still looks strong but got weak just for a minute which put us on the sidelines.
Also, some subscribers have asked for a cell phone alert service.
The easiest way to keep in touch with us is this way and it will ensure that you get our email updates as soon as they are released.
First, go out and buy a smart-phone or if you have one make sure our emails are coming through.
When we send out an email you should get it in a few seconds. Once we send out an email our phone makes a “ding” sound and it lets me know I have an email. (We copy ourselves on all emails we send out and it works every time).
Then, if there is action you need to take or want to take you can make the trade right from your phone. We have all of our brokerage accounts loaded on the phone as most of them have apps.
We understand that people work and can’t watch the market which is why we try to have select times at which we do the trade updates…9am and 1pm. Today’s is late because we are doing a long update…
The update by 9am gets you prepared for the market and the 1pm update keeps you caught up. Now, if we do an update outside of those time frames OR we do the 1pm update a little early or a little late then you can rely on your email to keep updated.
The trading manual…
It will be $2,495 and a one-year membership is included. The manual will teach you how to really look for option trades and will give you a better insight to how we break down our trades. This is a one-time special offer because all of you are our charter members. Remember, we are limiting our circle of subscribers so that our trades don’t get crowded. Once we reach our limit, the trading manual will be $2,495 with NO free one-year membership. If you already have a membership, this will be added to your current membership.
The last thing we want to say is this. We get more joy in teaching people how to trade options than actually trading. Yes, we still trade and yes, we like money and yes, we trade our own accounts. But when you write us and tell us your success stories then we know we have a happy subscriber.
Look. We wanted to create this service to teach people how to trade options and find trades. The picks we provide are a bonus and we realize there are subscribers who want us to do the work which is cool. If we make them money maybe they will tell their friends about us. The bottom line is that we want you to make money and we don’t want you to be afraid of options or some of the “transgressions” you may have. (Insert Tiger Woods joke here…)
We have updated all of our current trades before we head out for the weekend and we will be back Sunday night with the Weekly Wrap…
Tags: call option trading, chicken option trades, Covered Calls, momentum stock option trading, option trade picks, option trading online, options blog, options mentoring, options newsletters, options track record, put option trading, Rick Rouse, stock option trade pick service, straddle option trades, strangle option trades, support and resistance levels, triple-digit option trades
Posted in Market Commentary, Money Management, Option Trades, Sectors, Strategies, Trading Psychology, Trading Tips, Yahoo / Microsoft | Comments Off
Friday, October 23rd, 2009
12:55pm (EST)
Despite some solid earnings report, the market is struggling to end the week on a high note.
We are at the heart of earnings season and this week has been full of good news and good trades if you picked the right options. It’s no secret that earnings can move stocks but picking the right stock and the right option is an art. The great thing about option investing and taking these types of trades is that you don’t have to risk a lot of money to make an incredible return. In fact, a 5% move in the STOCK can easily return over a 100% on an OPTION. Of course, these types of trades are all-or-nothing because if you are on the wrong side you can lose a major portion of your investment.
Not only that, a company can report great earnings and give tempered guidance which sometimes sends the stock reeling. For the current quarter, we said weeks ago the key would be revenue growth and the good news is we are seeing that. Although we didn’t take this trade, we thought we would show an you an example of just how powerful an earnings announcement is and how much of a return or loss you can expect if you trade these types of events. We profiled a Nike (NKE, $63.69, down $1.49) earnings trade a few weeks ago in the Members Area that returned our subscribers up to 175% but we didn’t see this one coming from Microsoft (MSFT, $28.39, up $1.80).
We mentioned Microsoft’s earnings this morning and yesterday in the 1pm update but didn’t recommend a trade because the stock has not traded well the past few quarters after the earnings announcements. This stopped us from buying any call options. However, it certainly wasn’t a stock we felt comfortable shorting or buying puts because the stock has been in an uptrend albeit a slow one and we didn’t think there was any money there either way.
Well, as you know, Microsoft crushed it and its stock is up 7% today. Not bad, but let’s look at how the options did. Remember, I told you a 5% move in the stock gets you a 100% return or a 90% loss with the right and wrong options. Well, wait until you see what a 7% move in a stock does…
Microsoft shares closed at $26.59 yesterday so at 3:30pm (EST) you could have bought options based on which way you thought the stock was going to move. You did your research on the company and figured they were going to have a blowout quarter and you knew XBox could be a key catalyst to an earnings and revenue surprise. You figured the stock could move 5% so you go long or buy call options.
Folks, the MSFT November 27 calls (MSQKB, $1.62, up $0.97) are up 150% today. These were the closest call options that were “out-of-the-money” and you could have picked them up for 65 cents yesterday. A 10 lot trade would have cost you $650 yesterday and as of today you would have over $1,600. That is $1,000 in less than 24 hours.
Now, let’s look at the other shoe…
Let’s say you thought Microsoft was going to report a lousy quarter or say some negative things and you thought the stock was going to drop. You could have went slightly out-of-the-money and found some cheap put options for about the same price as the call options you were looking at.
The November 26 puts (MSQWA, $0.12, down $0.55) closed at 67 cents yesterday so your $670 is now worth $120. That is a loss of 82%. Now, you could still hold onto to these put options but they will probably go to zero because the stock is unlikely to trade back down to $26 by November 20th which is when the options expire. But they could…the stock would have to get to $25.35 for you to break even, if not, your options are worthless and you lost 100% of your investment.
Earnings trades are bets but just like most things in life you can put the odds in your favor by doing some research. Again, things may not go your way on all of these types of trades but often times you can find the companies that are going to wow Wall Street and make a sweet return.
We do play earnings and there are probably a few trades that we will be looking at next week. Most of our trades are profiled BEFORE or AFTER earnings as we try to eliminate a little of that risk and the emotion of one-day trades. However, we see some really good opportunities on a few companies that could provide for some excellent trades for next week.
Having said that, there is TWO trades that we are playing today and current subscribers can check the Members Area RIGHT NOW for the trade. One is a speculative play, the other is an earnings play. The company reports earnings on Monday BEFORE the bell and traders are building positions before the weekend.
We will talk about them more in the Weekly Wrap and in the Members Area on Monday morning. If you are not a current subscriber you can signup NOW to get instant access or over the weekend to get the Weekly Wrap and Monday morning’s Current Trade updates…
As we head to press, the Dow is down 72 points to 10,008…
Tags: momentum options, MomentumOptionsTrading.com, options help, options mentoring, options track record, options trading, trading options
Posted in Company Commentary, Earnings, Hot Stocks, Market Commentary, Option Trades, Sectors, Strategies, Trading Psychology, Trading Tips, Yahoo / Microsoft | Comments Off
Wednesday, July 29th, 2009
9:00am (EST)
Futures are pointing towards a negative open after Durable Goods orders came in lower than expected. Dow futures are down 38, S&P 500 index futures were down 6, while Nasdaq futures were down 7.
I mentioned the bulls were trying to hold Dow 9,000 and with earnings season nearing a close the bulls are looking for the next catalyst.
Bank of America (BAC, $13.34, up $0.25)
November 15 calls (BYOKO, $1.00, up $0.05)
Entry Price: $1.50 (6/12/09)
Exit Price: $2.25
Return: -33%
Stop: If BAC falls below $11, close the position.
Action: This position has gained over 30% since Sunday night’s Weekly Wrap but is still down from an entry price of $1.50. Open Interest continues to build in the November options as the 15’s have an OI of over 100,000 contracts. That means there are a lot of bets being placed at the $15 strike and they are very liquid. This is great if you are trading 50 or 100 lot contracts. I still like current positions at these levels.
For our new subscribers, BofA was below $5 on March 11th when I recommended a couple of call options, May 6’s and July 10’s. They returned 400% and 500% as BofA stood at $10 a month later. If you do the math and the stock doubles from here it puts BofA at $26. These calls would be worth $11 and you would have a 1,000% return on you hands. Anything is possible, right? However, all we are looking for is a run past $15 so we can double or triple or money. (PS, if you haven’t gotten my track record for 2009 or 2008, email us by going to the website and sending us a request)
Cisco Systems (CSCO, $21.93, up $0.09)
October 20 calls (CYQJD, $2.50, up $0.05)
Entry Price: $1.50 (6/2/09)
Exit Price: $3.00
Return: 67%
Stop: $2.00
Action: Tech held up well on Tuesday and Cisco traded up to $21.99. The 52-week high is $25.25 which is my target for the stock. The options traded as low as $2.16 so we will keep the $2.00 stop in place.
Green Mountain Coffee Roasters (GMCR, $67.50, down $0.25)
August 80 calls (QGMHP, $1.50, down $0.10)
Entry Price: $1.40 (7/27/09)
Exit Price: $2.10+
Return: 7%
Stop: $0.70
Action: The goal is to be out of this trade by the closing bell. We will be watching this one all day as the company reports earnings after the bell today. These options are inflated meaning the premiums are rich so be careful with this one. If you can escape with a gain, even if it’s 10%, it may be better than leaving this one open.
Buffalo Wild Wings (BWLD, $39.32, up $2.21)
August 40 calls (BQUHH, $1.25, up $0.01)
Entry Price: $1.10 (7/27/09)
Exit Price: $1.50 (7/28/09)
Return: 36%
Stop: CLOSED
Action: I told you the best time to sell is at the open and these calls traded as high as $1.60. The first 20 minutes are when the sharks are in the water and we all know sharks usually win these battles. I can’t stress this point enough to the beginners we have on board. If a stock is hot, the best time to sell is shortly after the bell because all of the rookie options traders were in there BUYING these call options on Buffalo reporting and beating Wall Street’s estimates. Each earnings trade is different as you will see and it’s best to have a plan going in and an exit on when to close the trade.
This trading tip is invaluable.
Cerner (CERN, $64.18, down $0.81)
August 70 calls (CQNHN, $1.20, down $0.15)
Entry Price: $1.30 (7/27/09)
Exit Price: $2.20
Return: -8%
Stop: $0.65
Action: Cerner got a 50 cent pop at the open and these call options trades as high as $1.50. The company reports after the bell on Wednesday.
Another point I want to make is how some option traders will only look for a 20 or 30 cent move in an option and then sell it. If you buy 20 contracts and an option goes up 30 cents in price you have made $600. Do it twice a week and you are making $50,000 a year. Hard but not impossible.
I’m throwing all of this information and tips at everybody this morning because I’m trying to teach you how to use options and the many different ways people trade them. What kind of profits you want to make is up to each trader. And each trader’s strategy is different. Some people like straddles and strangles, some investors write covered calls while others get naked. “Naked” option trading is not my game but all it means is that you are taking on a ton of risk.
Microsoft (MSFT, $23.47, up $0.36)
August 23 calls (MSQHQ, $0.98, up $0.23)
Entry Price: $0.78 (7/27/09)
Exit Price: $1.60
Return: 26%
Stop: $0.30
Action: Well, well, well…Yesterday I said “these calls options are technically in-the-money and we only need the stock to recover by 5% to make a decent return off of the trade.” Microsoft was in the red all morning but made a comeback along with the Nasdaq. The stock only made a 1.5% gain but the options gained 30%. Again, it was a short-term trade and I wanted to be out Friday. Hopefully we can ride this one a little higher but 25% is 25%.
IBM (IBM, $117.28, down $0.35)
August 105 calls (IBMHA, $11.69, down $1.17)
Entry Price: $3.40 (7/14/09)
Exit Price: $12.00 (7/24/09 1/2 the trade was closed)
Return: 253%
Stop: $11.00
August 115 calls (IBMHC, $3.70, down $0.40)
Entry Price: $1.05 (7/16/09)
Exit Price: $2.00 (7/24/09 1/2 the trade was closed)
Return: 281%
Stop: $2.00-$2.25, raise to $3.25
Action: We closed half of each side of these call options to make it a risk free trade from here on out. Our stops are in place and you’ll notice I raised the stop on the August 115’s. IBM has made a nice run but $118 is the new hurdle. The stock was down 60 cents in after-hours so we may be close to getting stopped out on the other half of the trade.
Visa (V, $66.30, down $1.89)
August 70 calls (VEHHN, $1.30, down $0.50)
Entry Price: $1.60 (7/27/09)
Exit Price: $3.20
Return: -19%
Stop: $0.80
Action: Visa will no doubt be the crown jewel of announcements on Wednesday. On Monday, the company said it would “continue to meet or exceed” Wall Street’s expectations. The numbers we want to watch for after the close is 64 (cents a share) and $1.63 billion on the revenue side. Warning: If Visa misses or doesn’t impress the Street then these options will drop like a rock if the stock heads south.
DryShips (DRYS, $6.79, down $0.29)
August 7 calls (OOCHJ, $0.50, down $0.15)
Entry Price: $0.25 (7/21/09)
Exit Price: $0.65 (7/27/09)
Return: 160%
Stop: CLOSED
September 7.50 calls (OOCIU, $0.60, down $0.13)
Entry Price: $0.35 (7/21/09)
Exit Price: $0.70
Return: 71%
Stop: $0.40, raise to 50 cents
Action: I don’t like giving gains back which is why we closed the August calls on Monday for a 160% return. The September call options had given us over a 100% gain and our stops were set just above our entry point to protect profits. I didn’t like the action in DryShips yesterday which is why I raised the stop. These calls hit a low of 45 cents on Tuesday so if DryShips doesn’t rebound we will let the market take us out with a small profit. This is exactly why we sold the August options. DryShips is a very liquid stock capable of making huge moves but let’s take what the market gives us.
Ford (F, $7.14, down $0.13)
December 6 calls (FLI, $1.63, down $0.07)
Entry Price: $1.25 (5/18/09)
Exit Price: $2.50
Return: 30%
Stop: $1.00, raise to $1.45
December 7 calls (FLJ, $1.06, down $0.01)
Entry Price: $1.00 (5/18/09)
Exit Price: $1.50-$2.00
Return: 6%
Stop: 50 cents, raise to 75 cents
Action: It is looking as though Ford is trying to build a solid base at the $7 level which would be perfect for this longer-term play. If we can build a base at $7 then move towards $8-9 then were are golden.
Check back after lunch for an update on today’s action.
Rick Rouse
Tags: Bank of America, Buffalo Wild Wings, Cerner, Cisco Systems, DryShips, Ford, Green Mountain Coffee Roasters, IBM, Microsoft, Visa
Posted in Earnings, Option Trades, Stock Earnings, Strategies, Trading Tips, Yahoo / Microsoft | No Comments »
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Market Flat After EU Bank Test Results
Friday, July 23rd, 2010
1:20pm (EST)
The market is near the breakeven line after Europe’s bank stress results were revealed a little while ago. There are lots of moving parts and Wall Street is still digesting the news but the headline is that 7 out of the 91 banks failed the stress test. The European Union say the results show the “resilience” of their banking system and we will bring you more of this story in our Weekly Wrap.
Corporate news is also hitting the wire with another mixed bag of earnings.
Microsoft (MSFT, $25.34, down $0.50) is trading lower despite reporting better-than-expected earnings on the top and bottom lines. The company said profits came in a at $4.5 billion, or $0.51 a share, versus $3 billion, or $0.34 a share, in the same quarter last year. Revenue came in at $16 billion for the quarter last year. Analysts were looking for earnings of $0.46 a share on sales of $15.3 billion.
SanDisk (SNDK, $40.10, down $3.00) is also lower but not because of its numbers. The company, which is a big player in the flash memory market, reported earnings of $258 million, or $1.08 a share, up from $53 million, or $0.23 a share, in the year ago period. Revenue shot up to $1.2 billion from $731 million a year earlier. Analysts were looking for $0.90 a share on sales of $1.16 billion. The company also announced its CEO is leaving them after 22 years of service.
As we head to press, the Dow is higher by 11 points to 10,333. The S&P 500 is off by a point and is at 1,092 while the Nasdaq is down 7 points to 2,239. Once again, the S&P 500 cannot clear 1,100 while the Nasdaq is having trouble at 2,250.
We will be back Sunday night with our Weekly Wrap and an in-depth look at what the EU bank stress tests mean for the market. Our trades are holding up well and we will be looking to add new positions on Monday.
Tags: call options, how to trade options, momentum options trading, Momentum stocks, option picks, option stock picks, options alerts, options newsletter, options track record, put options, stock options trading, volatile options
Posted in Company Commentary, Earnings, Yahoo / Microsoft | Comments Off