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Friday, April 1st, 2011
1:35pm (EST)
Lots of good happenings today, folks.
We had a little trouble sleeping last night in anticipation of this morning’s nonfarm payrolls numbers. Futures were up overnight by about 0.2% and we had a pretty good feeling this morning that the bulls would push the tippy-top of resistance. The headlines for today’s unemployment report will be debated but we could care less. All we care about is price action and we said to stay long and strong.
The Dow is up 77 points to 12,396 and has kissed 12,416. The February and 52-week high is 12,423.
The S&P is higher by 9 points 1,335 while the Nasdaq is showing a 16 point pop and is at 2,797 but has touched 2,802.
The rally up to resistance is a strong indication the bulls will probably push our next set of targets for the market and we will go over them this weekend. We will also be doing a video for our course members who have purchased our trading manual, How to Trade Options on Momentum Stocks, either this weekend or next.
For those of you who have been in our “mentoring” program, these videos are designed to help you find your own option trades and to understand where the market could be headed over the short and long-term. We also cover possible trades, different option strategies and some chart work.
The start of 1Q earnings season is just around the corner and it is one of the best times to look for trades. Each week in our Weekly Wrap we highlight the companies that we think will move 5%-10% and we show you how to find call or put option trades to take advantage of the possible price swings in our videos.
Alcoa (AA, $17.57, down $0.09) will announce earnings on April 11 which ”officially” starts the season so we have all of next week to start getting ready for our trade setups. We currently have Alcoa on our Watch List as we feel shares could push $19-$20 on a good announcement.
The cost of our trading manual and video courses have been low because we wanted to give everyone the opportunity to get the options manual at an incredible price and for those of you who have supported us through the years. This weekend, the price is going up and we won’t be offering anymore deals as we start to promote the course more aggressively.
Currently, you can get our option course at no charge (shipping included) if you subscribe to a 1-year membership to our Weekly or Daily newsletter. Again, this will be our last weekend offering this promotion.
We are also going to cover WEEKLY options in our next video. We recommended our first trade with these types of options on Monday. We recommended the Potash (POT, $60.77, up $1.84) April 60 calls (POT110401C00060000, $0.71, up $0.50) at 33 cents and closed the trade yesterday for a small profit.
We were a little nervous that the $60 level would be tough to crack so we decided to get out of the trade and try again next week. As you can see, these options are up over 200% today and had traded down to 10 cents on Wednesday. Today they have traded up to 94 cents.
The reason we went with this trade and closed it yesterday is because it was part of our PLAN. Before we got into the trade we said to ourselves it would be a play on Mosaic’s (MOS, $81.13, up $2.38) earnings (which blew away Wall Street’s estimates yesterday). We thought Potash would easily break $60 if Mosaic popped 5%-10% but they didn’t. We also knew if Mosaic would have moved this much, Potash would have followed and we would have been out of the trade before Friday and the jobs report.
In any event, we blew it, to a degree, because we closed the trade a day early but the more important thing is that we followed our plan. However, there are over 50 stocks that trade Weekly options and we will cover that list in our video. You can bet we will hit a big trade like this one, soon.
We have a lot to cover in our Members Area, including a NEW TRADE, so we have to roll but we wanted to make you aware of our offer. We will be back Sunday night with the Weekly Wrap which has become a big hit with covered call investors. These trades are designed to make 5%-10% every month or two which adds up over a year.
Have a good weekend everyone and we expect the rally to continue into next week with new highs on the horizon.
Tags: AA, Alcoa Earnings, MOS, Mosaic, NYSE: AA, POT, Potash
Posted in Option Trades, Weekly Wrap | Comments Off
Tuesday, August 25th, 2009
9:40am (EST)
I waited a few minutes to see how we opened so I could give you an early read on our trades.
Bank of America (BAC, $17.70, up $0.35), Citigroup (C, $4.89, up $0.07), Imax (IMAX, $9.72, up $0.02), Potash (POT, $97.40, up $1.13) and Sirius XM (SIRI, $0.73, up $0.01) have all opened in positive territory.
Exxon Mobil (XOM, $71.84, up $0.54) has been on a roll since last Monday, rising from $66 to $72. I was watching this stock thinking, gee, Exxon at $66? That was $6 ago and the September 70 calls (XOMIN, $2.55, up $0.23) have doubled since then. I’m not ready to open any new positions because we have plenty of trades already open but I should have known the bounce from $66 was the play. I’ve covered Exxon numerous times in the past and the mid $60 level was the chance to get long. I missed it but I don’t want to chase here.
Federal Reserve Chairman Ben Bernanke got another term and the market seemed to like the news. Although not enough people give the dude credit, he did help the economy and kept us out of recession. The Dow is currently up 30 points to 9,540 as I go to press.
Rick@MomentumOptionsTrading.com
Tags: bac, Bank of America, c, Citigroup, Exxon Mobil, Imax, POT, Potash, siri, Sirius XM, XOM
Posted in Option Trades | No Comments »
Monday, August 24th, 2009
9:30pm (EST)
I didn’t like the afternoon action today as the market came off its highs. The futures are slightly lower as I head to press and we will have to watch the action closely this week. With earnings season winding to a close, economic reports will take on more meaning…
Bank of America (BAC, $17.35, down $0.11)
January 20 calls (BYOAT, $1.35, flat)
Entry Price: $1.18 (8/12/09)
Exit Target: $2.20
Return: 14%
Stop: $1.15, raise to $1.20
Action: BofA made a run to over $18 and the call options traded as high as $1.63. The financials stocks sold off just after mid-day and it was a disappointment they couldn’t close out on a more positive note. Hopefully this isn’t a reversal but we raised the stop just in case.
Citigroup (C, $4.82, up $0.12)
January 7.50 calls (CAQ, $0.27, up $0.02)
Entry Price: $0.14 (8/12/09)
Exit Target: 50 cents (sold half on 8/24/09 at 30 cents)
Return: 114%
Stop: 21 cents
January (2011) 10 calls (VRNAB, $0.57, up $0.08)
Entry Price: $0.40 (8/12/09)
Exit Target: 80 cents
Return: 45%
Stop: 50 cents
Action: I did mention today to close half of the trade if you hit a 100% return because the rest would be house money we played with. As far as the 2011 10 call options there was a chance at a 50% profit but let’s just keep the stop of 50 cents in place. That represents a return of 25% and we will honor the stop on the 7.50’s as well. At 27 cents, these calls are still a double so make sure you close the trade if Citigroup hits our stops.
Imax (IMAX, $9.71, up $0.16)
September 7.50 calls (IMQIU, $2.20, up $0.15)
Entry Price: $1.90 (8/4/09)
Exit Target: $3.00, lower to $2.60
Return: 16%
Stop: $1.50, raise to $1.90
March 2010 12.50 calls (IMQCV, $0.60, up $0.15)
Entry Price: $0.45 (8/10/09)
Exit Target: $1.00+
Return: 33%
Stop: None
Action: I lowered the exit target on the September calls because Imax is not a fast mover. Yes, we did challenge $10 today but if the stock continues to struggle with that area we will manage the position for a profit. Ideally, we would like to see a strong breakout abover $10 and hold.
Potash (POT, $96.27, up $0.23)
September 110 calls (PYPIB, $0.80, down $0.30)
Entry Price: $1.35 (8/20/09)
Exit Target: $2.10+
Return: -37%
Stop: 65 cents, lower to 60 cents
Action: Nasty. After hitting a high of $1.45 the bottom fell out after shares hit $99. The premiums lost a lot of juice on the way back down although Potash ended the day with a small gain. I lowered the stop to give us a little wiggle room but this one is pretty close to hitting it anyway.
Sirius XM (SIRI, $0.73, up $0.03)
December 1 calls (QXOLA, $0.15, flat)
Entry Price: $0.15 (8/21/09)
Exit Target: $0.30
Return: 0%
Stop: none
Action: Take this trade for what it’s worth. To buy a 1000 shares at current prices would cost you about $730. To control a 1,000 shares which would be the case if you bought 10 option contracts will only cost you about $150. This is still a risky play either way you slice it and Sirius is bleeding money. Their balance sheet is a disaster but we are only risking a small amount of capital on this trade. If the stock can make it to $2 which could be a cold day in hell, then these options would be worth at least a $1 apiece or $1,000 if you had 10 contracts. See the leverage?
Tags: bac, Bank of America, c, Citigroup, Imax, options trading strategies, POT, Potash, siri, Sirius XM
Posted in Option Trades | No Comments »
Thursday, August 20th, 2009
9:15am (EST)
The futures had been up this morning but have lost steam after a worse-than-expected weekly jobs report. The number of US workers filing new claims for jobless benefits rose 15,000 last week to 576,000. Wall Street had forecast new claims of 550,000 from the previously reported 558,000. As a result, Dow futures are lower by 11 to 9265, Nasdaq futures are down 3 to 1596 while the S&P 500 futures are up 1 to 998.
China’s Shanghai index rebounded 4.5% which seemed to be the driving force behind the earlier momentum. Elsewhere on the economic front, July’s leading economic indicators and the August Philly Fed manufacturing report are also due out today.
As far as our open trades, I’ll give an update at 1pm. I am watching the Potash (POT, $95.18) September 110 calls (PYPIB, $1.20, up $95.18) this morning. I’ve talked about this stock numerous times in the past but it has been consolidating at these levels for awhile. If the stock opens LOWER and the call options dip below a $1.00…pull the trigger and pick some up. If the stock opens HIGHER, wait 15 minutes and try not to pay more than $1.35-$1.40 for them. Do not pay more than $1.40 to start new positions.
Rick@MomentumOptionsTrading.com
Tags: Jobless Claims, option picks, POT, Potash
Posted in Economic News, Option Trades | No Comments »
Tuesday, June 23rd, 2009
It was a brutal Monday for the market if you were a bull as all three major indexes took a beating. The Nasdaq and S&P 500 fell 3% and the Dow dropped a little over 2%. When I saw the futures take a turn for the worse , I knew we were in for a crummy day.
As a result, the Dow lost 200 points and finished at 8,339. The Nasdaq gave back 60 and closed at 1,766 while the S&P fell 28 points and finished at 893. The S&P 500’s break below 900 was not good. As a mental note for myself (and for you) here is what I have posted on my desk right now (from the June 16th Blog):
“For weeks, we have been in a tight trading range and last Thursday and Friday, we hit the top of those trading ranges. Yesterday’s drop hasn’t even brought us to the middle of those trading ranges. To put things in perspective, the Dow has resistance at 8,900 while there is a floor of support at 8,250 and then further support at 8,000. When we BREAK those levels, then it might be time to turn bearish.
As far as the other indexes, pull up a chart and take a look. The Nasdaq, currently at 1,823, has serious resistance at 1,850 and then 2,000 would come into play. For support, there is a nice resting area at 1,700 then 1,600. Below that, we get nervous. For the S&P 500, which is at 923, we are targeting 960 and then 1,000. The breakdown would be at 870 and 800.” – (END)
I keep these types of trading ranges posted to remind myself of how I was feeling or what I am seeing down the road and I pay attention to them. We have a number of long positions open and if you will notice, we went out longer-term to protect ourselves in case we did head lower. But we also didn’t want to miss the next leg of the rally if we get one in July. Also, if you will notice, I have been recommending put options as a way to play the downside over the short-term.
Last Friday, we closed out a two-day trade on Abercrombie & Fitch (ANF, $25.67, down $0.34) that netted 25%-50% and today it was a Potash (POT, $87.27, down $5.45) trade that quickly gained 30%. Monday morning and last week I had mentioned a couple of put options to watch and we jumped on one of them like grass on dirt a couple of hours after the market opened.
The ANF July 25 puts (ZWRSE, $1.25, up $0.05) traded as high as $1.40 today although we were out at $1.20 on Friday. I had a few emails today about this trade and remember, it is already closed. However, a break below $25 could spell trouble for the stock.
As far as the Potash position, we got into the July 80 puts (PVZSP, $3.40, up $1.15) at $2.60 before lunch with a limit price of up to $2.75. The initial target was $3.00-$3.25 and the purpose was to make $500 on a 10-lot trade. We got that and then some. If you didn’t get out today, set stops at $3.00-$3.10. There is “a little” support for Potash at $84 but if that breaks, we could see a trip to the lower $80’s.
That was the good; the bad:
Bank of America (BAC, $11.94, down $1.28) had a terrible day as it dropped 10%. The November 15 calls (BYOKO, $1.10, down $0.50) were entered at $1.50 and were positive coming into today. We have a stop of 55 cents on this one.
Cisco Systems (CSCO, $18.41, down $0.51) fell over 2% and the October 20 calls (CYQJD, $0.95, down $0.20) dropped 20%. Our entry price was $1.50 and the stop is set at 75 cents.
Dendreon (DNDN, $24.54, down $1.54) got crushed and it is time to close the July 30 calls (UQBGF, $0.28, down $0.11). I wanted to leave them open but today’s drop forced our hand. These calls were profiled at 80 cents and we were right at a 50% stop anyway. I know I said this was a pure play on Biotech but this breakdown was a killer for the July calls. The August 30 calls (UQBHF, $0.95, down $0.40) were profiled at $1.50 and you should place a stop of 70 cents on them to limit losses.
Ah, now it’s time for the ugly.
Ford (F, $5.38, down $0.34) took one on the chin but I kinda knew this one was coming. I went all the way out to December on playing Ford and these positions should be closed if Ford drops below $5. The December 6 calls (FLI, $0.88, down $0.23) were entered at $1.25 while the entry price for the December 7 calls (FLJ, $0.58, down $0.20) was $1.00. It would be disappointing if Ford falls back below $5 but you can’t fight the trend.
JDS Uniphase (JDSU, $5.48, down $0.39) is a “lottery” play and we entered the September 7 calls (UQDIJ, $0.10, down $0.10) at 35-40 cents. One contract would have cost you $40 or 5 contracts would have cost $200. When I say a trade is a “lottery” trade that means there is no stop for these positions because they are just that..lottery picks. As you can see, we will have to wait this one out.
Some of these trades were positive going into Monday but the market’s steep drop is telling us something. My guess is that we could test the aforementioned areas of support over the next couple of weeks which would lead us into 2Q earnings at the start of July. From there it could be a war between the bulls and bears that could determine the trend for the rest of the summer.
Rick Rouse
Rick@TheOptionInvestor.com
Tags: Bank of America, Dendreon, Ford, Potash
Posted in Company Commentary, Financial Stocks, Market Analysis, Market Commentary, Option Trades | No Comments »
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The Good, Bad, and Ugly
Tuesday, June 23rd, 2009
Tags: Bank of America, Dendreon, Ford, Potash
Posted in Company Commentary, Financial Stocks, Market Analysis, Market Commentary, Option Trades | No Comments »