The bulls are once again pushing resistance as we head into the second half of trading but as we have seen all week, the trouble has been holding these levels on the close. Some of the talking heads are calling it a Romney Rally and we talked about this last month on how this theme could come up. However, until we break resistance (or another wave of support). The market remains in a trading range.
Before we cover the numbers, we wanted to do another quick update on Apple (AAPL, $671.02, down $0.43) as shares have traded on both sides of the ledger today. The stock has reached a high of $674.25 but has pulled since.
The talking heads must have read our midday update on Tuesday because they confirmed our speculation yesterday that Apple could announce the iPad mini this month. Of course, we have been mentioning for a few weeks now that the new iPad announcement was coming but we were hoping the news would have come next week as we were looking to get into some Apple call options.
We said the announcement could come as soon as October 10 and our plan was to pick up some near-term options next Tuesday, October 9.
We profiled the WEEKLY October 675 calls (AAPL121005C00675000, $3.00, down $0.50) on Tuesday and at the time they were going for $1.90. They doubled in less than 48 hours after kissing a high of $3.90 this morning.
The October 675 (AAPL121020C00675000, $13.60, down $0.25) were super expensive and were going for $9.90 per contract midday on Tuesday. These options hit a high of $14.80 earlier today, representing a 50% gain.
We said to watch the $650 level on Tuesday to see if it would serve as support and if so, it could be a signal to go long. Shares were at $658 midday and did indeed test a low of $650.65 shortly after our update. These means both call options actually got cheaper, providing great entry prices at support.
Although we missed the gravy train on these two trades, we said we wanted to review how we trade because we have so many new subscribers. We have been working hard updating our options trading manual, How to Trade Options on Momentum Stocks, and we thought we would share with you how we look at and find trades before we release the updated version in December.
If you are in this trade, we would lock up profits on the WEEKLY call options RIGHT NOW. We mentioned $675 was prior support and this will be the first level of resistance. While it would be nice to hold the regular October 675 calls for a chance at Apple running to $700, we would take the safe money and also lock-in profits if these were official recommendations.
As far as the market, the Dow is up 63 points to 13,557 while the S&P 500 is higher by 7 points to 1,458. The Nasdaq is basically flat (+0.41) at 3,135.
Nonfarm Payrolls are due out before the bell on Friday so we could have a volatile day. The suit-and-ties are looking for a number of at least 120,000 jobs and anything north of this could lead to a break past resistance. If the print is under this level, or heaven forbid under 100K, the bears will pounce.
We have action to take on a trade that is up 111% so let’s go ring the register! This marks our 19th winning trade out of our last 21 recommendations since mid-August.
Subscribers, check the Members Area for the updates and we will be back in the morning with a full report.