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Zumiez Announces Earnings After the Close
Zumiez (ZUMZ, $27.29, down $0.24)
December 25 puts (ZUMZ131221P00025000, $0.50, up $0.05)
Thoughts: Zumiez reports after the close today and we listed these options as a possible earnings trade. The bid/ ask has narrowed from the wide spread over the weekend.
The company lowered guidance when they reported last quarter so this quarter could be iffy. Sales were down in September and improved in October so they could beat, miss, or match their lowered estimates. We believe shares will be in the teens in 2014 but the December options will have the most impact on a drop below $25.
This would be an all-or-nothing trade as a beat could push shares towards $28-$29. A miss or lowered guidance again could crush the stock and get $25-$24 in the mix. At $24, the December 25 puts would be a double, or a 100% return, as they would be worth at least $1.
Krispy Kreme (KKD) Crumbles/ Put Options Soar 275%
We have been expecting the numbers for Krispy Kreme Doughnuts’ (KKD, $19.71 down $4.84) earnings report for a couple of weeks now as we mentioned the company had pushed the release date out from mid-November to early December.
We said this is often a warning sign as companies don’t want to confess or they want the pencil pushers to check the numbers one more time. Although Krispy Kreme beat Wall Street’s estimates by a penny, revenue missed and they lowered guidance.
“Adjusted” earnings came in at $0.16 a share versus the suit-and-ties forecast for $0.15 a share. Revenues for the quarter checked-in at $114.2 million versus estimates for $114.6 million. Same-store-sales were up 3.7% here at home but international sales are struggling and are going south.
We have been bearish on the stock since early September and have said shares could trade into the mid-teens this year. We also listed a possible earnings trade for our Weekly Wrap as a way to play a double-digit percentage move to the downside and those put options have exploded today.
Krispy Kreme Doughnuts closed just north of $25 on Black Friday’s shortened session and we liked how $26 had been holding as resistance.
The December 23 puts (KKD131221P00023000, $3.00, up $2.15) closed at 65 cents last Friday and opened Monday’s session at the same price. Volume was heavy as nearly 2,500 contracts traded hands.
These puts closed at 85 cents yesterday after trading to a high of $1.10 and are up a whopping 276% at current levels. As you can see from the option quote below, the puts have traded up to $3.40.
While we wanted to add these options as an official trade to the Daily yesterday, we were hesitant because we are already short the stock in our Weekly Wrap. There was risk for a breakout to $26-$28 had the company’s numbers come up rosier but it was one of the rare times we should have doubled-down and pulled the trigger as we expected shares to test $20. Trust your gut.
Although we are disappointed we didn’t get this trade in as an official recommendation for our Daily, some of our savvy subscribers did judging by their extremely happy emails. We are still short shares in our Weekly Wrap portfolio and a close below $20 today would be beautiful.
Krispy Kreme (KKD) Could Disappoint Wall Street (Again)
Krispy Kreme Doughnuts ( KKD, $25.38, down $0.15)
December 23 puts (KKD131221P00023000, $0.65, up $0.05)
Thoughts: Earnings are due out after the close and we believe they could disappoint Wall Street.
Joy to the World, All the Bulls…
Joy Global (JOY, $55.71, up $0.44)
December 57.50 calls (JOY131221C00057500, $1.00, up $0.10)
Thoughts: We have traded this name in the past and we could get into these call options if shares clear $57.
Homebuilding Stocks Showing Signs of Life
Pulte Group (PHM, $18.95, up $0.80)
January 20 calls (PHM140118C00020000, $0.50, up $0.20)
Thoughts: The Homebuilding sector lead yesterday’s rally and not too many of the talking heads noticed the possible breakout underway. Shares of Pulte closed above their 200-day MA for the first time since mid-July and a run past $20 could be coming. Notice the “Golden Cross” that has formed as the 50-day has crossed the 100-day MA and is a bullish sign. This trade has us licking our chops.
Twitter Falls Below $40
Twitter (TWTR, $39.06, down $1.94)
December 37 puts (weekly) (TWTR131213P00037000, $0.70, up $0.25)
December 35 puts (TWTR131221P00035000, $0.55, up $0.20)
Thoughts: We mentioned last week Twitter was testing $40 and that a close below this level could lead to $35. We will have to make sure $40 holds as resistance but we have said the big boys are waiting to buy shares at $35. We have listed some WEEKLY options as well to play a move to $37 this week of next but again, let’s see if $40 holds, first.
Opko Health (OPK, $9.94, down $0.35)
December 10 calls (OPK131221C00010000, $0.60, down $0.40)
January 11 calls (OPK140118C00011000, $0.65, down $0.20)
Thoughts: Support is at $9 and where we are looking to start possible positions. We had 2 huge winners in October playing this name and shares tend to be volatile but the premiums are reasonable and what we are looking for. If there is another surge past $10 we could go long on a break above $10.25.
Spider Gold Shares (GLD, $120.12, down $2.83)
December 115 puts (GLD131221P00115000, $1.22, up $0.65)
Thoughts: For those of you that have followed us all year, we have been bearish on gold as we said in July there could be a test to $1,100. We like the yellow metal for the long haul and own a few ounces but there could be an opportunity to make some green by using these puts. They opened at 80 cents yesterday and could still double from here.
Horizon Pharma Surges on Deal
Shares of Horizon Pharma (HZNP, $5.85, up $1.38), a company we profiled a couple of weeks ago in our Weekly Wrap and have been doing a lot of homework and chart work on, are getting a nice pop today. We profiled shares at $4.86 and talked about the company’s recent earnings as our research showed they would come in better-than-expected.
Shares are zooming nearly 30% today on news the company has bought the U.S. rights to arthritis drug Vimovo from AstraZeneca (AZN, $53.39, up $0.21) and Pozen (POZN, $6.69, up $0.86) which will continue to receive royalty payments. AstraZeneca will continue to have rights to commercialize VImovo outside of the U.S.
While we are still on the fence with adding the stock, or an option trade to our portfolios, we have received emails about some of the call options we profiled in the Weekly Wrap as they have rocketed 100% and 500% higher today.
The December 4 calls (HZNP131221C00004000, $1.90, up $0.95) were at 95 cents and have doubled on today’s news.
The December 5 calls (HZNP131221C00005000, $0.95, up $0.80) were at 50 cents at the time of our update and are up 533% after closing at 15 cents yesterday.
If you are in these options, lock-in half profits and set stops on the other half.
Jacobs Engineering Group (JEC, $63.76, up $0.31)
December 65 calls (JEC131221C00065000, $1.20, up $0.15)
Thoughts: Shares are quietly pushing 52-week highs and has been a hot stock in the past.
Agilent (A) Jumps 8%, December Call Option Zoom 200%
Agilent (A) shares are up 8% today on an earnings beat and we had a good feeling about this trade. If you haven’t signed up for our Weekly Wrap, each week we profile a number of option trades as possible long or short candidates and we played this name last time out.
We listed some options and did some chart work ahead of yesterday’s announcement and here were our thoughts on Sunday night (quotes from 11/8/13 close):
Agilent Technologies (A, $50.78, up $0.73)
December 52.50 calls (A131221C00052500, $0.95, up $0.15)
Thoughts: We played a bullish call option trade on this name last time out that did well.
As you can see, the December 52.50 calls (A131221C00052500, $3.05, up $2.07) closed just under $1 yesterday and are up over 200% on today’s surge to double-nickels ($55).
We see a few more opportunities for next week and you can join us now for 50% of just $29.99 for 2 weeks by using the code SAVE-50 and clicking here.
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Say it Isn’t So Cisco (CSCO)
Cisco Systems (CSCO, $21.06, down $2.94) nearly caused the presses to stop following its nasty earnings report. We often talk about the company and have traded it numerous times over the years but we stayed on the sidelines this week ahead of its earnings announcement.
The company is King of “Beat by a Penny” and reported earnings 2 pennies ahead of expectations but shares were slammed after the revenue miss and lowered guidance for the current quarter.
Cisco said the emerging market was challenging and sales were down around the globe. They now see adjusted earnings of $0.45-$0.47 a share for the current quarter underway versus Wall Street’s expectations for $0.52 a share. Cisco also sees revenue dropping 8%-10%. Ouch!
We expected shares to move 3%-5% but we weren’t sure which way they would sway. Had we known they would move double-digits (shares are down 12%), we could have played a strangle option trade.
With shares at $23 going into yesterday’s close, a 10% move would have pushed Cisco past $25 or near $21. These are the types of moves needed by a stock to make these option strategies profitable as it doesn’t matter which way the stock moves as long as the options are priced right.
The December 21 puts (CSCO131221P00021000, $0.50, up$0.42) have zoomed 525% as you can see from the Yahoo Finance option chain quote below after closing at 8 cents yesterday. Ten contracts would have cost just $80 and are now worth $500. They have traded to a high of 65 cents and they key with these types of trades is to close one side into strength.
The December 25 calls (CSCO131221C00025000, $0.01, down $0.37) took a bath. The calls were going for 38 cents ahead of yesterday’s close and 10 contracts would have cost $380.
As you can see, the put options soared while the call options tanked. The total cost of the strangle option trade would have been $460 and if you cashed out the puts right now the options would put $500 back into your account.
The return would be a roughly 10% for a day’s work and a little more had you closed them up to 65 cents. You would still have the call options open to play a possible run to $25 but that is not likely to happen and if the options expire worthless you still make 10% as they were dead money anyway.
These types of strangle option strategies usually provide a nice double-digit return and in some cases triple-digits. However, with one side of the trade used as protection, the gains are somewhat limited.
We have started using these types of strategies in our Weekly Wrap as there are plenty of opportunities for these types of trades and our goal is to show you how effective they can be. Making 10% a month easily doubles your money in less than a year.
Don’t shy away from these “complex” strategies because they are just as simple as putting on a directional option trade or buying a call or put option. You just have to buy both sides. A little math and homework are needed but that is why you have us.
As we head to press, the Dow is up 41 points to 15,863 while the S&P 500 is higher by 6 points to 1,788. The Nasdaq is down 2 points to 3,962 as Cisco weighs on Tech.
We have a lot more to talk about with our current trades so let’s go check on them to see where things are at.
Rackspace Hosting Tanks 12%
We profiled a possible earnings trade for Rackspace Hosting (RAX, $43.45, down $5.86) in Sunday night’s Weekly Wrap along with some chart work. We mentioned this would be a big quarter for the company and that Wall Street would grade them accordingly when they reported earnings on Tuesday.
The company came in with profits of 11 cents a share on revenue of $388 million while the suit-and-ties were looking for 10 cents a share on roughly the same revenue. Gross margins also slipped and capital expenditures are headed higher in the current quarter.
Here were our thoughts along with the chart work from this week’s Weekly Wrap:
Rackspace Hosting (RAX, $48.54, up $0.86)
November 50 calls (RAX131116C00050000, $2.40, up $0.65)
November 45 puts (RAX131116P00045000, $1.45, down $0.10)
Thoughts: This is an important quarter for the company and while we like them they are hard to trust and why we have also listed put options. The options are also very expensive as we have listed November options that expire this week. If we aren’t playing these, we certainly don’t like the December chains either. Perhaps, selling options against the stock is another option but we don’t go naked. Ever.
As you can see from our chart work, we expected a 10% move and a possible drop to $43 on a disappointing quarter. The options were over inflated and the main reason we stayed on the sidelines but there could have been a sweet profit had we taken positions ahead of Monday’s close with the puts or SOLD both options but we didn’t like that idea.
The November 45 puts (RAX131116P00045000, $2.00, up $1.00) went out at a buck on Monday’s close and traded up to $3. They could’ve and should’ve been closed out at $2 ahead of Tuesday’s close for at least a double as these options expire this week.
The November 50 calls (RAX131116C00050000, $0.03, down $2.45) got crushed for a 99% loss. We said it might be best to SELL the options to collect the premium instead of buying them as the strangle trade with both options would be up roughly 50%.
NextOptions.com Weekly Wrap New Trade for 11/11/13
We have a New Trade for our Weekly Wrap on a stock we feel is headed from $21 to $25 over the next few months. The call options we are recommending could make us 200%-400% on a run to the mid-$20’s.
Subscribers, check the Members Area for the update.
Our Weekly Wrap is 40-4 for the year and 84-6, overall. If you are not a subscriber, come check us out and get on board. You can use this discount coupon to save 50% off right now and by clicking here.
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This coupon works for ALL subscription models and is good through November. We only do this promotion once a year so we urge you to get on board now. We hope to see you on board as you will not want to miss this monster trade!
NPSP Pharmaceuticals Testing 100-Day MA
NPSP Pharmaceuticals (NPSP, $23.66, down $0.13
December 27 calls (NPSP131221C00027000, $0.90, down $0.20)
December 20 puts (NPSP131221P00020000, $0.60, up $0.15)
Thoughts: The close below the 50-day MA (moving average) was a sign further weakness could be ahead for the stock. Earnings were a disappointment to Wall Street this week and Wednesday’s low checked-in at $21.60. We did extremely well playing the stock’s run to $35 in early October and we are tempted to short shares for a possible drop below $20. We have listed some call options as well we can use to make this a strangle option trade for our Weekly Wrap portfolio but we are favoring the puts if we open a position.
Keryx Breaking Out to New Highs
Keryx Biopharmaceuticals (KERX, $14.28, up $1.10)
December 13 calls (KERX131221C00013000, $2.10, up $0.80)
Thoughts: We said a run to the mid-teens could be coming and shares reached a high of $14.49 yesterday. These options opened at $1 on Monday.
SolarCity (SCTY, $59.29, down $3.48) has been a fascinating stock to watch in 2013. We added shares to our Weekly Wrap at $16.25 on January 7, looking for a double-digit return.
We said at the time shares could run past $20 but a week later they were struggling to hold $13. Another week later shares were back above $16 and by late February they tripped $20.
We closed the trade at $18.50 after three days of resistance and a 14% gain. The next day shares cleared our Price Target. We didn’t like the volatility so we decided to take profits as our original objective was achieved. By mid-March shares were back at $16.
In late April, Solarcity pushing $25 and we suggested call options for our Daily as the May 30 calls were going for 25 cents. The next day shares surged past $27 and we had a 140% gain in less than 24 hours so we rang the register at 60 cents. We wished we would have only closed half the trade as shares zoomed to $45 the day the May options expired.
By late June shares had fallen to $32 and we started aggressively watching it for either a rebound or breakdown.
On October 7, 2013 here were our thoughts along with our chart work showing the possibility of a huge breakout:
SolarCity (SCTY, $37.65, up $1.91)
November 40 calls (WEEKLY) (SCTY131101C00040000, $1.40, up $0.50)
November 40 calls (SCTY131116C00040000, $1.40, up $0.60)
Thoughts: Shares could be setting up for a run past $40. The symmetrical triangle that has formed usually foreshadows a major breakout (or breakdown) that could get $50 in play if $40 clears. A drop below $35 would be bearish.
October 4, 2013 chart for SCTY:
Symmetrical Triangles are powerful trading strategies and with shares near $60, these options exploded for jaw-dropping gains. Today’s chart and updates are proof why options trading is the most powerful and the most lucrative investment in the world!
The November 40 calls (WEEKLY) (SCTY131101C00040000) expired last Friday and shares closed at $54.75. These call options were $14.75 “in-the-money” and the return from $1.40 to $14.75 represents a gain of 954% in a little over a month.
The November 40 calls (SCTY131116C00040000, $19.70, down $2.90) have dropped below $20 with today’s dip below $60 in the stock. As you can see from the quote below these options are roughly $20 in-the-money.
The return from $1.40 to $20 represents a gain of over 1,300%! In other words, a 1,400 investment would be worth nearly $20,000. How sweet is that?
We will be doing some chart work on SCTY over the weekend to see if a possible peak is in or if shares are heading to $100 in 2014.
As far as the market, futures were pointing towards a strong open this morning and the opening pop has held up well with the blue-chips hitting a fresh all-time high. Tech is pulling back along with the small-caps so these developments need to be watched.
The Dow is up 88 points to 15,706 while the S&P 500 is higher by 4 points to 1,767. The Nasdaq is off 9 points to 3,930. The Russell 2000 is lower by 4 points to 1,099 and is just below the 1,100 level.
We have another Profit Alert today so let’s go see where things are at along with our current trades. Subscribers, check the Members Area for the updates.
iShares Russell 2000 (IWM, $109.97, up $1.26)
December 114 calls (IWM131221C00114000, $0.75, up $0.20)
December 102 puts (IWM131221P00102000, $0.55, down $0.25)
Thoughts: The Russell 2000 made a strong rebound on Monday after dipping below the 1,100 level on Friday but is not out of the woods. We could go long on a pop above $111 or short on a close below $108.
AOL Earning Due Out on Tuesday
AOL (AOL, $36.68, up $0.84)
November 40 calls (AOL131116C00040000, $0.80, up $0.15)
November 34 puts (AOL131116P00034000, $0.90, down $0.15)
Thoughts: Our first choice would be to buy puts but shares could surge higher after earnings as they have matched or beat expectations 4-straight quarters. Shares have traded lower the past 2 reports but a few analysts have upgraded the stock over the past 2 months. There has also been a public firing and the Patch division closure that could lead to a one-time charge.
If the market looks like it ends higher on Monday, the call options could be worth a gamble but the best trade could be a strangle trade using these options. However, the premiums are rich and will likely keep us on the sidelines.
AbbVie (ABBV, $48.45, dpwn $0.35)
December 50 calls (ABBV131221C00050000, $0.80, down $0.15)
Thoughts: We could get into these call options on a move past $50.
Special Notice: If you are not a subscriber but would like to get more, real-time trades, please click here. We are one of the fastest growing stock options trading advisors on the internet. We offer 2-3 powerful call or put option trades each week (depending on market conditions) aimed at triple-digit returns for our Daily newsletter and our Weekly Wrap Covered Call Portfolio strides for double-digit returns on a monthly basis.
Our 10 biggest winning recommendations in 2013 have been:
+364% JC Penney (JCP) put options
+201% Salesforce.com (CRM) call options
+104% Adobe Systems (ADBE) calls
+83% Caterpillar (CAT) put options
+206% Goodyear Tire (GT) calls
+319% JC Penney (JCP) put options
+108% Beam (BEAM) call options
+146% Goodyear Tire (GT) calls
+80% Financial Spiders (XLF) calls
+263% Regeneron (REGN) calls
+300% Solazyme (SZYM) calls
+173% Big 5 Sporting (BGFV) calls
+140% SolarCity (SZYM) call options
Keryx Biopharmaceuticals (KERX, $10.79, down $0.09)
December 13 calls (KERX131221C00013000, $0.95, flat)
Thoughts: Support at $10 has been holding strong and a run to the mid-teens could be coming.
Burger King Calls a Whooper of a Return
We provided a whopper of a trade ahead of last Friday’s close as we said shares of Burger King Worldwide (BKW, $20.63, up $0.87) could clear $20 on an earnings beat. Shares are up over 4% and have traded to a high of $21.27 after the company smashed estimates. Wall Street was expecting a profit of 2 cents a share but the burger-chain came in with a profit of 19 cents a share following lower expenses and franchising more restaurants.
The November 20 calls (BKW131116C00020000, $0.80, up $0.35) were going for 35 cents when we profiled them on Friday and have easily doubled on today’s news after reaching a peak of 99 cents. They opened at 95 cents. If you are in the trade, close HALF and set a stop of 60 cents on the other half to lock-in profits. If shares continue higher the stop can be raised but if they retreat the stop will close the other half of the trade automatically.
We have a number of possible earnings plays for this week that could double or triple your money so we urge you to get on board today.
Burger King Call Options Could Satisfri
Burger King Worldwide (BKW, $19.71, down $0.04)
November 20 calls (BKW131116C00020000, $0.35, flat)
Thoughts: The company reports earnings before the bell on Monday and shares could trip $20 on a good report. The restaurant stocks have been weak of late so there is risk of shares falling below $19 on weaker-than-expected numbers.
Apollo Group (APOL) Soars 28%, Strangle Option Trade up 456%
Shares of Apollo Group (APOL, $26.80, up $5.86) had a banner session after surging 28% on Wednesday. The company reported earnings of 19 cents a shares on revenue of $845 million. Good numbers on the surface but it was the operating income that was a dozy as it dropped 60% yet shares still surged.
The were a numbers of ways we could have played earnings and one of the more profitable ways would have been to use call options. Apollo Group trades WEEKLY options and the October 22 calls (weekly) (APOL131025C00022000, $3.84, up $3.15) closed Tuesday’s session at 69 cents. They reached a peak of $4.35.
We had a feeling shares would move 10% or more but we have always been bearish on the stock as we have pointed out their shady practices in the past. Wall Street loves the stock for some reason and is now calling the company a turnaround story.
Shares seem to go up every time they report their quarterly numbers so we knew better than to short the stock. However, we don’t trust shares to go long either.
We could have played it safe and used the October 18 puts (weekly) (APOL131018P00018000, $0.01, down $0.15) as protection for a strangle option play. This would have taken a lot of risk out of the trade and they were cheap options. As you can see, these puts got pummeled yesterday but the overall trade still would have been a monster.
Ten (10) contracts of the October 22 calls it would have cost $690 while 10 contracts of the October 18 puts would have cost $160. As a strangle option trade the total cost would have been $850. Although the puts got hammered and will likely expire worthless, the call options could have been sold for around $4 yesterday, or $4,000.
The return would have been 371%.
Opko Health ($OPK) Shares Volatile
Opko Health (OPK, $10.68, down $0.92)
November 11 calls (OPK131116C00011000, $0.55, down $0.60)
December 12 calls (OPK131221C00012000, $0.60, down $0.25)
Thoughts: There is risk down to $11-$10 on a continued retracement but we are still expecting shares to reach $15 over the next 6 months. We just banked profits of 172% and 150% for our Daily newsletter playing this name and 213% for our Weekly Wrap newsletter using LEAP options.
Apple (AAPL) Shares Showing Momentum
Apple (AAPL, $508.89, up $4.39) doesn’t report earnings until next week and shares have been under pressure for much of the year so we wanted to talk about them this week following the break above $500 again. The volatility has caused an endless debate from Wall Street to Main Street on if shares are undervalued or overvalued. We use both fundamental and technical analysis in predicting a stock’s possible future move and the chart has turned favorable for Apple in our opinion.
Shares cleared $500 for the first time since early September on Wednesday and the run has been perfectly telegraphed by the recent golden crosses. The blue line on the chart is the 50-day MA, currently at $487.62. The green line on the chart shows the 100-day MA turning up and is currently at $458.76. The red line is the 200-day MA that is showing a downtrend and is currently at $451.49.
A golden cross forms when a shorter-term moving average (MA) crosses above a longer-term moving average. This is considered a bullish sign because the shorter-term MA reflects the most recent price action relative to the longer-term MA. Obviously, the bigger the difference in MA’s the better but having 2 or 3 can be used for confirmation of a continued uptrend.
A “classic” golden cross signal is when the 50-day MA crosses above the 200-day MA and from the Apple chart below (red circle) you can see where this occurred in early September. A second golden cross has also formed as you can see where the 100-day MA has crossed over the 200-day MA.
Our chart work is showing a run to $550 is in the works and if it is, Tech should trigger 4,000 this week or next. Apple will be holding an “event” this week so expect some new product news. We doubt a watch or TV will be rolled out but if they are, shares will explode higher.
Select Comfort (SCSS) Slides 24%
We profiled a number of possible earnings trades for our Weekly Wrap and one put option trade we liked was a near-term put option on Select Comfort (SCSS, $18.52, down $5.68)
Here is how the setup looked in our Weekly Wrap on Sunday night (quotes are from 10/11/13 close):
Select Comfort (SCSS, $26.02, up $0.29)
November 22.50 puts (SCSS131116P00022500, $0.70, down $0.10)
Thoughts: These put options are expensive and will probably keep us on the sidelines but could do well if the company misses wall Street’s expectations. (END)
With shares tanking 24% today, the November 22.50 puts (SCSS131116P00022500, $4.30, up $3.10) have soared 258% after closing Wednesday’s session at $1.20.
Opko Health Clears $12/ Options Zoom 500%!
Opko Health (OPK, $12.11, up $1.20) is on a roll and has cleared $12 today. We recommending going long by using the
November 9 calls (OPK131116C00009000, $3.00, up $0.95)
when they were priced at 55 cents and are now up a whopping 500%. We locked-in profits on our LEAP option trade for the Weekly Wrap and we rang the register on our near-term options and suggest you do the same if you are in this trade.
Earnings Season Kicks Into Second Gear
magicJack (CALL, $14.27, up $0.69)
November 15 calls (CALL131116C00015000, $0.60, up $0.25)
November 12.50 puts (CALL131116P00012500, $0.40, down $0.25)
Thoughts: We have traded bullish positions on magicJack in the past but shares can be very volatile both ways. This spreads are a little wide to play this as a possible strangle trade but it could do okay if shares move 10%.
El Paso Pipeline Partners (EPB, $41.22, up $0.01)
November 42.50 calls (EPB131116C00042500, $0.40, flat)
Thoughts: Shares could move significantly based on earnings as the range is for a profit of 40-55 cents with the average at 47 cents. The company has beaten estimates in the last 3 quarters by 4, 7, and 4 cents. The dividend yield is at 6% and the 52-week high is at $44.99.
SolarCity ($SCTY) Clears $40, Options Zoom Triple-Digits
We had SolarCity (SCTY, $46.62, up $8.29) at the top of our Watch List this week as a possible call option trade but we missed getting into the position as shares were a little choppy and we were trying to time a perfect entry point.
We mentioned last week support at $35 needed to hold as shares looked poised to make a move past $40. Here is our homework and chart work from Monday morning’s update (quotes are from the previous Friday’s close):
SolarCity (SCTY, $37.65, up $1.91)
November 40 calls (WEEKLY) (SCTY131101C00040000, $1.40, up $0.50)
November 40 calls (SCTY131116C00040000, $1.40, up $0.60)
Thoughts: Shares could be setting up for a run past $40. The symmetrical triangle that has formed usually foreshadows a major breakout (or breakdown) that could get $50 in play if $40 clears. A drop below $35 would be bearish. (END)
The aforementioned call options have zoomed today with the stock’s surge past $40.
The November 40 calls (WEEKLY) (SCTY131101C00040000, $6.90, up $5.50) are up nearly 400%.
The November 40 calls (SCTY131116C00040000, $8.50, up $6.05) are up over 200%.
Aruba Looking to Push $20
Aruba Networks (ARUN, $18.21, up $0.08)
November 20 calls (ARUN131116C00020000, $0.40, flat)
January 20 calls (ARUN140118C00020000, $1.00, flat)
Thoughts: Shares could be making a run at $20. Support is at $17.75.
Watch Caterpillar if Resistance Fails
Caterpillar (CAT, $83.53, down $0.67)
November 80 puts (CAT131116P00080000, $1.40, up $0.25)
Thoughts: We like these options for a possible test to $80. Resistance is at $85 and if it holds we could go short. Earnings are due out on 10/23.
MGM Continues Strong Yearlong Uptrend
MGM Resorts International (MGM, $20.59, up $0.01)
October 20 calls (MGM131019C00019000, $0.90, flat)
November 21 calls (MGM131116C00021000, $0.90, flat)
Thoughts: We may get into these calls on a close above $20.50. We have called for a run to $20 all year when shares were in the low teens and it now appears $25 could be in the mix.
Opko Health Showing Strong Momentum
Opko Health (OPK, $9.79, up $0.30)
November 9 calls (OPK131116C00009000, $1.20, up $0.15)
Thoughts: Shares cleared $10 yesterday and reach $10.22 – a fresh 52-week high. Our Weekly Wrap subscribers have been in the move from the $8′s and our call LEAP recommendation is approaching a 100% return. We believe shares are headed north of $12 over the near-term.
Solar Stocks Could Pop
SolarCity (SCTY, $35.26, down $0.52)
November 40 calls (SCTY131116C00040000, $1.70, down $0.25)
Thoughts: Shares could be setting up for a run past $40. Open Interest is over 1,000 so the options are liquid with a good bid/ask spread. We need to make sure support at $35 holds before jumping in so watch today’s close.
Opko Health Could Push Double-Digits
Opko Health (OPK, $8.81, up $0.15)
November 9 calls (OPK131116C00009000, $0.55, up $0.05)
Thoughts: Shares could be setting up for a run to $10 and we like these calls on a break above $9.
Financial Stocks Breaking Down
JPMorgan Chase (JPM, $52.24, up $0.35)
October 50 puts (JPM131019P00050000, $0.55, down $0.10)
Thoughts: We could go short JPM on a drop below $51.50.
Dow Blue-Chipper, Nike (NKE), Rocks Earnings
We have been profiling a trade for Nike (NKE, $73.85, up $3.51) all week on our Watch List as shares had been hovering near their 52-week high just north of $70. We have talked about how the stock was recently added the Dow and the impact it would have on the index. Today’s surge to new highs has added 22 points to the blue-chips but hasn’t helped the index as the bears push support.
If you look at our Track Records over the years, you will see we have played Nike’s earnings in the past with call options but we sat on the sidelines this go round as we were uncertain on which way shares would move. Our worry was overseas sales but the company did a tremendous job in North America as earnings came in better-than-expected. We did figure in a 5%-8% move in the stock but to be safe, we listed both calls and puts as a possible strangle option trade.
The October 72.50 calls (NKE131004C00072500, $2.30, up $0.90) closed Wednesday’s session at 55 cents and doubled on Thursday’s run past $70. They have zoomed to a high of $3.65 today after opening at $3.49.
The October 65 puts (NKE131004P00065000, $0.10, down $0.50) were at 50 cents by Wednesday’s close and naturally got crushed on the surge to new highs.
Together, these calls and puts could have been purchased for $1.05 and a 10-contract trade each way would have cost $1,050. A 1-contract trade for each call and put would have cost $105.
If the calls were closed at the open, the trade would be up 243% even with the puts losing nearly 80% of their value. The beauty of a strangle option trade is that the puts can be left open because they are only a dime, or $100. If shares of Nike happen to fall below $65 by mid-October, it is possible the put options could still make a profit. Not likely but possible and they would provide downside protection heading into October. We would close the puts at current levels because $70 should hold as support and was prior resistance.
For those of you that braved the storm and bought call options only, congrats, as your returns should be over 600%!
Diamond Foods Surges 12%, Call Option Up 100%
Diamond Foods (DMND, $24.69, up $2.64) is up 12% today after an analyst upgraded the stock. Shares have reached a fresh 52-week peak of $24.83 and the call options we recommended just 9 days ago have more than doubled.
We profiled the October 24 calls (DMND131019C00024000, $1.60, up $1.05) at 75 cents 9 days ago so if you are in the trade, lock-in HALF profits to make it a risk-free trade with 3 weeks left to go. Set a stop of 90 cents on the other half in case shares pull back off their highs.
Nike Earnings on Deck
Nike (NKE, $69.43, up $0.45) Earnings on Thursday
October 72.50 calls (NKE131004C00072500, $0.70, up $0.10)
October 65 puts (NKE131004P00065000, $0.40, down $0.15)
Thoughts: We have played Nike in the past and we usually use call options. With shares at 52-week highs and the stock being added to the Dow, this is an important earnings announcement tomorrow. We have also listed put options to make this a possible strangle trade because if Nike comes up short on estimates, shares could tank. These are also WEEKLY options we have listed and expire earlier than the regular options.
Apple Pushes $500, Options Pop 200+%
We wanted to give an update on the Apple trade from last Friday that did super swell on Monday. If you were in the trade, hopefully you locked-in half profits on the surge towards resistance. Shares got a huge lift after the company said iPhone sales over the weekend topped 9 million units. Here is how the trade looks inside our Members Area for the Daily:
Apple (AAPL, $490.64, up $23.23)
October 500 calls (AAPL131019C00500000, $10.30, up $5.70)
Thoughts: We said there could be a run to $500 on the iPhone news and shares reached $496.71. The options traded to a high of $12.90 after closing Friday at $4.65. A close above $510 would be bullish for a continued rally towards $550.
CarMax Looking to Wax Earnings
CarMax (KMX, $51.19, down $0.06)
October 55 calls (KMX131019C00055000, $0.50, flat) Earnings on Tuesday
January 55 calls (KMX140118C00055000, $1.75)
Thoughts: We have traded KMX is the past and we should have made the stock a Weekly Wrap recommendation back in the $20′s. We believe the company will beat current expectations and a 5%-10% pop could get shares pushing $55 and fresh 52-week highs. The options only trade in $5 increments and we like the January calls over the October calls as it gives the trade more time to play out. If we take action, we will send out a Trade Alert.
Apple (AAPL, $472.30, up $7.62)
October 500 calls (AAPL131019C00500000, $4.85, up $1.40)
Thoughts: There could be a run to $500 again over the next week or two and we should here some news on how the new iPhones are doing early next week.
Rite Aid Jumps 16%, Options Surge 200%
Shares of Rite Aid (RAD, $4.29, up $0.58) are up 16% after surprising the suit-and-ties with an incredible quarter.
The company was expected to report a loss of 4 cents a share but instead came in with a profit of 3 cents a share on revenue north of $6 billion. Rite Aid also raised next year’s guidance to 18-27 cents a share versus expectations for 14 cents.
We told you a turnaround story was taking place at Rite Aid after adding the stock to our Weekly Wrap portfolio.
Our homework from the weekend showed earnings were due out today but we didn’t expect the explosion to the upside past $4.
Although it is a low priced stock, the option pits have been super active today and we wished we would had played the news because we have been so bullish on the company.
The September 4 calls (RAD130921C00004000, $0.30, up $0.20) went out at 10 cents yesterday and are up 200% today. The calls have traded to a high of 39 cents but these options expire tomorrow so it would have been a super risky trade.
The Rite Aid October 4 calls (RAD131019C00004000, $0.40, up $0.20) are up 100% but have traded to a high of 60 cents for a 200% gain off Wednesday’s close.
If you are not in the stock, it’s not too late as we have said shares could reach $6-$8 over the next year or two.
Adobe Systems (ADBE) Misses Estimates but Shares hit 52-week Highs
This time around, we didn’t feel as comfortable with the company waxing numbers so we sat on the sidelines. After the close last night, Adobe reported a profit of 32 cents a share versus estimates for 34 cents. They also missed on revenue.
Despite the miss, “cloud” revenue is surging so that saved the stock as shares reversed off their lows and ended higher last night. The gains held into this morning as shares have reached a fresh 52-week peak of $52.08.
The September 50 calls (ADBE130921C00050000, $1.84, up $1.36) would have been a risky bet but a nice lottery trade. The call options closed at 48 cents yesterday and are currently up 283%.
We have done well trading earnings announcements over the past few months and Q3 earnings season is just around the corner. While we do have an earnings trade or two we are watching this week and next as possible plays, we are more excited for October as the bigger names start to roll out their numbers. The option pits are more liquid and the quality of trades will be much better so be patient.
As we head to press, the Dow is down 48 points to 15,481 while the S&P 500 is lower by 3 points to 1,701. The Nasdaq is off 6 points to 3,739 and the Russell 2000 is declining a half-dozen points to 1,060.
We could have some afternoon action once the Fed minutes are released so stay locked-and-loaded. We will be using possible plays from our Watch List for new recommendations so make sure you are familiar with what we are watching.
We have some updates for our current trades as well along with a Special Notice.
Diamond in the Rough
Diamond Foods (DMND, $22.56, up $0.21)
October 24 calls (DMND131019C00024000, $0.75, up $0.05)
Thoughts: If $22.50 holds, we can get back into this trade on a break above $23. Earnings are at the end of the month.
Earnings for the Week
These are the companies reporting earnings this week. October is just around the corner so there will be a bevy of possible upcoming option trades but until then these are the cards being dealt. We did well playing Adobe Systems call options on their last earnings announcement back in June as our subscribers made 104% in 24 hours. We got in before the announcement at 65 cents and we were out the next day at $1.45 and $1.20 for an average closing price of $1.325. We have options on Adobe on our Watch List as a possible play and we believe Cracker Barrel could pop 5%-10% when they report their numbers later in the week.
AIR, AHPI, CSUN, CTAS, CVT, Darden Restaurants (DRI), call/ put options, DRAM, DXR, ECT, ECTY, ERA, KB Home (KBH) call/ put options, MSON, OFIX, PKE, PNX, RTI, WPCS
Adobe Systems (ADBE) call options, ALCS, CIM, DCIN, ELMD, FactSet Research Systems (FDS) call options,
Apogee Enterprises (APOG) call/ put options, CLC, Cracker Barrel (CBRL) call options, FedEx (FDX) call/ put options, General Mills (GIS), Manchester United (MANU) thinly traded, Oracle (ORCL) call/ put options, SCS, TWGP
ConAgra Foods (CAG), IHS, MCS, Pier 1 Imports (PIR) put/ call options, Rite Aid (RAD) call options, Tibo Software (TIBX) call/ put options
None worth mentioning
Bears Attack at the Top of Trading Ranges
The Dow dipped 26 points, or 0.2%, to end at 15,300. The blue-chips traded up to 15,345 shortly after the open and came within 5 points of triggering our 15,350 target for a possible run higher. However, resistance held and the low checked-in at 15,283. If the bears can get back below 15,200 today there could be trouble for the bulls next week.
The S&P 500 slipped 5 points, or 0.3%, to settle at 1,683. The index made a run to 1,689.97 but never threatened 1,700 and the next go target for a push to new highs. The low for the session was 1,681 and a close below 1,675 today would be bearish.
The Nasdaq dropped 9 points, or 0.2%, to close at 3,716. Tech kissed 3,731 and made a higher high for the week but the low of 3,713 keeps 3,700 and 3,650 in play on a close below this level. If the bulls can clear and hold 3,725 into the close, next week could be bullish.
The Russell 2000 gave back 7 points, or 0.65%, to finish at 1,048. The small-caps reached a peak of 1,055 but failed to make a higher high as Thursday’s high of 1,057 wasn’t cleared. The bulls were trying to hold 1,050 into the close but it looks as though the bears may have marked their territory. The close below resistance keeps 1,025 in play for the bears but there is still a chance the bulls push 1,075 before a possible pullback if they clear 1,050 by the weekend.
The S&P 500 Volatility Index ($VIX, 14.29, up 0.27) advanced 3% and went out at near its its high of 14.39 after trading down to 13.73. We mentioned at the beginning of the week the bulls would probably get below 15 but struggle at 13.50 and so far that story is playing out. If the bears can tackle 15 on the close today, next week could get nasty.
As we head to press, futures are pointing towards a lower start: Dow (+19); S&P 500 (+1); Nasdaq 100 (+4).
Market Nearing Major Inflection Point
The Dow zoomed 135 points, or 0.9%, to close at 15,326. The blue-chips went out at their high for the day and we mentioned a run to 15,350 could come if 15,200 cleared. This could be the extra fluff like we saw in the other indexes but a close above 15,350-15,400 would be bullish for a possible test to the all-time highs north of 13,658. A close below 15,200 again would be short-term bearish
The S&P 500 added 5 points, or 0.3%, to finish at 1,689. The index was choppy throughout the session but also went out at session highs following a dip to 1,678. Support at 1,650 held but another close below this level would be bearish. The bulls are still trying for a push past 1,700 and fresh all-time peaks.
The Nasdaq dropped 4 points, or 0.3%, to settle at 3,725. Tech struggled and failed to keep its momentum following Apple’s (AAPL, $467.71, down $26.93) pullback but did hold the 3,700 level after kissing 3,704. Apple was one of the key stocks we said to watch this week and a close below 3,700 on the Nasdaq this week would not be good.
The Russell 2000 declined a half-point (-0.38), or 0.04%, to close at 1,055.34. The small-caps traded in the red for much of the morning session but did manage an intraday high of 1,057. There is still a chance a run to 1,075 comes as long as 1,050 holds but a break below this level and then 1,040 would signal a short-term top is in.
The S&P 500 Volatility Index ($VIX, 13.82, down 0.71) went out at its lows after making a run to 13,50. A close below this level would suggest new highs are coming while a close back above 15 could get scary.
As we head to press, futures look like this: Dow (+1); S&P 500 (-1);Nasdaq 100 (+3).
Five Below (FIVE) Soars 17%, Options Surge 395%
We listed a possible earnings option trade for Five Below (FIVE, $48.09, up $7.05) in our Weekly Wrap on Sunday night that was on F-I-R-E Tuesday. The company topped Wall Street’s expectations by 2 pennies as revenue came in $5 million higher. They also raised full-year guidance that sent shorts running for the hills.
The September 45 calls (FIVE130921C00045000, $3.71, up $2.96) closed Monday’s session at 75 cents with the stock at $41. The out-of-the-money calls needed a 10% move in the stock to make the trade worthwhile but it ended up being a windfall as the options traded to a high of $4.
We often mention a 5% move in a stock can add up to a 100% return with the right options and as you can see, a move of 15%-20% in a stock can get you gains of 400%. This is why we play the game and do our homework every week because there is always a trade to the up or downside.
Bulls Push Resistance, Nasdaq Hits New Highs
The Dow added 140 points, or 0.9%, to finish at 15,063. The blue-chips traded to a high of 15,088 and easily held resistance at 15,000. Our near-term target has been 15,200 for the index before a possible pullback but a close above this level could change our mind. The bulls have some breathing room down to 14,800 if 15,000 fails to hold.
The S&P 500 gained 16 points, or 1%, to settle at 1671. The index reached a peak of 1,672.40 and made a nice run at 1,675 that needs to be cleared before a push to new highs can happen. Near-tem support is now at 1,650 and another close below this level would be bearish.
The Nasdaq jumped 46 points, or 1.3%, to end at 3,706 – and a new 52-week high. Tech was building strength all day and reached a peak of 3,708. The index is now just 3% away from our year-end prediction of 3,800 we called for back during the first week of February (golf clap).
The Russell 2000 surged 16 points, or 1.6%, to close at 1,046. The small-caps made a strong push past 1,040 and went out at their high while falling just short of resistance at 1,050. If cleared, the 52-week and all-time high of 1,063.52 could trigger.
The S&P 500 Volatility Index ($VIX, 15.63, down 0.22) traded just past 16 on the open before falling to 15.22 late in the day. We have repeatedly said the bulls will need to get the VIX below 15 in order for the market to make a run at new highs but this is no time for a cigar as the index was nearly unchanged. The VIX could get to 13.50 on a close below 15 that would push the S&P towards 1,700 but something feels funny. A close above 17.50 could come from nowhere and still cause chaos so keep this in mind.
We are looking to take profits in a couple of our September plays this week and we could have a Profit Alert after the open depending on how Tech does.
As we head to press, futures look like this: Dow (+84); S&P 500 (+10); Nasdaq 100 (+21). Subscribers, check the Members Area for the updates.
Diamond Foods Could be on the Move
Diamond Foods (DMND, $22.31, up $0.21)
September 23 calls (DMND130921C00023000, $0.45, up $0.10)
Thoughts; Earnings are out today after the close. These options could be a nice “lottery” play on a run to $25 as we are expecting a possible 10% move. If the company disappoints Wall Street the September 21 puts could double and closed at 25 cents on Friday.
Infoblox Surges 16% on Sweet Quarter
We highlighted Infoblox (INFO, $40.79, up $5.55) this week as a possible earnings trade for our Daily newsletter. We had a great feeling shares would push $40 on better-than-expected numbers and they didn’t disappoint.
We wanted to play the options on the possible move as we listed them on Tuesday morning before the market opened but noted that they were thinly traded. Here is how the trade looked on our Watch List (prices were as of the August 30 close):
Infoblox (BLOX, $34.90, up $0.16)
September 35 calls (BLOX130921C00035000, $2.65, up $0.15)
Thoughts: These options were active on Friday and the option chains only trade in $5 increments. The September 40’s have low open interest and the bid/ask is too wide for us to play at 80 cents/ $1.15. (END)
Well, as you can see from the graph below below, the September 35 calls are up 124% on today’s news and have traded to a high of $6.20. Although the 40’s were thinly traded, we should have pulled the trigger on the 35’s but we rarely like paying over $2 for an option.
This is one of those cases but for those of you that get in, lock-up profits!
NPS Pharmaceuticals POPS 7%
1:45 pm (EST)
For those of you that subscribe to our Weekly Wrap, shares of NPS Pharmaceuticals (NPSP, $27, up $0.58) have reached another fresh 52-week peak of $28.18 today and we have been mentioning there could be a run past $30 coming.
Microsoft Takes a Hit/ Salesforce Call Option Update
Microsoft (MSFT, $31.88, down $1.52)
October 30 puts (MSFT131019P00030000, $0.45, up $0.20)
Thoughts: Shares could be headed for $30 or worse. The company may have reached with its Nokia deal and continues to struggle with innovation. Our near-term target is $30 by the end of the month, possibly $27 by late mid-October.
Special Note: We have a a sweet, free trade last week on Salesforce.com (CRM, $49.58, up $0.45) as we mentioned there was a good chance they beat Wall Street’s estimates. Our homework was spot on as shares made a run at $50 last Friday and cleared this level yesterday after hitting a fresh 52-week peak. Here is how the official trade looked in our Members Area:
Salesforce.com (CRM, $49.58, up $0.45)
September 47 calls (CRM130921C00047000, $3.00, up $0.20)
Entry Price: $0.88 (8/26/13)
Exit Target: $1.75+ (closed half at $3.00 on 8/30/13)
Stop Target: $2.75 on other half (Hard Stop)
Action: Shares traded to a 52-week high of $50.15 yesterday as the options reached $3.50. We have moved the Hard Stop up to $2.75 on the other half of the trade.
Infoblox (BLOX, $34.90, up $0.16)
September 35 calls (BLOX130921C00035000, $2.65, up $0.15)
Thoughts: These options were active on Friday and the option chains only trade in $5 increments. The September 40’s have low open interest and the bid/ask is too wide for us to play at 80 cents/ $1.15.
eBay Breaking Down
Watch eBay today as shares look like they are headed below $50. We have a near-term target of $45 once it does and these options will do well.
eBay (EBAY, $50.99, up $0.56)
September 50 puts (EBAY130921P00050000, $0.80, down $0.20)
October 50 puts (EBAY131019P00050000, $1.70, down $0.25)
Thoughts: Resistance is at $52.50 and where we may establish a short position as we expect shares could test $48-$47 once $50 cracks.
Bulls Get Relief
The Dow gained 48 points, or 0.3%, to close at 14,824. The opening dipped to 14,760 was followed by a triple-digit run to 14,867. The bulls will be trying to clear 15,000 ahead of the 3-day weekend while the bears would like to get the blue-chips under 14,600.
The S&P 500 added 4 points, or 0.3%, to settle just under 1,635. The index reached a high of 1,641 after testing 1,627 but still fell short of triggering 1,650. Current support at 1,625 stuck like glue and we wouldn’t be surprised to see this range hold through Friday’s close.
The Nasdaq jumped 14 points, or 0.4%, to end at 3,593. Tech held green from start to close after reaching 3,607 but failed to hold 3,600. There is still risk down to 3,550-3,500 while a close above 3,625 would be bullish heading into next week.
The Russell 2000 advanced 3 points, or 0.3%, to end at 1,016. The small-caps kissed 1,020 but had trouble pushing resistance that served as prior support at 1,025. The index will likely drift 1% higher of lower for the rest of the week while holding 1,000 and staying below resistance.
The S&P 500 Volatility Index ($VIX, 16.49, down 0.28) popped above 17 to 17.11 but the bears were unable to push 17.50. The bulls tried to get 15 in play but stalled at 16.10. A close above or below 15-17.50 will be the next clue for short-term direction.
As we head to press, futures look like this: Dow (+44), S&P 500 (+4); Nasdaq 100 (+13).
Subscribers, check the Members Area for the dates.
Looking at LEAPS
The slick talking pros are once again sitting on the sidelines and are suggesting you do the same. In some ways it makes sense to them but we always like to have open positions in any market at all times. It may be risky but that is where opportunity is.
We can also afford to be aggressive because we are having another phenomenal year. We plan to be extremely busy starting next week as we add new trades to our Daily and Weekly Wrap. We are especially excited about our Weekly Wrap because there are few LEAP options we may recommend.
LEAPs are longer-term options that can be used to predict where a stock will be in 6-12 months. The options are usually more expensive and can run in the $4-$6 range, or more.
This means a 10-contract option trade on a stock at $45 could cost you $5,000 for a February 50 call option that expires in 2014 and is trading for $5. The good news is that we don’t have to buy that many as we can buy two $5 call options for $1,000. We like to keep all of our trades between $1,000-$2,000 per position and LEAPs offer an incredible way to play momentum stocks.
In order to make a 100% return on the options, shares would need to reach $55 by next February on the $45 stock. If so, the options would be worth $10 and a $1,000 would be worth $2,000 on a 2-contract trade with the call options at $5.
Now, in order to make 100% on the stock, shares would have to zoom to $90. If you invest $900, it would buy 20 shares. At $55, the investment would be worth $1,100, or a little over 20%.
At $90, a $900 investment would be worth $1,800 by owning the 20 shares on the move from $45. This is a nice 100% return.
However, if shares do reach $90, the options would be worth $45 and the $1,000 invested in the 2 call options at $5 would be worth $9,000 for a 900% return. This is what we are looking to accomplish as we ramp up the action in our Weekly Wrap. If you still don’t understand LEAPs, email us. More importantly, if you are not a Weekly Wrap subscribers, we urge you to get on board with this newsletter by Tuesday’s Wall Street open. We closed out our 100th and 101st WINNING trades yesterday and we are running with a 75% win rate for all of our trades this year as we enter the second half of our sixth-straight profitable year.
We know we have been long winded but we wanted to talk about the incredible opportunity options offer and again, we can’t wait for next week to get started.
As we head to press, the Dow is up 69 points to 14,845 while the S&P 500 is higher by a 10 points to 1,639. The Nasdaq is advancing 24 points to 3,602.
We do have a few remaining trades in play that we are winding down so let’s go check on them. Subscribers, check the Members Area for the updates.
Market Tumbles in Final Hour of Trading
The Dow dropped 64 points, or 0.4%, to close at 14,946. The blue-chips raced to a high of 15,049 but sputtered out well below 15,100 while failing to hold 15,000 in the process. The index went out at its low for the session and keeps 14,800 in play. Specifically, watch 14,880 and last Wednesday’s low for confirmation.
The S&P 500 fell a half-dozen points, or 0.5%, to end at 1,656. The index reached a peak of 1,669 and made a run at 1,675 before finishing at its lows for the day as well. Support at 1,650 has been shaky and another close below 1,640 gets 1,625 back in the mix.
The Nasdaq slipped less than a point to settle at 3,657. Tech looked strong all morning long and traded up to 3,684 – just 10 points off its 52-week high, before the collapse back to 3,650. The low of 3,652 was a “good” sign but there is still risk down to 3,600 this week.
The Russell 2000 finished with a slight gain (0.22) of less than a point to 1,038 after pushing 1,044 and clearing 1,040. The real test comes at 1,050 and as long as 1,025 holds there is chance for a run at new highs into September. Another break below this level gets 1,000 back in the picture.
The S&P Volatility 500 Index ($VIX, 14.99, up 1.01) amazingly held 15 after kissing 15.01. The VIX traded down to 13.90 shortly before lunch but we mentioned the bulls need to get the VIX under 13.50 if they hope to push the top of the trading ranges and new highs.
As we head to press, futures look like this: Dow (-31), S&P 500 (-3); Nasdaq (-4).
We have a mixture of a few calls and puts in play and we have Hard Stops on some trades to protect profits. We have some other trades that should be closed this week so we will be entering September with a full round of ammo to play the breakout of the current trading ranges. We have gotten some nice pin action this month and we have been on a roll so let’s go see where things are at. Subscribers, check the Members Area for the updates.
Salesforce (CRM) Earnings on Thursday
Salesforce.com (CRM, $43.59, down $0.16)
September 47 calls (CRM130921C00047000, $0.85, down $0.05)
Thoughts: Earnings are out this week on Thursday and this is an important quarter for the company. If shares trade above $44, we could send out a Trade Alert if we take a position.
Bulls on Track for Weekly Win
The Dow added 66 points, or 0.4%, to finish at 14,963. The blue-chips traded to a high of 14,989 but newly formed resistance at 15,000 proved to be a challenged. The index ended a 6-session slide and the bulls would like to clear this level ahead of the weekend. The bears obviously don’t as they eyeball 14,800.
The S&P 500 gained 14 points, or 0.9%, to settle at 1,656. The index reached a peak of 1,659.55 and had its head above the 50-day MA (1,658.87) but still closed below this level for the fourth-straight session. A close above this level could get 1,675 back in play while a drop back below 1,650 keeps 1,625-1,600 in play.
The Nasdaq jumped 39 points, or 1.1%, to close at 3,638. Tech ended a point of its high and cleared 3,625 in the process. This gets 3,650 bacl in action and a close above this level would be bullish. If the bulls are unable to hold 3,625 look for another test down to 3,600 today.
The Russell 2000 advanced 14 points, or 1.4%, to end at 1,036. The small-caps also went out at session highs but failed to kiss 1,040. This area had served as strong support up until this week and is now trying to hold as resistance. A close above this level would be bullish heading into next week while a finish under 1,025 by the close would be bearish. The 50-day MA for the Russell is at 1,021.21 so the bulls have a 1.5% cushion before they are in danger again.
The S&P 500 Volatility Index ($VIX, 14.76, down 1.18) was trading just below 15 on the shutdown of the Nasdaq after peaking at 15.26. This was a slightly bullish sign but a close below 13.50 would confirm a temporary bottom is in. Another trip above 15 keeps 17.50, and possibly 20, in the mix.
We have been so close to adding new trades this week and we have been thron a few curveballs as the Fed minutes were too volatile to trade and the flub by the Nasdaq yesterday kept us out of a couple of trades we liked. One was an earnings play and the other was on a stock we feel is headed below $50.
Let’s see how the action is during the first 30 minutes of trading as we could have a new trade and we could also have a few Profit Alerts. If we take action we will send out an alert. We have added a few more new candidates as possible options trades for today or next week so make sure you check them out to see what we are looking at.
As we head to press, futures look like this: Dow (+6); S&P 500 (+2); Nasdaq (+4).
Bear Continue Assault
The Dow dropped 105 points, or 0.7%, to finish at 14,897 on Wednesday. The blue-chips traded down to 14,880 ahead of the Fed minutes but rebounded and touched 15,019 (+17) before ending near its low for the session. The next wave of support lies at 14,800 and will likely be tested on further weakness. If this level cracks, the bears could push 14,600 in a hurry. The bulls will focus on clearing 15,000 that has suddenly become near-term resistance.
The S&P 500 fell 9 points, or 0.6%, to settle at 1,642. The index touched a low of 1,630 before bouncing back to kiss 1,656 then fading. Resistance at 1,665 was never really threatened and the lows keep 1,625-1,600 in play. It was the second-straight close below for the 50-day MA for the S&P 500 and the finish back below 1,650 was bearish.
The Nasdaq slipped 13 points, or 0.4%, to close at 3,599. Tech showed some strength in the morning and was holding 3,600 before the whipsaw action into the bell. The index reached 3,630 late in the day but once again failed to hold resistance at 3,625. The finish below 3,600 keeps 3,550-3,500 on the bears map.
The Russell 2000 gave back 7 points, or 0.7%, to end at 1,021. The small-caps tested the 1,018 level twice before making a run to 1,030. Resistance is at 1,040 but seemed like a mile away to the bulls. The bears are still trying to push the 1,000 level and we mentioned a dip or close below 1,013 should do it.
The S&P 500 Volatility Index ($VIX, 15.94, up 1.03) reached a peak of 16.56 and we have been warning once 15 cleared this level could be tested. If breeched, the VIX could trigger 20.
As we head to press, futures look like this: Dow (-23); S&P 500 (-3); Nasdaq 100 (-2). Subscribers, check the members Area for the updates.
Market Rebounds but Dow Slips Again
The Dow slipped 7 points, or 0.1%, to close at 15,002. The blue-chips fell below 15K to 14,992 on the open but recovered and were able to push 15,074. However, another final hour selloff pushed the index back into the red for its fifth loss in-a-row. Resistance at 15,100 was never really challenged and there is still risk down to 14,800. A close above 15,100 and then 15,200 would signal a short-term bottom is in.
The S&P popped a 6-pack, or 0.4%, to settle at 1,652. The index held green from start to finish and reached a peak of 1,658 while reclaiming the 1,650 level in the process. However, the index failed to clear its 50-day MA (1,057.65) into the close. Resistance is at 1,675 and could be challenged if the 50-day MA and 1,665 is cleared. Another close below 1,650 would signal 1,625-1,600 is in play again.
The Nasdaq gained 24 points, or 0.7%, to end at 3,613. Tech cleared the 3,600 level shortly after the open as it traded to a high of 3,625.26 and held support into the close. We mentioned the bulls needed to clear 3,625 by the bell to get 3,650 back in the mix but they fell short of clearing resistance. The bears are still eyeing 3,550-3,500 as a possible resting area and the next 1% move could determine the next trend.
The Russell 2000 surged 15 points, or 1.5%, to settle at 1,028. The small-caps looked strong on the move past 1,025 but will need to clear 1,040 before we would say they are out of the woods. A dip or close below 1,013 and Monday’s low will likely get 1,000-990 in play.
The S&P Volatility Index ($VIX, 14.91, down 0.19) closed back under 15 after trading up to 15.25 at the start of trading. While the close was positive, the higher high was a slight negative and keeps 17.50 on the radar. A close under 13.50 would be bullish.
We have some bad earnings news this morning that could be good news for one of our current options when shares open for trading. Subscribers, check the Members Area for the updates.
Dow Pushes 15K, S&P Volatility Index ($VIX) Clears 15
It was another lower Monday on Wall Street as the VIX cleared 15 while the S&P 500 closed below support. Tech was having a good day but joined the other indexes in the red after it too, closed below support. If you didn’t check the charts we drew up for you on Sunday and Monday, do so today as there were good clues the market could experience further weakness.
The Dow dropped 70 points, or 0.5%, to end at 15,010. The blue-chips made a run to 15,106 after the open but the 100-day MA at 15,107 (moving average) was a brick wall. The drift lower keeps 15,000-14,800 in play as yesterday’s low checked-in at 15,005. Resistance is at 15,100-15,200.
The S&P 500 fell nearly 10 points, or 0.6%, to settle at 1,646. The index joined the Dow in closing below its 50-day MA at 1,657 and also failed to hold the 1,650 level. This gets 1,625-1,600 in play if there is no rebound today. The 100-day MA is at 1,632.
The Nasdaq slipped 13 points, or 0.4%, to finish at 3,589. Tech looked strong for much of the first half but faded in the final hour of trading to close below 3,600. There is further risk down to 3,550-3,500 on continued weakness. A close back above 3,600 and then 3,625 would be bullish but that might be asking a bit much given the current environment.
The Russell 2000 declined 11 points, or 1.1%, to close at 1,013. The small-caps tried to clear 1,025 on the open and when they didn’t we knew it would be a rough day for the bulls. We said there is risk down to 1,000 on Friday’s close below this level and the index went out at its low for the session. Not a good sign.
The S&P 500 Volatility Index ($VIX, 15.10, up 0.73) gained 5% after trading to a high of 15.20. If you flinched it was okay as we said to expect 15 to trip once 13.50 was cleared on the close. There is a chance the VIX reaches 17.50-20 on a continued pullback while a close back below 13.50 would be bullish.
Subscribers, check the Members Area for the updates.
9:00am (EST) (quotes are from Friday’s close, August 16, 2013). Be sure to read our Weekly Wrap as we are giving away free 2-week trials through the end of the month!
Possible Earning Trades Week of 8/18/2013
Intuit (INTU, $64.24, up $0.41)
September 67.50 calls (INTU130921C00067500, $0.60, up $0.05)
September 60 puts (INTU130921P00060000, $0.50, down $0.12)
Thoughts: Earnings are due out on Tuesday. Estimates are calling for the company to earn 9 cents a share OR lose 2 pennies a share for the recently ended quarter. This is based on guesses by 19 suit-and-ties.
The company has beat forecasts the last 3 quarters by 3 cents, on average, but missed a year-ago at this time by 3 cents. With the average estimate at 3 cents a share, the company will likely come in at a profit of 6 cents profit or break even.
A loss of more than 2 cents a share could lead to a test to $62-$61. Anything over a dime profit a share could lead to a run past $65.
RetailMeNot (SALE, $32.75, up $0.49)
September 35 calls (SALE130921C00035000, $1.45, up $0.20)
October 35 calls (SALE131019C00035000, $1.90, up $0.20)
Thoughts: Earnings are due out on Thursday. Shares reached a 52-week high of $33.65 on Friday in a weak environment. These options are thinly traded and the bid/ ask is too wide for us to probably get into but we will be watching them this week.
Madison Square Garden (MSG, $57.27, down $0.43)
September 55 puts (MSG130921P00055000, $0.98, down $0.11)
Thoughts: Earnings on Wednesday. Shares could test double-nickels if they miss Wall Street’s bar. Resistance is at $59 and could be tested if the company matches or beats estimates.
Synopsys (SNPS, $36.96, up $0.04)
September 40 calls (SNPS130921C00040000, $0.20, flat)
Thoughts: Earnings on Wednesday. The options only trade in $5 increments so these calls could be a stretch but they are cheap enough to use as a lottery play.
Bears Flex Muscles
The bears are pushing the 50-day MA’s (moving averages) and the July lows but we mentioned yesterday the indexes are still in a trading range. There could be a little more downside action if there is not a rebound today but the bulls still have some wiggle room before we would push the panic button.
Of course, if there is a continued pullback, DON’T be nervous to play a market correction because you can make just as much money shorting stocks and the market as you can to the upside.
The Dow dropped 225 points, or 1.5%, to settle at 15,112 on Thursday. The blue-chips traded to a low of 15,094 and the close below 15,200 gets 15,000-14,800 in play. A close back above this level would stop the bleeding heading into next week.
The S&P 500 fell 24 points, or 1.4%, to end at 1,661. The break below 1,675 was nasty and we said it could lead to 1,650. Yesterday’s low checked-in at 1,658. A close below 1,650 could lead to 1,625-1,600 and where we would expect buyers to come in if there is no rebound today.
The Nasdaq declined 63 points, or 1.7%, to finish at 3,606. We mentioned a close below 3,675 would get 3,625-3,600 and yesterday’s low was 3,600.96. There is risk down to 3,550-3,500 on continued weakness while a close back above 3,650 would provide some stability for the bulls.
The Russell 2000 tanked 20 points, or 1.9%, to close at 1,027. We have warned that a break below 1,040 would be bearish for a possible dip to 1,025-1,000 and Thursday’s low was 1,026. The bulls would love to get the index back above prior support but there could be further downside action before a bottom is in.
The S&P Volatility Index ($VIX, 14.73, up 1.69) surged 13% on the market’s slide and closed above 13.50 but not 15. If you flinched, punch yourself twice because we said not to until 15 cracks. Thursday’s peak was 14.85. Now that the VIX is near 15, we can prepare for a possible run to 20 but needs to be confirmed with a close above 15 today.
As we head to press, futures look like so: Dow (+14); S&P 500 (+3); Nasdaq 100 (+7).
We got some great news after the close on Thursday and it’s been a sweet week so let’s go see where things are at with our current option trades. Subscribers, check the Members Area for the updates
Bears Growl as Dow Dips Triple-Digits
The Dow dropped 113 points, or 0.7%, to close at 15,337. The blue-chips traded to a low of 15,316 following a 2-point pop after the open. The close below 15,350 was bearish but may be “stretched” and puts 15,200 in play on further weakness. The bulls will now need to clear 15,400 to regain the momentum as it was the first close below this level in over 2 months (since July 10).
The S&P 500 slipped 8 points, or 0.5%, to settle at 1,685. Imagine that. The index fell to a low of 1,684.83 and we have warned a close below 1,685 could lead to 1,675-1,650. The high checked-in at 1,695 on the open but resistance at 1,700 was never really threatened.
The Nasdaq gave back 15 points, or 0.4%, to finish at 3,669. Tech fell to a low of 3,668 and closed below the 3,675 level but easily held 3,650. This could be tested today with Cisco Systems (CSCO, $26.38, up $0.06). Shares were slammed in after-hours last night, falling nearly 10% and were last seen at $23.84 after the company trimmed its workforce. Earnings were ahead of expectations by a penny and if the losses hold into this morning’s open, shares could find support as the dividend yield pop back above 3%. The $1.80 annual dividend has a current yield of 2.6%. If shares fall down to $23-$22, we could add the stock to our Weekly Wrap. Resistance remains at 3,700.
The Russell 2000 declined 4 points, or 0.4%, to end at 1,047.80. The small-caps traded down to 1,047 but were never in real danger of triggering 1,040. The close below 1,050 again was slightly bearish and needs to be watched but we still fell as though new all-times are just ahead.
The S&P 500 Volatility Index ($VIX, 13.04, up 0.73) jumped 6% and traded up to 13.09. The VIX was in the green all session long but stayed below 13.50.
As we head to press, futures look like this: Dow (-xx); S&P 500 (-xx); Nasdaq 100 (-xx). We could have another Profit Alert shortly after the open
Subscribers, check the Members Area for the updates.
Bulls Rebound but Fail to Clear Resistance
The Dow gained 31 points, or 0.2%, to close at 15,451 on Tuesday. The blue-chips traded down to 15,342 shortly after the open but support at 15,350 held and the bounce reached a peak of 15,504. The bulls had trouble holding 15,500 into the close and still need to clear 15,600 before we would say the next trend is developing but yesterday’s action felt bullish.
The S&P 500 added 4 points, or 0.3%, to end at 1,694. The index kissed a low of 1,682 but once again the bulls were able to hold 1,685. Resistance is at 1,700 and yesterday’s high checked-in at 1,696.81.
The Nasdaq jumped 14 points, or 0.4%, to settle at 3,684. Tech tested a low of 3,648.82 but support at 3,650 held and the bulls made a push to 3,691. Resistance at 3,700 still looms but a break above this level would be extremely bullish.
On the flip side, we were a little disappointed to see the Russell 2000 finish with a 2 point loss, or 0.2%, to 1,052. The small-caps kissed 1,046 and easily held 1,040 after an opening pop to 1,054.76. The slight takeaway is that the index held 1,050 for the second-straight session and is just 1% away from triggering new highs.
The S&P 500 Volatility Index ($VIX, 12.31, down 0.50) dropped 4% after trading to a high of 13.37. We have have been saying the VIX could test 11-10 on another run to new highs as long as 13.50 holds and Tuesday’s action was also bullish.
As we head to press, futures are showing a slightly lower open: Dow (-42); S&P 500 (-4); Nasdaq 100 (-4).
We have a lot to cover with our current trades so let’s get on it.
Trading Range Continues
The bulls and bears split Monday’s session as the market remained stuck in its mini-trading range that we covered in our charts from over the weekend. It was the same story as last Monday where the broader indexes fell while Tech and the small-caps pulled their weight.
The Dow dropped a 6-pack, or 0.04%, to close at 15,419. The blue-chips traded to a low of 15,359 on the open before bouncing back to test a high of 15,441. Support at 15,350 was once gain challenged by the bears while the bulls failed at sniffing 15,600. A break above or below these levels could be a signal to go long or short but we will need other clues to confirm the possible new trend.
The S&P 500 slipped 2 points, or 0.1%, to settle at 1,689. The index traded down to 1,683.35 and fell below 1,685 before making its way up to 1,691.45 shortly before Wall Street’s lunch break. Although the index triggered positive territory after the opening dip – and held 1,685 – the low was lower than last week’s kiss to 1,684.91. Lower lows and lower highs are not good signs on a technical basis and 1,675 will be crucial in holding if there is further weakness. A push past 1,700 is still less than 1% away and a good headline over the next day or two could get the bulls running.
The Nasdaq gained nearly 10 points, or 0.3%, to finish at 3,669. Tech showed the most strength after opening at 3,645 and trading its way up to 3,673. The bears made their fifth-straight attempt at getting a close below 3,650 while the bulls have failed to clear 3,675. The next 1% close higher or lower could be the start of the next trend.
The Russell 2000 was higher by 5 points, or 0.5%, and ended at 1,053. The small-caps opened at 1,043 and kissed 1,042 before going ou at session highs. The bulls held 1,040 and cleared 1,050 and this was a very bullish sign.
The S&P 500 Volatility Index ($VIX, 12.81, down $0.60) opened at 13.52 and tested 13.57 before dropping like a rock to 12.80 by noon. There was another run past 13 in the second half of action and we were watching 13.50 to hold but it was never really challenged by the close.
We came into the week (and month) with a bullish feeling despite all the chitchat for a major pullback. We know trading ranges can be frustrating but the bulls and bears are getting ready to throw down and a 3%-5% move could be coming – to the upside.
The Watch List is loaded with possible option plays and while we like the bulls we also have to be prepared for a continued trading range if we don’t get the follow-through we will be looking for today, or a breakdown on lower lows.
As we head to press, futures look like this: Dow (+12); S&P 500 (+2); Nasdaq 100 (+4). We could have New Trades shortly after the open for both our Daily and Weekly Wrap so check your email inboxes between 10am-11am or follow us on Twitter to know the instant we take action!
BlackBerry (BBRY) Confirms Rumors
Shares of BlackBerry (BBRY, $10.47, up $0.71) are up 7% and have traded to a high of $10.50 today after the company confirmed it is exploring strategic alternatives.
The stock was halted ahead of the open around 7:40am (EST) and started trading pre-market about an hour later. Shares gapped up $10.47 at 8:30am and officially opened on Wall Street at $10.43 this morning.
We have followed shares of BlackBerry (formally known as Research In Motion) for over a decade and we recently made a nice double-digit profit in June for our Weekly Wrap subscribers ahead of the earnings announcement.
We knew there was a good chance shares were going to run up ahead of the news based on expectations but we warned to get out at $14 because we had a feeling they would miss Wall Street’s estimates.
It was a classic ” buy-the-rumor, sell the news” event as the stock tumbled from $14.48 to $10.46 after the company missed the suit-and-ties numbers.
We said at the time we would wait for shares to fall below $10 to $8 and where would possibly start another position for both the Daily and Weekly Wrap.
BlackBerry dropped below $10 on the first of July and by the end of the month had prints in the $8’s. Shares came into August at $8.84 and popped above $9 last Monday after testing a low of $8.72 on back-to-back days to end the prior week. The double-bottom came in went like a shot of whisky.
We knew then that shares might not trade exactly down to $8 so we wanted to get in a trade before $10 was cleared. The chart we drew up in the sand from the weekend looked like this:
As you can see, there is a big gap to fill from $11 to $14. We were/ are looking to get into some near-term and longer-term call options this week before the jump past $10 to play the move but now the action feels crowded.
There is still a chance we establish a position but we will wait until the hoopla settles and we want to see if shares hold $10 into the close and for the rest of the week.
The options we are following are on our Watch List and we are tracking them daily. There are also a number of other trades we like as possible candidates, both call and put options, but we stressed patience in our market commentary this morning and to wait for resistance or support to clear or crack before starting new positions.
Also, be sure to check out our Weekly Wrap for FREE on our blog post for the month of August and make sure you sign up for the 2-week free trial. We could have New Trades this week and you will also get all of our Trade Alerts during your free trial. And do us a favor and tell your friends as the offer won’t last much longer!
Bulls Bounce Back
The Dow added 27 points, or 0.2%, to close at 15,498 on Thursday. The blue-chips traded to a low of 15,418 and we mentioned it would be crucial they held 15,400. Check. While we knew the rebound off the lows didn’t have enough momentum to clear resistance at 15,600, we wanted to see the bulls clear 15,500 into the close and you see where they ended. If there is a triple-digit drop today we could use put options on the break below 15,400 but we usually don’t open new positions on Friday’s. However, we do believe the next 100 points up or down on the Dow will be the start of the next trend.
The S&P 500 gained over 6 points, or 0.4%, to settle at 1,697.48. The index fell to a low of 1,688 and we have warned a drop below 1,685 could lead to 1,675-1,650. The high checked-in at 1,700.18 as the bulls just missed the all clear sign. A close above 1,700 would be bullish for a run to 1,710 and would rekindle our 1,725 target
The Nasdaq popped 15 points, or 0.4%, to finish at 3,669. Tech fell to a low of 3,649.64 and tripped the 3,650 level before making at run at 3,675 (.71). We said a close back above this level could lead to a run at 3,700 again but both the bulls teased each other and us from initiating new positions.
The Russell 2000 advanced 5 points, or 0.5%, to end at 1,049.38. The small-caps traded down to 1,044 but easily avoided the trap door at 1,040. The index reached a peak of 1,051.82 but failed to hold 1,050.
The S&P 500 Volatility Index ($VIX, 12.73, down $0.25) traded up to 13.13 and held 13.50 again before dropping 2%.
As you can clearly see and read, the market is still in a mini-trading range with pressure to the downside if there is another pullback today. A bullish Friday and a close above the levels we have outlined could lead to higher prices next week while a close below support could be the start of a leg lower.
As we head to press, futures are shaping up for a positive open: Dow (-50); S&P 500 (-5); Nasdaq 100 (-6). Keep an eye on our possible index option trades because we could take one or two of them if we get the signal.
Subscribers, check the Members Area for the updates.
Bears Riding 3-Session Win Streak
The S&P 500 slipped a 6-pack, or 0.4%, to settle at 1,691. The index tested a low of 1,684.91 and we mentioned to watch the 1,685 mark as a possible warning sign 1,675 would come into play. There is further risk down to 1,650 on a break below this level and where we would buy put options but yesterday’s dip held and another close back above 1,700 would be bullish.
The Nasdaq declined 12 points, or 0.3%, to finish at 3,654. Tech kissed 3,633 and fell below the 3,650 level before holding it by the close. We mentioned at the start of the week there was a cushion at 3,625 before 3,600 comes into play and the close above 3,650 keeps 3,700 in the picture.
The Russell 2000 gave back 8 points, or 0.7%, to close at 1,044. The bulls tried to hold 1,050 but we said there was additional support at 1,040 and a level that is imperative the bulls hold. Yesterday’s low was 1,042 before the slight rebound and a close back above 1,050 would settle some nerves. However, it was the second-straight nasty loss for the Russell following Tuesday’s 1% drop.
The S&P 500 Volatility Index ($VIX, 12.98, up 0.26) surged to a high of 13.91 before settling below 13. We said not to flinch until there is a close above 15 but keep your eyes on a close above 13.50. There is still a chance 11 comes into play on a breakout to new highs and we have a good feeling by this time next week one of these levels will trip.
As we head to press, futures look like this: Dow (+60); S&P 500 (+6); Nasdaq 100 (+13).
There were a few earnings trades we liked into yesterday’s close but we decided to hold off and may play a directional call or put option play based on where the market opens and trades to. We have given you specific levels to watch for on a downside break and where we will use puts options but if support holds, we will continue to trade call options to the upside.
We have added some index options trades to play a breakdown, or possible breakout, so put them on YOUR Watch List as well so you will be prepared to take action once we get the signal.
Live Nation Entertainment (LYV) Soars 10%, Options Zoom 200%
We have been fortunate enough to close several triple-digit winning options trades this week on a couple of earnings trades but they are always tricky because there are so many factors that come into play. Not only are earnings per share looked at, Wall Street and investors judge revenue growth, current quarter and full-year outlooks, and margins. A stock can also rise or fall in sympathy with the market and with today’s pullback in several large-cap names, call options are getting crushed if you are on the wrong side of their earnings hits or misses.
This is where research comes into play and we put in triple-digit homework hours a week to find the best trades. We have said this is becoming a stock picker’s market and this is where research, chart work, and fundamental analysis come into play. We targeted a few companies this week that would go unnoticed on Wall Street’s radar and we were rewarded again with today’s surge in shares of Live Nation Entertainment (LYV, $17.86, up $1.54).
Shares are up a whopping 10% after smashing the suit-and-ties earnings forecast. The slick talking pros had penciled-in $0.10 a share on revenue of $1.62 billion. The company tripled that as they earned $0.30 a share while sales came in at $1.68 billion.
The beats on the top lines were big as shares broke out to multi-year highs. We did some quick chart work last night and said shares could run to $20, possibly $25, but we decided to ring the register on our call options as they were August options and they expire next week.
We were in these calls at 40 cents and they closed at 35 cents heading into yesterday’s close and we told subscribers we should be good to go as we expected a fantastic quarter. We set limit prices to close half the position at $1.20 this morning and our target was hit on the open. It appeared shares were struggling to clear $18 just before 10am so we decided to close the other half of the trade at $1 to lock-in profits.
Shortly afterwards, $18 cleared as the stock ran to a high of $18.19 but are once again below adult levels. Our average close was $1.10 and the trade returned 175% in 48 hours. We could have tried to squeeze more juice out of the call options but we are sure you know bulls make money, bears make money, and pigs get slaughtered.
Live Nation Entertainment (LYV) Smashes Earnings Estimates
The Dow fell 93 points, or 0.6%, to settle at 15,518 on Tuesday. The blue-chips came close to losing triple-digits for the first time since late June after falling to a low of 15,473 but kept their streak alive at 26-straight sessions without a 100-point loss. International Business Machines (IBM, $190.99, down $4.51) slipped 2% following another analyst downgrade and accounted for 34 red points, or nearly a third of the losses. Support is at 15,400 with resistance up at 15,600.
The S&P 500 declined nearly 10 points, or 0.6%, to close at 1,697. The index kissed 1,693 shortly after the open and was unable to clear and hold 1,700 again by the close. There is additional help at 1,685 but a break below 1,675 would be extremely bearish.
The Nasdaq gave back 27 points, or 0.4%, to settle at 3,665. Tech slipped below support at 3,675 but held the second wave at 3,650 as the low checked-in at 3,654. A break below the latter would be bearish while a close above 3,700 would signal the next leg higher.
The Russell 2000 dropped 11 points, or 1%, to finish at 1,052. The hit to the small-caps was more significant than the ones to the other indexes but 1,050 held as the low checked-in at 1,050.08. A significant breakdown could occur if the bulls fail to hold 1,040 but there is backup support at 1,025 before 1,000 comes into play. A 5% pullback at current level would put the Russell 2000 right at 1,000 while a 5% move higher would trigger 1,100.
The S&P 500 Volatility Index ($VIX, 12.72, up 0.88) jumped 7% but held 13.50 following a test to 12.93. Don’t flinch until 15 trips.
We got some more great earnings news after the close last night as Live Nation Entertainment (LYV, $16.32, down $0.31) waxed Wall Street’s estimates by a mile. More in the Midday update but let’s set limit prices to maximize our gains.
Subscribers, hit the Members Area for the updates.
TAP Profits on August Calls
We got some nice pin action today on one of our earnings trade recommendations yesterday and here is an update:
Molson Coors Brewing (TAP, $52.80, up $2.72)
August 52.50 calls (TAP130817C00052500, $1.00, up $0.60)
Action: We mentioned yesterday this was one of our favorite two earnings trades for the week and the company didn’t disappoint us as the beat Wall Street’s expectations. Shares are at their highs for the session and if you are in this trade, ring the register for a 100+% win as these options could have been picked up for 45 cents just before yesterday’s close. For those of you that took the option trade, congrats on the triple-digit return in less than 24 hours!
As we head to press, the Dow is down 97 points to 15,514 while the S&P 500 is lower by 9 points to 1,697. The Nasdaq is off 25 points to 3,667 while the Russell 2000 is giving back 11 points and is at 1,051.
Subscribers, check the Members Area for the latest updates and stay on your toes for the remainder of the trading session as we could have additional Profit Alerts.
Monday’s Possible Options Earnings Plays
The companies below will be announcing earnings on Tuesday 8/6. These options should be looked at before Monday’s close if you want some action. Our favorite 2 are TAP and LYV.
Molson Coors Brewing (TAP, $50.79, down $0.12)
August 52.50 calls (TAP130817C00052500, $0.70, down $0.05)
Thoughts: These calls were super active on Friday as 6,400 contracts traded. Open Interest is over 18,000 contracts so there could be an explosion to new highs if the company impresses Wall Street with their numbers. These call options can be purchased before Monday’s close to play a possible move to double-nickels ($55). A disappointing report could easily send shares below $50 and where puts can be used to play further weakness.
Live Nation Entertainment (LYV, $16.60, down $0.10)
August 17 calls (LYV130817C00017000, $0.35, down $0.05)
Thoughts: There is the potential for a huge earnings surprise or miss with Live Nation. Of the 4 suit-and-ties that cover the stock, estimates range from a profit of 5-15 cents a share.
The stock has been in a solid uptrend all year long after starting January and $9-and change. These are “cheap” call options on shares making a surge past $17.
The break-even point for the trade would be $17.35 and a 5% move in the stock gets shares to $17.43 ($16.60 + $0.83). Since there is some time premium left in these options, they could double to 70 cents if there is a 7%-8% move in the stock to the upside.
If the company misses earnings expectations, shares could fall 5% or more and these options would collapse.
We like the trade as a lottery play and would rather play these options than the current PowerBall lottery that is approaching $400 million. The odds of us hitting on the options are better than us picking 6 winning numbers.
Regeneron Pharmaceuticals (REGN, $272.39, down $5.90)
August 300 calls (REGN130817C00300000, $2.90, down $1.00)
Thoughts: These call options are expensive and shares will need to move 10% or more just to get them in-the-money and above the $300 strike price. Anything less than a 10% move could deflate the calls so there is more risk than reward to this trade.
Earnings are out Tuesday so we will be watching these call options into Monday’ close.
Jazz Pharmaceuticals (JAZZ, $76.23, down $0.10)
August 80 calls (JAZZ130817C00080000, $1.10, down $0.05)
Action: Shares of JAZZ have been on and off our Watch List since the $50′s this year but we dropped coverage in May and have missed the $20 move. Earnings are out Tuesday and if these call options fall below $1 on Monday then we may swing the bat before the close.
Weight Watchers (WTW) Tanks Despite Good Earnings/ Put Options Soar
Shares of Weight Watchers International (WTW, $38.51, down $8.51) are getting pounded despite reporting earnings above Wall Street’s expectations.
The company reported a profit of $1.15 a share on revenue of $465 million versus expectations for $1.10 a share on $459 million in sales.
The problem was their forecast for the year which they lowered and the sudden resignation of their CEO. Not a good combination.
Shares are down 18% and we had a nice trade on our Watch List that we missed. Each week in our Weekly Wrap we highlight the stocks and companies reporting earnings and these are the times shares make their biggest moves.
The lucrative part of trading earnings with options is that it is cheaper and the profits are much more explosive.
For instance, shares of Weight Watchers were at $47 going into yesterday’s close. To short the stock you would have to have at least $5,000 in a margin account to cover any potential losses and be approved for short-selling. At current prices, you could have made $850 overnight shorting the stock and covering today.
The beauty of options is this. You are buying contracts to control 100 shares of stock with much less money and much less risk.
One put option contract on the August 40 puts (WTW130817P00040000, $2.30, up $1.73) would have cost you $57 yesterday as the put options closed at 57 cents. As you can clearly see from the Yahoo Finance quote below, these put options are up an amazing 303% in less than 24 hours.
To dummy it down, a $57 investment would now be worth $230 if you cash out now. If you had purchased 10 contracts rhe trade would have required $570 and your investment would be worth $2,300.
See the difference?
We should also warn, however, if shares would have moved past $50, this trade would have been a disaster.
These are the risks/ rewards of options trading and why we love playing the game. If you are new to options and want to learn more, we encourage you to join us as we use a number of different options strategies to provide our subscribers the most powerful returns we can.
Our next issue of the Weekly Wrap is out Sunday Night and there is a small-cap stock we have been pounding the table on that has broken out past resistance this week.
While we do like options, we also like investing in undiscovered stocks that will eventually become 3-baggers (300% winners) to 5-baggers (500%). Our current favorite stock was profiled to our subscribers near $4 and has traded to a high of $9 this year. Shares are currently at $7 and we feel they can reach $20-$30 in the next 2-3 years no matter what the stock market does.
We urge you to join us this weekend as shares prepare for a move to double-digits over the next 3-6 months.
We are offering a 2-week free trail for the month of August so we encourage you to take advantage of the chance to find out about a small-cap stock before Wall Street does. All you have to do is enter you email address into the box for the free 2-week trial.
Aruba (ARUN) Hits New 52-week peaks
11:30 am (EST)
We profiled Aruba Networks (ARUN, $18.33, up $0.55) at $16.98 a few weeks ago and with today’s push to new 52-week highs, we have another triple-digit winner for you to close out.
The August 17 calls (ARUN130817C00017000, $1.55, up $0.35) were at 75 cents when we recommended the trade as a free option pick and they are now up over 100%. If you are in the trade, lock-in half profits and set a Hard Stop of $1.25 on the other half.
Trius Therapeutics (TSRX) Gets a Buyout Bid
Trius Therapeutics (TSRX, $13.79, up $2.08) is up 18% today following a bid from Cubist Pharmaceuticals (CBST, $x, down $x) to acquire the company for $13.50 a share. The deal includes a kicker, one Contingent Value Right (CVR), and gives shareholders an additional $2 in value if certain sales are met. This would bump the deal to $15.50 a share and on July 23, or just one week ago, we said there was some heavy activity in the call options.
We listed the August 12.50 calls (TSRX130817C00012500, $1.20, up $0.85) as a way to play a possible move past $15 based on our chart work and the options are up a whopping 243% on today’s news.
SolarCity Earnings Due Out Next Week
SolarCity (SCTY, $41.84, up $0.21)
August 50 calls (weekly) (SCTY130809C00050000, $0.50, up $0.10)
Thoughts: Earnings are out August 7. Support is at $40 with risk down to $37.50 on a close below this level. A break above $42.50 could lead to $50 if losses come in ahead of expectations. The company is not profitable and has missed Wall Street’s estimates in its first 2 quarters as a publicly traded company by 9 and 10 cents. The current estimate is for a loss of 38 cents, on average, for the recently ended quarter.
If revenues can come in north of $30 million, earnings may not matter as Wall Street will be looking ahead at what potential sales the company may have. Current guesses are for sales of $27 million and a 10% upside surprise could send shares soaring. A wider-than-expected loss or a miss in sales could push shares below $35. The August 35 puts (weekly) (SCTY130809P00035000, $0.90, flat) are expensive but could be used to create a strangle option trade. However, if this becomes an official trade, we will likely play it straight-up with the call options.
Watch the Transports for Price Action This Week
iShares Dow Jones Transportation Average (IYT, $115.71, up $00.69)
August 110 puts (IYT130817P00110000, $0.70, down $0.10)
September 105 puts (IYT130921P00105000, $0.85, down $0.10)
Thoughts: The Dow Transports had been struggling with the 6,600 level and took a significant hit last week. The index came within spitting distance of falling below its 50-day MA and a close below this level would be bearish. We could add puts by using the IYT iShares on a drop below $113.
Walter Energy Suspends Dividend
Walter Energy (WLT, $11.53, down $2.56)
August 9 puts (WLT130817P00009000, $0.23, up $0.20)
September 9 puts (WLT130921P00009000, $0.62, up $0.40)
Thoughts: We have been watching this stock off and on all year and yesterday’s news the company was suspending its dividend punished shares for an 18% loss. The August 9 put options zoomed 666% and could be an omen shares are headed for single-digits again. If so, these options could easily double or triple again from current levels.
The 52-week low of $9.88 was hit in late June and a test to $10 is likely over the next few weeks. If these levels crack, there is a chance $7 comes into the mix.
Market Update/ Support & Resistance
The market traded in a tight range on Tuesday as Wall Street awaited Apple’s (AAPL, $418.99, down $7.32) earnings announcement after the close. The stock is a heavy component on the indexes and will sway market direction today and perhaps why traders were a little hesitant to take positions overall. Expectations were super low Apple would beat expectations but they did. We will talk about their earnings in our midday update but it should be good news for the bulls and today’s session.
The Dow gained 22 points, or 0.1%, to finish at 15,567 on Tuesday. The blue-chips traded to a high of 15,604 on the open before giving back all of its gains to trade down to 15,544 (down a point) shortly afterwards. The index was able to hold green throughout the remainder of the session and tested 15,600 afain late in the day and was a bullish sign. Next up is a possible push to 15,800-16,000. Support remains 15,400-15,350.
The S&P 500 slipped 3 points, or 0.2%, to settle at 1,692. The index kissed another all-time intraday high of 1,698.78 before testing a low of 1,691. The bulls have come too far not to ring the register at 1,700, and should, as long as support holds at 1,685-1,675.
The Nasdaq dropped 21 points, or 0.6%, to end at 3,579. Tech traded up to 3,606 after the opening bell but quickly faded before bottoming at 3,576 just before the close. Support at 3,575 continues to hold like a Bob Segar song and should recover 3,600 on the Apple news. If not and the index closes below 3,575 there could be trouble ahead.
The Russell 2000 dipped a point, or 0.1%, to close at 1,052. The small-caps charged to another all-time intraday high of 1,056.86 before falling back to test support at 1,050 after trading to 1,050.87. We believe the index still has another 2% in the tank for a run to 1,075 as long as support at 1,050-1,040 holds up.
The S&P 500 Volatility Index ($VIX, 12.66, up 0.37) was up 3% after kissing 13.06. No need to get cautious until 13.50 trips as the bulls look to push 11-10 over the near-term.
Side Note: We talked about Gold testing $1,350 and yesterday’s high checked-in at $1,348.70. This is a crucial level as we could see a breakout to new highs and maybe, a big maybe, run to $1,400-$1,425. If resistance holds here for the rest of the week, look out below.
As we head to press, futures look like this: Dow (+31); S&P 500 (+5); Nasdaq 100 (+29). Subscribers, hit the Members Area for the updates.
Trius Therapeutics (TSRX, $12.16, up $0.68)
August 12.50 calls (TSRX130817C00012500, $0.75, up $0.20)
September 15 calls (TSRX130921C00015000, $0.55, up $0.05)
Thoughts: A run to $15 could be coming and the call option pits have been active. Shares are at fresh 52-week peaks.
Watch SGMS for Continued Gains
Scientific Games (SGMS, $13.24, up $0.23)
August 12.50 calls (SGMS130817C00012500, $1.15, up $0.15)
Thoughts: We said a close above $12.50 would be bullish for a run to the mid-teens. The options trade in $2.50 increments and we like both of these options as long as support and the uptrend line holds. Friday’s close was a 52-week high.
Bulls Push Another Set of All-Time Highs
The Dow jumped 78 points, or 0.5%, to close at 15,548. We said a close above 15,500 would be bullish and that it could lead to a run to 15,800 on a close above 15,600. Yesterday’s high was 15,589. We would like to see the bulls hold 15,500 on any weakness today but there is risk down to 15,400-15,350 if they can’t hold the momentum.
The S&P 500 added 8 points, or 0.5%, to settle at 1,689. The index traded to a high of 1,693 and we mentioned a break above 1,685 could trigger 1,700. The S&P reached a peak of 1,693 and the aforementioned support and resistance levels could be bullish (1,700) or bearish (1,685) on a close above or below these levels for next week.
The Nasdaq gained a point, or 0.04%, to end at 3,611. Tech kissed a 13-year peak of 3,624.54 and we have said there is a chance 3,650 comes into play if the bulls hold 3,600. They have for 2 days but today will be challenging considering the high-profile earnings misses after yesterday’s close. A finish above 3,625 could lead to our fluff target next week but a drop below 3,600 could be cause for concern.
The Russell 2000 closed right on our bulls-eye target of 1,050 after the index advanced another 8 points, or 0.7%. The small-caps triggered 1,052.46 and could push 1,075-1,080 on continued momentum but we do expect a pause here soon. The key level of support to watch for on a dip is 1,036 and the bulls have over 1% to play with.
The S&P 500 Volatility Index ($VIX, 13.77, down 0.01) was flat as a pancake but did drop below 13.50 to a low of 13.20. We have said there is a chance the bulls push 12.50 but the bears are still trying to get back above 15 and still need to be respected.
As we head to press, here is how futures look: Dow (-19); S&P 500 (-1); Nasdaq 100 -100 (-1).
We have some good news this morning on our earnings trade from Wednesday, and hopefully, we can get a 150+% return on this morning’s open. Subscribers, check the Members Area for the updates and stay locked-and-loaded in case we take additional action this morning.
Side Note: Detroit files for Chapter 9 bankruptcy – the biggest bankruptcy filing in U.S. municipality history. This city is $20 billion in the hole and this could have a ripple effect in the muni bond market.
Gold Struggling at $1,300
Spider Gold Shares (GLD, $124.04, up $0.72)
August 115 puts (GLD130817P00115000, $0.65, down $0.18)
Thoughts: Gold is having trouble clearing $1,300 and the Gold Spiders could take another tumble below $120 to $115. We have nailed Gold’s fall to $1.200 over the past few months and our chart work shows a drop to $1,050 could be coming if the yellow metal can’t clear resistance.
Yahoo (YHOO) Surges 9%, Options Zoom 400%!
We profiled a Yahoo (YHOO, $29.30, up $2.42) earnings trade earlier this month as we said shares could push $30 over the near-term. Shares opened at $27.52 and are at session highs. On 7/3/2013 we suggesting buying call options when shares were a penny below $25.
The Yahoo July 25 calls (YHOO130720C00025000, $0.80, down $0.10) were at 80 cents when we recommended them and with today’s triple-digit pop the overall return is now a staggering 413%. The July options expire this Friday and we suggesting closing the trade at current levels.
Sony (SNE) Holding $22, July Options Up 110%
Sony (SNE, $22.02, down $0.22) has made a nice run since we profiled a free call option trade back on 6/25/13. Shares were at $19.94 and we mentioned a close above $20 could lead to $22-$24.
We profiled the July 20 calls (SNE130720C00020000, $2.10, down $0.10) at $1 and they are up 110% with the options expiring this Friday. We suggest locking-in profits at current levels.
We also recommended the August 22 calls (SNE130817C00022000, $1.20, down $0.15) at 75 cents and these call options are still a buy as long as $21 holds up as support.
Aruba Networks (ARUN, $16.98, up $0.27)
August 17 calls (ARUN130817C00017000, $0.75, up $0.15)
Entry Price: $0.55 (7/8/13)
Exit Target: $1.10
Stop Target: None
Action: The symmetrical triangle forming is pointing towards a major breakout. We are looking for shares to make a run at $18, possibly $20 by mid-August. Support is at $15.50. We could add the August 18 calls (ARUN130817C00018000) on a breakout and they closed Friday at 40 cents. The October 22 calls (ARUN1019C00022000) are also at 40 cents.
Domino’s Pizza (DPZ, $63.00, up $0.76)
July 60 calls (DPZ130720C00060000, $3.10, up $0.70)
August 60 calls (DPZ130817C00060000, $4.40, up $0.60)
Thoughts: If you haven’t locked-in profits on these huge triple-digit and double-digit winners, do so today as we will be dropping coverage of the trade from our Daily. The July 60 calls were at $1.30 at the beginning of the month and are up 138% while the August 60 calls have moved from $2.60 to $4.40 for nearly a 70% gain.
NextOptions.com Weekly Wrap Trade Alerts for 7/11/13
We have a 3 trades we are taking action on with today’s surge in the market. We are using August calls to juice the gains for some of our current positions and if we get called away in over a month we will make nice double-digit return.
Subscribers, check the Members Area for the updates.
Backer Hughes (BHI, $48.96, up $0.27)
August 50 calls (BHI130817C00050000, $1.15, up $0.10)
Thoughts: Shares could be on the verge of challenging fresh 52-week peaks north of $51. At $52+, these options would be worth $2.20-$2.30 depending on how fast shares move. Earnings are due out on July 19.
Riverbed (RVBD) Looks Attractive at Current Levels
Riverbed Technology (RVBD, $15.82, down $0.08)
August 17 calls (RVBD130817C00017000, $0.75, down $0.05)
September 18 calls (RVBD0921C00018000, $0.75, flat)
Thoughts: There is risk down to $15 but if this level can hold, shares could challenge $18-$20 over the next 3-6 months. The company is also a takeover target.
NextOptions.com Weekly Wrap New Trades for 7/8/13
We have 2 New Trades for our Weekly Wrap today and we are excited about both of them as they are small-cap stock that are trading for under $5. Shares of both companies could be trading north of $5 by yearend for gains of 75%-150% from current levels and they trade options. These 2 gems are affordable for most investors and are a great way to get in on the ground floor for potential high double-digit gains and possibly triple-digit returns.
Our Track Record this year for the Weekly Wrap newsletter is now 26-3 and an amazing 70-5 since inception (2011).
If you are not a Member of the Weekly Wrap, we urge you to signup now!
Applied Materials (AMAT, $15.00, up $0.18)
September 16 calls (AMAT130921C00016000, $0.35, flat)
Thoughts: We think shares can test $17 over the next month. Support is at $15.
Yahoo (YHOO, $24.99, down $0.25)
July 25 calls (YHOO130720C00025000, $0.80, down $0.10)
Thoughts: Support is at $25 and a close below this level would get $24 in play. A close back above $27 would be bullish for a run to $30.
Domino’s Pizza (DPZ, $59.91, up $1.76)
July 60 calls (DPZ130720C00060000, $1.30, up $0.65)
August 60 calls (DPZ130817C00060000, $2.60, up $0.80)
Thoughts: Shares could make a push past $60 to fresh 52-week peaks. We like these options to play the move but the August options will allow us to play earnings. The company reports July 23 so keep this in mind that week as we could also play a 1-day trade down the road.