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  • Bears Storm Japan's Nikkei Midday Update for 6/13/2013

    Bears Storm Japan's Nikkei

    12:10pm (EST)

    Futures were pointing towards a nasty open on Wall Street this morning when we were doing our late night homework. The news after midnight of Japan's Nikkei dropping a whopping 6% sent shivers through the global markets. When we hit the rack at 2am, Dow futures were down 80 points to 14,898 while the S&P futures were down 10 points to 1,600.

    (Nikkei chart)

    The bulls were hoping this morning's unemployment report would right the ship but the bears are preparing for a titanic push out of the current trading range. We listed some go targets to possibly buy some index put options this morning for our Watch List but as we have seen 3 previous times this year, the bulls have bounced back just when it appears a selloff is imminent.

    Futures had improved dramatically as we went to press this morning and had turned positive ahead of the opening bell after Initial Claims were slightly ahead of expectations at 334,000. Continuing Claims came in at 2.97 million and in-line with forecasts. Retail Sales also came in above expectations at 0.6% versus a forecast for a rise of 0.2%.

    The overnight test to the bottom of the trading range limited the damage at the open and the bulls have done well in holding their gains. It will be important for the indexes to at least have a positive close today ahead of Friday's session to break the trend of lower highs and lower lows. A positive close on Friday would also be bullish but let's not put the horse in front of the cart just yet.

    As we head to press, the Dow is up double-nickels (55 points) to 15,050 while the S&P 500 is higher by 7 points to 1,620. The Nasdaq is advancing 13 points to 3,413 while the Russell 2000 is gaining 5 points to 977.

    The bulls are close to recovering prior support that is now serving as resistance and a big push into the closing bell could get them there. However, if they lose their gains, the bears could get super aggressive.

    We have some updates on our current trades so let's go hit the Members Area.

    Tags: DOW
    Jun 13 1:44 PM | Link | Comment!
  • Dow Spiders (DIA) Have Been A Great Trade

    12:00pm (EST)

    The easy trade over the past 20 Monday's before the close has been to buy the Dow Jones Spiders (DIA, $154.89, up $2.12) to play the up Tuesday's. We mentioned a few weeks ago that options traders have done extremely well buying call options on the Dow before Monday's close and selling them on Tuesday's for some sweet gains.

    Of course, with the market closed yesterday, traders would have needed to place their bets before Friday's close and ahead of a 3-day weekend. The Dow Spiders trade a bevy of options, including WEEKLY options so traders could have play the May or June contracts to take advantage of today's pop.

    The May 153 calls (DIA130531C00153000, $2.01, up $1.32) closed at 69 cents on Friday and are up nearly 200% after trading to a high of $2.14. These options expire this Friday so it would be wise to take profits immediately if you happen to be in this trade.

    The June 155 calls (DIA130622C00155000, $1.56, up $0.78) are also up triple-digits after closing at 78 cents on Friday. The calls have traded up to $1.64 and the 100% gains should be locked-in.

    If the current pop fades, traders can look to play the June 152 puts (DIA130622P00152000, $0.87, down $0.78) as they are down and could rebound following today's 50% pullback. We doubt the trade will make 100% in a day but it could make a nice double-digit return if the Dow can't hold its gains.

    It has been a tough bet to short this market and why we are still comfortable playing call options although we did place a few bearish bets last week. We would like to start unwinding the rest of our current trades as the June options are expiring in less than a month. We are starting to look at July and August trades but it is too early to say if we will still be in call options or if we will be playing more put options.

    We said over the weekend we went roller-coasting and the ride hasn't stopped as we are loving today's action.

    The Dow is up 185 points to 15,488 while the S&P 500 is higher by 19 points to 1,668. The Nasdaq is advancing 46 points to 3,504.

    Subscribers, check the Members Area for the updates and stay locked-and-loaded for the remainder of the day as we could have Profit Alerts or a New Trade for the Daily if we see something we like. This includes the Weekly Wrap as well.

    May 28 12:12 PM | Link | Comment!
  • JPMorgan (JPM) Just Misses Double-Nickels


    1:00pm (EST)

    Shares of JPMorgan Chase (JPM, $53.26, down $0.38) are trading lower again today following Wednesday's run to $55. Shares traded to a high of $54.96 yesterday and here is what we said about the company and its CEO on Sunday night along with our chart work:

    "We wanted to add some JPMorgan Chase (JPM, $52.30, up $1.33) call options but we don't like the current headline risk involving their CEO who plans to walk if his job duties are split and why we went with the XLF trade. If he stays, shares could easily trip double-nickels this week. The company will hold its shareholder meeting on Tuesday and vote on if Jamie Dimon should still hold the CEO and Chairman role or if it will be split.

    JPM shares were at $47.57 at the time we initiated coverage (and added the stock to our Watch List). We said if support held at $47 they could push $50-$51.

    They did and we profiled the June 50 calls (JPM130622C00050000, $2.80, up $0.95) at 40 cents. Yep, we missed a sweet 600% return there. Instead of trying to play the lottery, we said these call options were a "lottery play for a push past $50".

    Perhaps the June 55 calls (JPM130622C00055000, $0.33, up $0.17) will be this week's lottery winner. If Jamie walks, JPMorgan could fall back below $50 and we wouldn't expect him to be out of a job for too long. Most companies would give him the keys to their palace any day of the week."

    The June 55 calls traded to a high of $1.22 yesterday and could have been cashed-in for gains north of 300%. The June 50 calls reached a peak of $5.15 and would have banked you nearly 1,200% from the trough to the high of the day.

    Tags: JPM, options
    May 23 1:37 PM | Link | Comment!
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