EOT Position Update – April 22, 2015
Market Snapshot
The last few months haven’t been great for the S&P 500… they haven’t been bad either.
It has been a period of consolidation. The S&P 500 is making lower highs and higher lows.
These periods of directionless trade are an indication of uncertainty among investors.
And it’s not a great environment for our option buying strategy. Sure, options are cheap because volatility is low. But the market isn’t trending higher or lower so we don’t get the benefit of bullish or bearish momentum helping our trades.
We’ve been patiently waiting for the market to break out of this consolidation pattern. And we are getting close to a resolution.
You’ll notice the consolidation pattern indicated with the two blue lines on the chart is narrowing. Sooner or later the S&P will break out of this range. And the direction of the breakout will help determine the large cap index’s next move.
I’ve been able to identify a few good trades that have potential for big gains while we’re waiting. But be ready for a flurry of activity once the market breaks out of the current consolidation pattern.
Let’s move onto the updates…
Position Updates
Just a quick note: Remember, we won’t update every open position every week. We try to focus on the positions that have some significant news or price movement.
BSX May 15th 2015 $18 Calls
BSX is up 5% since we recommended buying call options on it. This call option is now up 78%. The stock is quickly closing in on our first resistance level at $18.50. Conservative traders can go ahead and cash in these nice gains. Aggressive trader can continue to ride the bullish momentum of this stock higher. The next resistance is at $19.00. Support is at $17.00 and $16.00.
CDW June 19th 2015 $40 Calls
CDW is now up 3% since we sent out the trade alert to buy call options on it. However, the option is still out of the money. There’s still plenty of time until the June expiration date. The stock should continue trending higher leading up to their May 7th earnings report. Continue holding. Resistance is at $40.00 and $42.50. Support is at $36.00 and $34.00.
WEN May 15th 2015 $11 Calls
WEN’s performance continues to disappoint. The profit taking on this high flying stock has lasted much longer than expected. But it’s holding above our support levels. The good news is the option takes up through their May 6th earnings report. I’m looking to this as the catalyst that can reignite the bullish momentum. Continue holding. Resistance is at $12.00 and $13.00. Support is at $10.20 and $9.50.
Category: EOT Update
