EOT position update July 16, 2014
July 16, 2014
Market Snapshot
The S&P 500 is back on the upswing this week. The large cap index is up 7.8% this year and just below its all-time high of 1,985.
And the blue chip stocks are performing even better this week. The Dow Jones Industrial Average climbed to a new all-time high on the back of strong earnings and potential M&A activity. However, the year-to-date performance of 4.1% lags behind the S&P 500.
The technology, financial, and industrial sectors have taken on a leadership role among US sectors this week. And the defensive utilities sector has been the biggest loser.
This is a good sign for the bulls. Defensive sectors, like utilities, should take a backseat to cyclical and other economically sensitive sectors if investors are expecting an uptick in economic growth. And that’s what we’re seeing right now.
What’s more, the technical picture of the major averages has been bullish over the last six month. And the recent price action has done nothing to change the bullish uptrend that is dominating the markets.
As long as this trend remains in place, I’ll continue to focus on call options. There’s no reason to fight the trend. That said, there are always circumstances that give us the opportunity to profit from the downside in individual stocks like we did with KORS last week.
One note I want to pass along is that I’m making a slight change to the option quote on the trade alerts to avoid any confusion about the specific option I’m recommending.
In future trade alerts, there will be the specific day the option expires.
For example, the latest trade on Michael Kors read like this…
Buy KORS August 2014 $85 Puts at $2.65 or better
In the future, it will read like this…
Buy KORS August 15th 2014 $85 Puts at $2.65 or better
I’ve always recommended standard options in Elite Option Trader. These options always expire on the third Friday of the month. But with the introduction of weekly options, there are now options that expire each week.
This should prevent any confusion about which option I’m recommending going forward.
Let’s move onto the updates…
Position Updates
Just a quick note: Remember, we won’t update every open position every week. I try to focus on the positions that have some significant news or price movement.
KORS August 2014 $85 Puts
In the words of my favorite fictional anchor man, Ron Burgundy… “Boy, that escalated quickly!” I rolled this trade out on Friday. On Monday, a number of analysts said exactly what I predicted… consumer sales are slowing and taking a bite out of KORS’ profits and the company’s growth prospects are diminishing quickly. KORS quickly plunged through our $85 support on Monday and it fell through our $80 support yesterday. The value of our put option soared 214% in just two days!Congratulations to everyone who cashed in on this lightening fast trade.
P August 2014 $30 Calls
P price action has been bullish after the quick selloff last week. It has set a series of higher highs and higher lows since May. I think we could see a big rally over the next few months. Continue holding… Resistance is at $32.00 and $36.00. Support is at $24.00 and $22.50.
TPLM October 2014 $12.50 Calls
TPLM is holding above support in a consolidation phase. We have until October for TPLM to make its next move to the upside… continue holding. Resistance is at $14.00 and $17.50. Support is at $10.75 and $10.00.
HIMX September 2014 $7 Calls
HIMX has been drifting lower but holding above our support levels. There hasn’t been any new information about the company for several weeks. But the company is planning to hold its annual general meeting on August 27th. This could be the catalyst that jump starts the shares. Continue holding… Support is at $5.75 and $5.00. Resistance is at $9.00 and $11.00.
Category: EOT Update
