The markets gapped open after a rally overseas and this time resistance was broken. The S&P closed at 2120 and a new high. The Dow fell about 35 points short but still punched through the resistance at 18,200. We need to see if there is any follow through on Friday to know if this breakout will stick.
In Wednesday's newsletter I said, "The last three days of trading may be a clue as to our future. Note that the last three candles on the Dow have clustered towards the top of the range. I could be grasping at straws here but maybe the range is about to end."
Today's market rise started on an opening gap on the Dow to 18,213 and stalled at that 18,200 resistance level for about 90 minutes before follow through buying began to push the index to 18,255 intraday and the little bit of selling at the close only knocked it back to 18,246. Apparently the bears were convinced the move had staying power and they did not jump in with shorts at the close.
I would love to see this rally continue and create a new leg higher. However, Friday's in the summer tend to be weak. It is not summer yet but it is getting close.
I am reloading the short call on Cheniere energy after the stock lost ground today.
Our remaining May positions will expire on Friday.
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Current Position Changes
Stop Loss Updates
Check the graphic above for any new stop losses in bright yellow. We need to always be prepared for an unexpected decline.
FB - Facebook (Stopped/Close)
Facebook rebounded +$3 on the opening short squeeze and some positive comments over their new active article venture. We were stopped out of the short June $85 call for a profit and the long call is close enough to our entry price I am recommending we close it now and protect our profit.
Closed June $85 short call, entry $.92, exit .51, +.41 gain.
Close June $90 Long call, entry .21, currently .17, -.04 loss.
Net gain 37 cents.
X - US Steel (Closed)
We received a gift this morning when US Steel gapped up at the open. I had recommended we close the long call today. The gap close gave us a decent recovery on a busted play.
Closed June $26 short call, entry .68, exit $1.04, -.36 loss
Closed June $28 long call, entry .34, exit 1.09, +.55 gain.
Net credit .19
UAL - United Continental (Closed)
I recommended we close the long call on United at the open this morning because I expect oil prices to rebound and airlines to decline again. By closing the call while it still had value we reduced our losses.
Closed June $67.50 long call, entry $1.05, exit .78, -.27 loss
Previously closed June $65 short call, entry $1.52, exit $2.04, -.52 loss
Previously closed June $65 short call, entry $1.40, exit $2.06, -.66 loss.
Net loss $1.45
LNG - Cheniere Energy (Reload)
We were stopped out of the LNG short call last week when the company announced a final investment decision on the Corpus Christi LNG facility. The initial bounce that stopped us out has failed. Since we already have a long call on LNG I am recommending we reenter the short call now that LNG has rolled over.
The call has declined in value from our initial entry but it should provide us an offset for the value we are losing in the long call.
Sell short June $80 short call, currently .95, stop loss $77.45
Retain June $85 long call, entry .70, currently .30.
Existing Play Recommendations
Links to original play recommendation
$OVX - Oil Volatility Index (Bear Call Spread)
RCL - Royal Caribbean (Bear Call Spread)
GDX - Gold Miner ETF (Bear Call Spread)
JKS - JinkoSolar (Bull Put Spread)
BBBY - Bed Bath & Beyond (Bear Call Spread)
FB - Facebook (Bear Call Spread)
X - US Steel (Bear Call Spread)
WYNN - Wynn Resorts (Bear Call Spread)
UAL - United Continental (Bear Call Spread)
LNG - Cheniere Energy (Bear Call Spread)
FSLR - First Solar (Bear Call Spread)
DDD - 3D Systems (Bear Call Spread)
GPRO - GoPro (Bull Put Spread)
Prices Quoted in Newsletter
At Option Investor we have a long-standing policy prohibiting the editors and staff from actually trading the individual recommendations in order to conform to SEC rules concerning trades.
The prices quoted in the newsletter are the end of day prices in most cases.
When discussing fills or stops the prices quoted are the bid/ask at the time the entry trigger or exit stop is hit. This is NOT a price that someone on staff actually got using a live order.
For entry/exit points at the market open the prices quoted will be the opening print. The majority of the time the readers are able to get a better fill than the opening print because of market maker bias at the open.
For trades with an opening qualification the prices quoted will be the bid/ask at the time the qualification was met.
All of these rules normally produce worse prices than an active trader would normally get. Because they are standardized there may be some cases where a price quoted was better than an actual fill. If you received a price that was dramatically different than what was quoted please let us know.