3 Possible trades

Here are two credit spreads that have a little more risk to them as we are 45 days out from MAR expiration, both have a 70% chance of profit and my rule of thumb is usually 80% but for those of you who want a little more profit for just a slight bit more risk here you go…

AAPL - just bounced off support at $70 so and MACD and Stoch are rising. This has been a strong stock the last 6 months and I think it will continue to be. A Bull Put Spread - buy the MAR 67.50 Put for 1.50 and sell the MAR 70 Put for 2.10 for a credit of .60 or a 31.5% gain in 45 days.

MGM - just bounced off resistance at $38. the 200 dma is just below $40. MACD and Stoch are at their peak and should start to come down within the next couple of trading days. A Bear Call Spread - buy the MAR $45 Call for .25 and sell the MAR $40 Call for 1.00 for a credit of .70 or a 17.65% gain. One other concern I have on this trade is that earnings are out next week on Feb 7th.

Another more conservative trade is to do a calendar spread on THOR. It appears to be peaking at $25 and closed just under it today, earnings is tomorrow after the close so this is a little risky as well, if they are really bad. So here you go - Buy the APR 22.50 Call for 3.50 to 3.75 then sell the FEB 25 Call for 1.00. The trade may have to be closed after earnings.

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CVTX Sell off!

What a dodged bullet!

CVTX comes out on Friday stating that the FDA has approved one of there drugs for chronic angina. The stock opens today above the $27 resistance line and then sells off the entire day to fall below the 50dma and to rest exactly on the 30dma. A true “sell on the news” cliche in real life. I expect a bit of a recovery from this sell off as the news was good for this company. However it may be difficult for it to break the $27 resistance line now.

AMZN fell back from resistance today. I will hold this trade through earnings which happens on Thursday.

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HOT list

I am going to do something a little different today and will continue this way so you can see what I am actively in vs. what I am looking to trade. I am going to post my current open positions in one post and then the possible trades in another post.

Current positions -

I only have 4 positions open currently 3 Bear Call Credit Spreads and 1 Bull Put Credit Spread. Expiration on all these Feb trades is in 19 days.

BEAR CALLS

CVTX - FEB 30/35 Calls for .70 credit - opened trade on 12/22

AT 26.08 with MACD already positive Stoch making another turn upward. The stock rose very quickly through all 3 daily moving averages I use - 30,50 and 200dma. It did not reach the weak resistance at $27 and then fell very quickly to then bounce off the 50dma and rise quickly again on Friday. It now rests about .90 below resistance.
The stock will have to break this resistance and then rise over 10% as well as break the 52 week resistance at $30 to become a losing trade.

PLCE - FEB 50/55 Calls for .80 credit - opened trade on 1/6

AT 45.09 with MACD turning positive but Stoch looks to be making a turn to the downside again. This stock just bounced of the trendline resistance in the bear channel this stock is in. It closed above the 200dma. So now this stock may be pinched between the two. We shall see what happens on Monday to determine which direction this stock will go. I believe it will continue down below the 200 dma heading towards the channels support line at around $40.

AMZN - FEB 50/55 Calls for .60 credit - opened trade on 1/12

At 45.22 with MACD and Stoch on the rise. The 52 week high is $50 and the stock has to go through the 30dma and the 50 dma as well as rise almost 10% in the next 3 weeks and penetrate the 52 week high in order to have a losing trade.

BULL PUT

OEX FEB 555/560 Puts for .70 credit - opened trade on 1/24

At 580.80 with MACD and Stoch both starting to rise. This index and the market in general has made big gains the last couple of trading days. This index will have to break the strong long term support of $570 and drop through the 200 dma to make for a losing trade.

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Positive day today for the stock market!

Well the DOW broke 10,800 and managed to close above this mark we are now thinking bullish again as long as it can hold above this mark tomorrow and Monday.

A couple of interesting items

NFLX - After earnings and such a postive bounce I am going to hold and watch this stock . It did not manage to break the resistance at $30 so I will wait and see what direction it takes. After a really strong day for the rest of the market I would have expected a break through this resistance but no. I will wait and see.

APPL - is fast approaching support at $70. What will happen? If a break through this support then a bear call spread may be in order a bounce and a bull put spread. We shall see by Monday.

PLCE - OK what a roller coaster, after placing the trade and the stock plunging down below the 200dma it has made some strong moves in the last three days to bounce it up above the 200 dma. It currently sits just below the resistance trend line. A couple of days will determine its course. I still think that it will be difficult for this stock to maintain its momentum to break my bear call spread at the $50 mark but MACD and Stoch are now on the rise.

Chart provided by BigCharts

The two parallel lines show the bear channel this stock is in. Will it have enough momentum to break this channel? I do not think so and if it does not then my trade is still in good shape.

CVTX - after some strong moves has bounced off resistance at $27. Still in good shape on this trade.

MGM - could be setting up for another good bear call spread for the $40 strike.

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