Forgotten Profits Trade Setup Archive

Happy New Year to all of you!

Here’s to a happy, healthy profitable year.

After some losses – and some great wins — in late 2014, we hold all open positions. Our last trade on the VXX March 32 put returned 20% and 22% in days.

And our XIV stock trade gave us a gain of 15% and 14% in just days.

While we’d like to issue more long bets at the moment, including long-term bets on the 2015 Dogs of the Dow, it’s a bit tough to make a call for upside when the markets are so toppy, post-Santa Claus Rally.

The idea that years ending in “5” are bullish holds no weight at these highs.

The Dow is challenging a double top again with reversing RSI, MACD and Williams % Range. Near term, I believe the Dow could test its 50-day average at 17,557. Failure from there sends it to its 200-day average just under 17,000.

Consider buying to open the DIA March 2015 176 put up to $5.

Shares of AT&T ( T )are also failing at prior resistance points, too. MACD, RSI, Williams % Range, and MFI are beginning to top out. I’d like to see a bullish gap refill just above $32.50 on failure at these highs.

Consider buying to open the AT&T ( T ) March 2015 33 put up to $1.45.

Let’s make 2015 our best yet. Best wishes.

Ian L. Cooper
Forgotten Profits

Gilead (GILD) broke its 200-day moving average to the downside. Unless something positive happens, the stock could fall under $85. However, I’m recommending that you sell to close this GILD February put option today to secure the gain, given the higher rate of time decay at the moment.

At the same time, I’m recommending that you buy to open the GILD May 2015 85 put up to $7.20. This way we can profit from a continued fall in the stock and not have to worry about time decay issues.

I’m also recommending that you exit the Coca-Cola calls (KO), XIV and the VXX March 32 put.

Once this Santa Claus rally tires out, the market could pull back.

Happy Holidays…

Ian L. Cooper
Forgotten Profits

Sometimes all you need is a little patience.

Shares of GILD are down $14.20 today. That brings our GILD February 2015 97.50 to about $6.60 on the day. Sell to close half of the trade right now.

Coca-Cola (KO) is up another 40 cents on the day to $42.35. That moves takes our KO May 41 calls to just under $2.55. Sell to close half of the trade if you’re happy with current gain.

I’m also recommending that you exit half of the XIV stock trade and VXX March 32 put. XIV last traded at $34.35. The VXX put last traded around $6.60. Exit just half of each trade to secure gains.

Look for new trades after the holiday season. Volume is a bit low this week.

Happy holidays to you and your family…

Ian L. Cooper
Forgotten Profits

After a long, rewarding win streak, the last few weeks have been “interesting.”

But I’m not changing the strategy. The oil names may have been bought a bit too early, but remain on hold, as oil begins to show signs of life again. The game stocks (TTWO, ATVI, and EA) are still elevated at overbought levels, too.

In fact, ATVI has pulled back substantially after failing at double top resistance. Our ATVI February 20 put now trades at $1.60, which gives us a gain of 33%. If you’re happy with the current gain, consider selling to close half to secure the gain. Hold the second half.

Our Coca-Cola (KO) calls are coming back very nicely, as KO screams above $41 a share in recent days.

And our American Airlines (AAL) May 46 put is showing good signs of life, as the airliner begins to fall from excessively overbought conditions. AAL is down another $1.09 today, bringing the bid-ask price to $5 x $5.65 as of 11:40 a.m. If you’re happy with the current gain, consider selling to close half. Hold the second half.

As for new trade ideas, the Dow may have just found its bottom, marked by oversold RSI and MACD just under the 50-day moving average. If this holds, which it could, volatility could pull back substantially. The VIX is a bit elevated at $24, challenging a previous high. Once this falls apart, we could do very well with a put on the VXX.

Consider buying to open the VXX March 2015 32 put up to $6.

Also, consider buying the Velocity Shares Daily Inverse VIX Short (XIV) up to $32. Options are not available on this stock but it’s a great way to trade a potential reversal in volatility.

Ian L. Cooper
Forgotten Profits

After a strong win streak, we do have positions that are down. Consider holding them all at this point. Oil is oversold. Gaming stocks are overbought. And our drug stocks are over-extended. Hold them all.

The markets are a bit wild, too. After falling about 400 points this week, the Dow bounced back 225 points, intra-day Thursday. By the end of the day, the Dow was up 63. It’s pandemonium. Money is flowing out of the market. Yet, the market is moving up. That makes no sense.

As for Coca Cola (KO), Money Flow (MFI) just fell under its 20 line. It’s now oversold on that indicator after the stock failed at a double top. RSI is about to cross under its 30-line, and MACD is over-extended to the downside.

At the same time, KO has been… well KO’d at the lower Bollinger Band with a massive over-extension to -100 on Williams % Range. We also have a spike from the mean on DMI, which should correct.

It’s also a Warren Buffett stock.

These indicators tell me KO should bounce back. Consider buying to open the KO May 2015 41 call up to $2.60.

Let’s get back into making good money, shall we?

Ian L. Cooper
Forgotten Profits

Our American Airlines (AAL) has started out a bit rough. But I see no reason to exit the trade. I went out to May 2015 with this trade on purpose, knowing very well it would take time for the trade to work out because of oil.

These airline stocks are unbelievably overbought on RSI and MACD alone. They’re all in the nosebleed section of the upper Bollinger Band. They’re wildly over-extended in desperate need of a substantial pullback.

Time decay won’t be a big factor in this AAL trade until we begin to near expiration.

Hold this, and all other open positions. After a steady, strong win streak, we did run into losses. But we see no reason – at this point – to exit anything.

I hope you and your families have a happy, healthy holiday season. Best wishes.

Ian L. Cooper
Forgotten Profits

After a steady win streak, we do hold some losses. But we’re continuing to hold them all. As we wait for them to pan out, as they should, we do want to add a long-term trade on airline downside.

The biggest reason airlines stocks – like United Continental (UAL) and American Airlines (AAL) – are up is because oil prices died off. In fact, light crude is down another $1.66 on the day to $67.65, plunging from 2014 highs of just above $106. While most of us like the idea of cheaper oil, it’s become much too oversold.

At some point, oil prices will turn higher. Even RSI is screaming, “I’m oversold,” as it sits under 2008 lows of 15.6.

While we are looking at other potential trades for Forgotten Profits, we want to make sure we establish a position in airline stocks that are incredibly, technically overstretched. When oil does bounce – and it will – airlines stocks like UAL will revert back to mean.

We just have to be patient with this trade, though. We have to be patient with the entire market at this point because it’s massively overbought, despite underlying economic weakness.

Consider buying to open the American Airlines (AAL) May 2015 46 put up to $4.80.

Hold all other open positions, as well. We have an eye on other trades, too. But are just waiting for market conditions to calm down. Rushing a trade is never good.

Ian L. Cooper
Forgotten Profits

“Ian, I’ve really enjoyed Forgotten Profits, and made some good money with you so far.  But I’m a bit concerned about the gaming puts you just recommended.  What should we do?”

In references to the trades on Take-Two (TTWO), Electronic Arts (EA) and Activision Blizzard (ATVI), we’re holding.  We see no reason to change our bearish assessment on any of these trades, technically.  They were also just recommended last week.  Not all trades will just move the way you want them too without patience.

For a technical idea of just how over-extended these stocks are, take a look at TTWO, for example.  Notice the over-extension on MACD and RSI alone.  At some point, TTWO has to put in a healthy reversal.  The same holds true for EA.

While we do have some positions that haven’t panned out as well as we would have liked, we have a very strong history of success with our trades.  There was also a concern about Gilead (GILD) over the last couple of days.  But we’re not exiting.  The underlying stock was down more than $2 this morning to $98.40 before recovering.  We still have a price target of $89.90 on this stock.

Look for new trades after Thanksgiving.  Low volume is creating havoc before the holiday.

If you celebrate, I hope you and your family have a happy, healthy Thanksgiving.

Ian L. Cooper
Forgotten Profits

After a great win streak, I do hold losers. Most remain on hold.

If you’re still holding the VALE December 12 call, let it expire. This trade should have worked out much better than it did.

At the same time, it’s time to exit the second halves of the MCD December 95 call and January 95 call for gains. Sell to close today. Let’s also sell to close the Owens Corning (OC) January 34 calls, which last traded at $2.25, as of 12:20 pm EST.

I am reviewing new trades to issue shortly.

Best wishes. We will speak again soon.

Ian L. Cooper
Forgotten Profits

On Friday, I issued a new buy on the GILD February 2015 97.50 put, and the SNY June 2015 47 calls. Both are already showing gains. Hold both…

Even though I do see further downside in the GILD stock, I do want to secure gains on the second half of the GILD January 105 put now showing a gain of 93%. The first half was exited for gains of 40% in late October 2014.

Hold all other positions, including the newly issued gaming stock puts recommended this morning.

Ian L. Cooper
Forgotten Profits