Forgotten Profits Trade Setup Archive

After a good amount of research over the weekend, the short side of gaming companies has piqued my interest, including Take Two (TTWO), Electronic Arts (EA) and Activision (ATVI).

Each is technically over-extended to the upside.  With TTWO, for example  RSI and MACD are greatly overdone of the upside, in desperate need of reversal from their runs.

When it comes to EA – RSI, MACD, and Money Flow (FMI) are each over-extended, as well.  Each needs to reverse to mean at some point.  They can’t just sit where they are for much longer.

Even ATVI is beginning to fail and reverse at 200-day moving average resistance.

The best way to profit from these moves at the moment is by opening a put option with each.  If you choose to buy into all three names, buy a basket.  Invest equal amounts in all three.  For example, if you want to risk $3,000 max, invest $1,000 in each.

Consider buying to open the following puts.

• ATVI February 2015 20 put up to $1.45.
• EA March 2015 40 put up to $3.
• TTWO March 2015 25 put up to $2.

We’ll talk again shortly.  Until then, take good care.

Ian L. Cooper
Forgotten Profits

After taking quite a few wins off the table, I still hold losses in the portfolio. All remain on hold, though, with plenty of time remaining on most.

One of the big winners still being held is the GILD January 105 put. We now show a gain of 48% on the trade and continue to hold. Believing the stock could easily fall to retest prior $92.50 support, not only am I recommending a hold on the put, I’m recommending an additional put on the name.

Consider buying to open the GILD February 2015 97.50 put up to $5.60.

Also consider buying to open the Sanofi (SNY) June 2015 47 call up to $3.50. The well-known stock plummeted on the CEO ouster and is wildly oversold. Once the company puts a new CEO in the front seat, we’re likely to see a further reversal north.

As Warren Buffett has taught us many times, be brave when others are fearful.

Ian L. Cooper
Forgotten Profits

Exxon Mobil (XOM) is beginning to run into overhead resistance again. Consider selling to close the second half of the XOM January 95 calls here. The first half of this trade was exited on October 31 for gains of up to 52%.

Also, consider selling to close half of the Gilead (GILD) January 105 put now. Hold the second half. The stock has been diving beautifully from overbought reads.

Hold all other positions.

Ian L. Cooper
Forgotten Profits

Consider selling to close the Red Robin (RRGB) December 60 calls for gains. These last traded at $3.40 x $3.60, as of 10:45 am EST.

The stock was up as much as $6 before pulling back slightly.

Secure the gain now. Look for new trade opportunities shortly.

Ian L. Cooper
Forgotten Profits

While I do have some positions that are down, we’ve also had some great winners over the last few weeks, including quick gains on Celgene, Gilead, Harley-Davidson, and the iPath S&P Futures trades.

Those CELG and GILD calls did so well, we heard some of you took well over 200% gains on them in less than a month’s time. Forgotten Profits only took gains of 42% and 36% on CELG, and gains of 40% and 42% on GILD.

Today, here’s what I want you to consider.

One, as Exxon Mobil (XOM) begins to make up lost ground, our XOM January 95 calls are showing a solid gain.

Consider selling to close half of the XOM call trade to protect gains.

Two, after taking such great gains on CELG and GILD I’m finding that both stocks are insanely over-extended to the upside. Both need to correct from these levels. A two-year candlestick chart of CELG shows wild over-extension after a run from $85 to $107. That’s a wild move in such a short period of time. MACD is overbought. RSI is screaming, “Sell me!” And MFI is just beginning to top out.

Consider buying to open the CELG January 2015 100 put up to $3.30.

Gilead is actually beginning to reverse from toppy conditions now, too. Here, RSI is reversing off its overbought 70-line. It’s also challenging double top where it failed over the last few days before testing it again. I’d like to see GILD correct to $102.50.

Consider buying to open the GILD January 2015 105 put up to $5.

If you celebrate it, have a great Halloween.

As we near the elections, volatility may begin to increase again.  So let’s sell to close the second half of the VXX December 36 put for solid gains today.  We closed half yesterday for up to 18% max gains.

These put options last traded at $6.35 x $6.45.

Hold all other positions, including the new trades issued this morning.

After taking fast gains on Celgene and Gilead, I’m turning my attention to still oversold names in the oil sector.  The double-digit drop in oil prices was a result of a strong dollar, the IMF decision to lower the global growth forecast, and the IEA decision to cut oil demand predictions.

None of it is reason for a 13% plunge in prices, though.

As oil begins to recover from its brutal sell-off, big names should recover more lost ground, as well, including Exxon Mobil (XOM), Nabors Industries (NBR), and Weatherford International (WFT).

The best way to trade these names is by buying a basket.  Consider picking up call options on all three, investing an equal amount in each.  Do not risk the house.  Invest a max of 5% to 10%.  Never risk 100% of your portfolio on anything at any time.

Consider buying to open the following:

• XOM January 2015 95 call up to $2.60…
• WFT February 2015 20 call up to $1.05…
• NBR March 2015 19 call up to $2.40…

As we near expiration on the Noodles & Company (NDLS) November 22.50 calls, consider selling to close the position now.  As of 10 am EST, I show a last trade of $1.70.  Close it out.

Consider selling to close half of the VXX December 36 put, as well.  Volatility is decreasing as expected.

Just last week, you had the opportunity to profit from the long side of volatility, and walk with gains of up to 23% and 158% on the VXX December 33 calls.  Now, you have the opportunity to profit from the short side of volatility.

Also, consider selling to close the Harley Davidson (HOG) January 2015 60 calls for a max gain of 86%.  As of 10 am EST, I show a last trade of $4.70.  Close it out.  I’d rather not risk this gain to a potential pullback from here.

Hold all other open positions…

On October 16, I issued a buy consideration on the CELG January 90 call, and the GILD January 105 call.  Both underlying stocks were wildly oversold, finding support after a massive 900-point drop on the Dow.

The next day, I recommended that you consider exiting half of each position, as they put in unexpected moves higher.  Today, after what appears to be a near-term over-extension to the upside, I recommend closing the second halves of the CELG and GILD call options.  I’ll consider buying them again on the next pullback.

Unfortunately, after such a market routing, losers exist, too.

Lululemon (LULU) and Quiksilver (ZQK) are two of those losers.  If you have not done so already, sell to close these two positions.

Always remember not to risk the house on any trade, ever. This market is far too volatile to play games with.  Only risk 2% to 5% on any trade.

This worked out a bit quicker than we thought it would.

While our goal with this service is to hold trades long-term, the profit opportunity today is too good to pass on.

As the market lost its mind again yesterday, we issued a buy on the GILD January 105 call and the CELG January 90 call up to $5 each.

Today, as of 11:50 am EST, those GILD calls last traded at $6.15 x $6.40, as the underlying stock jumps $4.80 on the day.

And, today, as of 11:50 am EST, those CELG January 90 calls last traded at $5.85 x $6.10, as the underlying stock pops $2.71 on the day.

If you bought in… and are happy with the gains, consider selling to close half of each right now. Hold the second halves a bit longer, as we expect further, explosive upside in these monster biotech names.

Hold all other open positions, as the market pops back as expected on Fed news.