Update: August 18, 2014

| August 18, 2014

August 18, 2014


Portfolio Update

US equities are looking strong once again as the S&P 500 has pulled within a percent of its all-time highs. The benchmark index is up 7% on the year and has almost entirely recovered from its early August swoon.

From a global perspective, US stocks are something of an enigma. Almost the entire US equities market appears to be insulated from the many international crisis areas sprouting up almost everywhere you turn. The biggest hot spot remains in Eastern Europe with the conflict between Ukraine and Russia. However, the continued US airstrikes in Iraq are also being watched closely. And, fighting between Israel and Gaza could erupt at any time.

And let’s not forget, we recently had a large bank default in Portugal and a government bond default in Argentina. There’s also an Ebola outbreak in West Africa which is making headlines. To top it off, China, Germany, and Japan are all contending with slowing economies.

Yet, the US remains resilient. That’s probably why stocks are doing so well here. It’s about the only safe place to invest in equities these days. Job growth, strong earnings, and heavy Fed support are keeping the gloom out of America for now.

Once again, I don’t expect a major turnaround in stocks anytime soon. However, given all the global turmoil, it’s not a bad idea to reassess your portfolio risk, or at least keep a close eye on volatility levels.

Now, let’s take a look at the portfolio highlights…


Portfolio Highlights

Just a quick note:  We won’t update every open position every update.  I try to focus on the positions that have some significant news or price movement.

  • Outerwall (OUTR) September 55 Calls – OUTR has climbed sharply higher since our late July trade. It’s almost like we bottom-ticked it! In fact, the stock has already climbed above our conservative exit point. Aggressive traders can hold all the way up to $65. At today’s peak, the options are 202% winners!


  • Noble (NE) September 31 Calls – For those of you still holding NE calls, the stock price may be a bit confusing. You see, the company spun off its Paragon Offshore division into a separate public company and it altered the stock price. Basically, the stock price was adjusted roughly $4 lower on August 4th. In other words, we’re still basically right at-the-money with our calls. Given the confusing nature of the stock, aggressive traders who are still holding may wish to exit at this point.


  • Kellogg (K) September 65 Calls – As I mentioned last update, K bounced hard off the $60 support level. The good news is, the rebound has remained strong since then. The share price is almost back to its pre-earnings trading range. And now we have the 20-day moving average and the 50-day moving average as support. With over a month to go, these calls are back in play for us.


Category: AOA Updates