Update: August 29, 2016

| August 29, 2016

August 29, 2016

 

Portfolio Update

The last couple weeks have brought a tad bit more action, but the overall theme has still been wait-and-see.  Stocks have generally moved up or sideways, with no real big days recently.  Investors have become increasingly complacent with volatility levels at very low levels (considering what could be on the horizon).

After all, we do have a presidential election coming up – although it doesn’t look like much of a contest at this point in time.  More importantly, the Fed has been hinting at a rate increase as early as September.  As long as future increases are easily predictable, there isn’t likely going to be any major selling, up to a point.

The US economy continues to look good, especially when it comes to jobs.  The housing market is also solid.  Even personal spending is starting to heat up.  Meanwhile, inflation remains subdued.  Combine low inflation with slow to no growth in Europe and elsewhere, and rate increases should be few and far between.

In the meantime, investors continue to look for yield with bond yields being so low.  Dividend stocks are doing quite well, and even commodities are starting to pick up a bit.  Precious metals are leading the way this year, with silver and gold outperforming most every other asset.

It’s going to be interesting to see what September brings with the potential for much bigger news items.  First and foremost, we’ll need to keep a close eye on everything the Fed says and does.  As always, stay tuned.

Let’s take a look at some 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.

  • Bank of America (BAC) September 13 Calls – BAC has been on a tear and has crossed both of our exit points for profit-taking. Everyone should out of this trade for a profit by now.  Peak gains on these calls are 253%!

 

  • Valero Energy (VLO) October 55 Calls – It may not seem like VLO has done that much since we made the trade last week, but the oil company has slowly climbed higher. Options activity has been even more bullish, with peak gains already hitting 43% despite only modest gains in the stock price.  This bodes well for the coming weeks.

 

  • Broadcom Limited (AVGO) October 190 Calls – As AVGO closes in on our first profit-taking point for conservative traders, it provides a good example with how you can make money on OTM calls. As long as you build in enough time, an option can be plenty profitable even if you don’t hit the actual strike.  (Of course, this doesn’t work when you get close to expiration.)  For instance, despite being $12 away from our AVGO strike, we’ve had peak gains of 36% so far.

 

Category: AOA Updates

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