Update: August 4, 2014
August 4, 2014
Portfolio Update
US equities took it on the chin at the end of last week, but have stabilized today. International drama and concerns over a global economic slowdown sent stocks tumbling for the first time this summer. However, investor fear seems to have subsided as we began the first full week in August.
Basically, the combination of several international events spooked investors into selling equities. When there’s enough drama going on across the world, it’s natural to start worrying about the negative impacts on the global economy.
Of course, there’s the situation in Ukraine, with many developed countries at odds with Russia. There’s also the military conflict between Israel and Gaza. And then, you throw in the potential bankruptcy of Portugal’s second biggest bank and a major default scare on Argentina government bonds… well, you could see how it could easily escalate into investors selling stocks.
This week, however, things seem to be under a bit more control. And let’s not forget the US economy is looking strong and healthy. GDP came in at a robust 4% growth level. Meanwhile, the job market looks stable and personal consumption is on the rise.
All in all, there’s not a whole lot of reasons to worry about a major setback to US equities. Any pullback at this point is likely just a temporary bump in the road.
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.
- Verizon (VZ) August 47 Calls – VZ spiked yet again and now even the aggressive traders should have closed their calls. At their peak, our calls were 342% winners! Both conservative and aggressive traders should have done quite well on this trade.
- McDonald’s (MCD) August 100 Puts – We bought these MCD puts all the way back in May, and they’ve finally paid off for both conservative and aggressive traders. The fast food giant is dealing with several issues, most notably losing a major labor case. The stock has now dropped below both our suggested exit points. The options peaked with a robust 206% in gains!
- SunEdison (SUNE) October 23 Puts – Looks like we made a good call on SUNE. The stock is dropping after mixed earnings results and lowered guidance. Conservative traders should have closed their puts by now. Aggressive traders have all the way until October to ride these puts out. After today, our options are 88% winners.
- Kellogg (K) September 65 Calls – K pulled back fairly sharply last week after an earnings miss. Cereal sales ended up more sluggish than expected in the previous quarter. However, the shares bounced hard off of support at $60. Now the stock should test the 200-moving average and has a chance to move higher. Conservative traders should have exited their calls, while aggressive traders have time to wait for the shares to rebound.
Category: AOA Updates
