Update: February 9, 2015

February 9, 2015

 

Portfolio Update

It’s been a really interesting year so far for US equities. The S&P 500 has been almost entirely range bound. Yet, volatility has remained elevated. It seems like investors expected a big move (down) in stocks, but instead we’re getting a wide, sideways channel.

Global markets continue to be a thorn in the side of US markets. Europe has initiated its own version of quantitative easing, but has a long road ahead to recovery. Greece has been on the minds of investors, as a political regime change could lead to the country’s exit from the Euro. China has also mostly released disappointing economic news lately.

On the other hand, the US economy looks solid. In particular, the job market is improving by leaps and bounds as we’re slowly returning to pre-recession levels. The rest of economic news has been mixed. But, it’s hard to be overly concerned when people are getting jobs and seeing higher wages.

At the moment, US investors don’t have a lot to worry about. However, it pays to keep an eye on global markets.

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.

• Freeport McMoRan (FCX) May 18 Calls – That’s a great start for our FCX calls! We’re already within $0.50 of hitting our conservative profit-taking exit despite having until May on these calls. The stock was simply too cheap and is now normalizing. Our position has already had as much as 113% gains in the first week.

 

• Microsoft (MSFT) March 46 Calls – MSFT missed on earnings and the shares took a dive. I actually felt the earnings brought some optimism to the company’s future. However, the stock reacted to the short-term negative news and has fallen below our conservative exit point for risk control. The share bounced before it closed out aggressive traders, so if you’re still holding, we have until March expiration for a rebound.

 

• Southern Company (SO) May 50 Puts – Our SO position has done something unusual. It hit both our conservative exit points (profit and risk control) in the same week! The stock briefly ticked above our risk control point before plunging nearly straight down. For more aggressive traders, you could be up as much as 119% on these puts so far. It’s been quite the ride lately with SO!

 

 

Category: AOA Updates