Update: January 12, 2015

January 12, 2015

 

Portfolio Update

So far in 2015, the financial markets have basically been driven by three things: oil, global economic risk, and volatility. However, with earnings week starting today, there will be a whole series of new inputs to pay attention to.

Back to the three categories, oil is still the biggest story of the year. Crude oil has been as low as $45 a barrel as I write this. Outside of the commodity crash of 2008/2009, the price hasn’t been this low for ten years! Yes, Wall Street is concerned because of the spillover effects from the energy industry. However, it should continue to be good news for the average consumer, akin to a tax cut.

Meanwhile, the global economic situation could use a boost. The biggest concern is the Eurozone, where Greece has taken the spotlight once again. This time around, we know the ECB will keep government bonds from defaulting. But, a Greek exit from the Euro could still cause quite a bit of turmoil.

Finally, we’re seeing some sustained market volatility for the first time in a while. Yes, we’ve had spikes in volatility, but the VIX is actually hanging out around 20 for more than just a day or two. We’ll have to watch it closely to see if investors loosen up in the coming days.

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.

• Valero Energy (VLO) January 47.50 Calls – Like XOM, we hit the nail on the head with the VLO trade. Despite the continued plunge of crude oil prices, VLO has basically held its ground. Conservative traders have already been stopped out, with aggressive traders still in the game. At their peak, our calls were worth 138% gains.

 

• Teekay (TK) January 50 Calls – TK looks like it could be that unusual circumstance where the stock hits none of our exit points prior to expiration. For the most part, the calls have been solid to excellent winners… we just never quite hit that exit point. With a week to go until expiration, go ahead and sell out the position at your discretion if you’re still holding. The trade most likely won’t finish in the money, but it makes sense to play it safe in this situation.

 

• The Gap (GPS) January 38 Calls – One of our older trades, just about to expire, GPS has been a winner from the get go. The stock basically never went down since we made our trade. We’ve come within a hair of hitting our aggressive exit point, with conservative traders long since stopped out. At its peak, this position has shown 176% gains.

 

Category: AOA Updates