Update: July 7, 2014

July 7, 2014

 

Portfolio Update

The S&P 500 hasn’t quite breached the 2,000 mark yet, but the Dow Industrials did top 17,000 for the first time. The markets continue to rally despite relatively low trading volume. That’s not entirely a surprise given it’s the summer and news has been relatively tame.

International news continues to be the most likely source to cause volatility, although investors are basically shrugging off what’s going on in Iraq, Ukraine, and elsewhere. After a brief spike in big name commodities like gold and oil, prices have remained mostly stable.

Domestically, the June non-farm payrolls report last week came out much better than expected. The jobs number blew away most analysts’ predictions, while unemployment fell to 6.1%. No matter how you look at it, it’s excellent news for the US economy.

There has been a little bit of concern of interest rates rising sooner than expected. However, the Fed continues to assure the financial markets they’ll play it safe. The central bank isn’t yet worried about inflation and doesn’t look ready to move key rates anytime soon.

Overall, I expect the non-volatile, mostly bullish action to continue throughout July.

Now, on to the 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.

• Starbucks (SBUX) July $72.50 Calls – Just when you thought SBUX was done making us money, the stock soared even higher! Aggressive traders now should have closed their positions as the stock price breached $78 per share this week. At their peak, our options were huge 415% winners!

 

• Barrick Gold (ABX) August $17 Calls – Gold has maintained its value, and that’s a good sign for ABX. The stock has climbed a bit since our last update, so our options have been as high as 104% winners. Keep in mind, conservative traders should have closed their calls a couple weeks ago, but aggressive traders can continue holding to $20 per share.

 

• Schlumberger (SLB) August $105 Puts – As good as our portfolio has been, occasionally I make a pick like SLB puts which blows up in my face. Not only did SLB raise long-term profit guidance, the company also received a price target of $130 from a major asset management firm. It’s hard to compete against those kinds of positive headwinds. After the recent surge in SLB’s share price, both conservative and aggressive traders should have closed out their positions.

 

 

Category: AOA Updates