Update: June 13, 2016

| June 13, 2016

June 13, 2016

 

Portfolio Update

Hello volatility!  It had been a very calm – you may even it call it bullish – June so far.  At least until today.  Investors decided today was the day to get spooked about Brexit and what it may mean for global stocks.  The VIX jumped over 20% and is sitting at the danger-zone level of $21.45.  Basically, anything over $20 is considered to mean investors are concerned about a selloff.

That being said, the S&P 500 only barely budged today, along with most of the other major stock indexes.  (On the year, the S&P 500 is up 2.5%.)  What this likely implies is investors are hedging their portfolio using VIX, but they aren’t necessarily dumping their stocks.

On the surface, you wouldn’t think the UK leaving the EU would be all that big of a deal.  It would certainly hurt the British economy right away, but will have little impact on the rest of the EU.  Still, uncertainty is never a good thing for investors, hence the major hedging activity today.

We’re likely to continue to see action over the next few days leading up to the vote on Brexit next week.  It’s a good time to stick to “wait and see” mode.

Speaking of next week, there won’t be a trade as our office is closed for summer vacation.  We’ll be back with a new trade the following Monday.  At that point, we should have a good idea of what the fallout from the Brexit vote is.

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.

  • Apache (APA) July 55 Puts – APA is one of our put positions which has come in play with today’s market selloff. The stock has dropped sharply the past couple days and is nearing our first exit point.  Peak gains so far are 65%.

 

  • Kate Spade (KATE) July 23 Puts – KATE is another one of our put positions which has done well recently. We’ve actually had this one on since mid-March.  Our patience has paid off as the stock finally dropped below our first profit-taking point.  Peak gains so far are 54%.

 

  • Xcel Energy (XEL) June 40 Calls – XEL is a call position we’ve had on since early February which is about to expire. This trade is going out with a bang as the stock has reached new 52-week highs.  That means we just hit new highs of 191% gains on the position!

 

Category: AOA Updates

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