Update: March 17, 2014

| March 17, 2014

March 17, 2014


Portfolio Update

After a tough week last week, US equities jumped today on news of stronger than expected industrial production.  The S&P 500 climbed by a 1% as did the Dow Industrials.  The Ukraine/Crimea crisis is likely to drag on, but investors aren’t too worried at the moment.

On Sunday, Crimea voters elected to be a part of Russia.  However, the US and other international powers won’t recognize Russia’s annex of Crimea and are imposing sanctions.  The US believes the decision should be left to the people of Ukraine – most of whom would likely prefer Crimea to remain part of their country.  It could take awhile for this situation to play out and the economic impact on the US is uncertain for now.

On the bright side, industrial production in February increased by 0.6% after dropping 0.2% in January.  Moreover, factory production improved by the most since last August.  It appears the country is finally rebounding from the harsh winter conditions.

This week, investors will be paying close attention to the March FOMC meeting, where the next round of tapering is assumed to occur.  Also, it’s worth keeping an eye on the Consumer Price Index (CPI) tomorrow to see if there are any signs of core inflation.

Of course, headlines out of Russia/Ukraine and China can always move the markets on short notice.  For now though, investors seem to be mostly at ease with worldwide affairs.

Now, on to the portfolio…


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.

  • Cameco (CCJ) June $21 Calls – Not to sound like a broken record, but CCJ continues to be strong winner for us.  At its peak last week, our options racked up 175% in gains.  What’s more, we’ve reached our exit point for aggressive profit takers.  If you’re following my advice, there should be no one left in this trade.  Congratulations on a great trade and our first big winner!


  • Cheniere Energy (LNG) June $45 Puts – LNG briefly spiked higher due to the situation playing out in Ukraine.  The company got a boost from talk the US could be open to more natural gas exports.  However, the shares almost immediately traded back down.  For conservative traders, you may have closed your position when the stock breached $53.  Aggressive traders should still be holding the puts, which I believe will be headed below $50 in the near future.


  • General Mills (GIS) July $50 Puts – GIS dropped sharply after forecasting an earnings miss for Q3.  As expected, the company is worried about higher grain prices brought on by the crisis between Ukraine and Russia.  Our puts have only been as high as 16% winners so far, but that number will increase quite a bit should the share price drop below the 50-day moving average at around $49.  After this recent earnings miss, I believe it’s just a matter of time.


Category: AOA Updates