Update: March 3, 2014

March 3, 2014

 

Portfolio Update

The crisis in the Ukraine has derailed what has been a mostly positive, low volatility past week for US equities.  The S&P 500 is down 0.75% on concerns over Russia’s troops entering the Ukraine.  Prior to today, the benchmark index had been up nearly 1.5% over the last week.

The Ukraine/Russia situation doesn’t pose a direct threat to US equities, but global turmoil is always a cause for concern.  The possibility of an emerging market conflict spilling over into developed nations is often a cause for investors to flee into safe haven investments.

In fact, commodities are getting a boost from the Ukraine crisis.  Oil is moving higher due to the many pipelines crossing the region from Russia to Europe.  Grains are also higher because of Ukraine’s role as a global grain producer.  Finally, gold is getting snatched up as the world’s foremost safe-haven investment.

On the domestic front, the US economy continues to improve as the country is finally digging itself out of the polar vortex.  Although some areas are still seeing awful weather, now that it’s March, the spring thaw is definitely in sight.

Be sure to keep an eye on the VIX.  The benchmark volatility index will tell us how nervous investors are really getting about market conditions and the situation in the Ukraine.

Let’s take a look at 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 – The CCJ trade was a part of our natural gas bearish play.  And, while natural gas has declined a little, nuclear stocks have taken off.  As Cameco is the top uranium producer in the world, it makes sense that the stock has soared along with the industry.  In fact, CCJ has already reached our conservative profit-taking level and is very close to our aggressive profit-taking point.  As of today, our CCJ calls have traded as high as $4.20, making them 163% winners at their highest point.

 

• Exelon (EXC) July $29 Calls – EXC has continued to hover over $30 a share, and reached nearly $31.  With investors moving into safe-haven investments, we could see utilities such as Exelon get a boost in the coming days.  In the meantime, on calls have been as high as 70% winners.  Who says you can’t have big winners in utilities?

 

• 3D Systems (DDD) May $50 Puts – DDD continues to be quite volatile, but could be in store for a decline.  The company posted mixed earnings this past week which initially sent the stock higher.  It has since pulled back and could be set up for another drop should overall market volatility pick up.  The share price briefly traded above $80, so conservative traders should have exited the puts for a loss.  Aggressive traders are still on board, with a much higher risk control level of $90.  I set that aggressive exit much higher due to the volatile nature of the stock.  Stay tuned.

 

Category: AOA Updates