Update: March 31, 2014

| March 31, 2014

March 31, 2014


Portfolio Update

US equities continue to trade in a sideways manner, although the S&P 500 is still up about a percent for the year.  Overall for the quarter, stocks have underperformed bonds (Treasuries) substantially, with long-term bonds up 8%.  Although, over the last year, stocks are up over 20% compared to bonds -3% return.

The sideways trade in US equities is probably going to continue given the macro circumstances.  On one hand, the domestic economy is looking stronger and stronger every quarter (but we’re still far from rapid growth).  On the other hand, geopolitical risk remains high due to overseas events.

The situation in Russia/Ukraine is likely to drag on for the foreseeable future.  The Middle East continues to be a hot spot in terms of political instability.  And, North Korea is once again sparking controversy.  However, at least the news on China has turned slightly positive on hopes of stimulus for the slowing economy.

In the US, investors are rotating out of strong performers from 2013, such as Internet stocks and biotech.  Money is flowing into safer sectors such as utilities.  Investors are also buying emerging markets again with US equities in a seeming standstill.

There could be ample opportunities for options trades coming up with earnings season about to kick off once again.  As always, we’ll be rolling out another set of trades next Monday.

Let’s take a closer look at some interesting positions in 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.

  • Exelon (EXC) July $29 Calls – Exelon has soared higher as investors rotate into utilities.  As one of the largest utilities out there, it makes sense EXC is seeing a lot of bullish activity given the shift in investor demand recently.  At its peak last week, our calls were up 185%!  Moreover, we’ve reached our exit point for conservative traders.  Feel free to exit here for big gains, or continue holding if you want to be aggressive on this stock.


  • Deere & Company (DE) June $90 Calls – DE shares moved sharply higher today breaking through resistance and climbing above $90.  At close, our calls were up 43% on today’s strong move.  We’re nearing our first exit point of $91.  Conservative traders may have the opportunity to exit as soon as tomorrow. Stay tuned.


  • Cheniere Energy (LNG) June $45 Puts – LNG has move against us ever since US politicians started talking about exporting more gas to make up for the possible disruption of gas exports in Ukraine.  There wasn’t a lot of reason to expect something like this might happen, but geopolitical threats can derail all kinds of sound market theories.  Anyhow, the stock briefly ticked above $56, so aggressive traders may want to exit this position here to control risk.


Category: AOA Updates