Update: May 16, 2016

| May 16, 2016

May 16, 2016

 

Portfolio Update

We had a pretty decent up day today for the first time in awhile. It’s mostly been back and forth action for the last couple weeks.  The big news today was the Berkshire Hathaway (BRK) $1 billion stake in Apple (AAPL).  That’s an investment the world’s largest company surely needed after its recent downturn.

Overall, the S&P 500 is up just under 2% for the year and the DJIA is up close to 2.5%.  Conversely, the Russell 2000 and the Nasdaq 100 are both down on the year, with the Nasdaq 100 still over 4% from breakeven.  Meanwhile, 10-year Treasury notes are still outperforming all major stock indices, up 4% for the year.

Commodities have been more exciting this year than the past couple cycles, with precious metals leading the way. Gold and silver are both up over 20%.  Crude oil has slowly gained strength and is now up over 10% for the year.  We may not get expensive oil prices for a while, but the moderate price increase in oil is certainly good news for the energy sector.

Sentiment has turned a bit and investors are a bit more bearish lately.  However, there’s nothing economically speaking that we really need to worry about right now.  There’s still no recession in sight.  On the other hand, we’re not doing well enough for the Fed to justify a rate increase.  Ultimately, this is a pretty good environment for stocks.

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.

  • Western Refining (WNR) June 21 Calls – We had a nice to start to our WNR position put on last week. The stock spiked above our conservative profit-taking point right away.  However, because the stock shot up right away, our entry price was right at the top of our buying range. Still, we made 45% so far in less than a week.  Aggressive traders can continue to hold.

 

  • Splunk (SPLK) June 47.5 Puts – The software company has had a rough month with tech getting hit hard. That’s good news for us since we’re long the puts. Although we’re not quite to our conservative profit-taking point yet, we’ve already been up as much as 129% on the trade.

 

  • Facebook (FB) June 125 Calls – FB is an interesting case study in time decay of options. The stock is around $121 right now, but our options haven’t hit their highs from March when the price was much lower. Why?  Time decay takes a toll on options and we made this trade all the way back in mid-March. Still, the trade is a winner, and we’ll take winners in any form all day every day.

 

Category: AOA Updates

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