Update: November 24, 2014

| November 24, 2014

November 24, 2014

 

Portfolio Update

The major US indices have been trading in record-high range and investors have mostly been complacent. It’s not necessarily unusual at this time of year. Consumers start looking ahead to the holidays and news tends to slow down.

That’s not to say all is bright and fuzzy. Sure, the US economy is doing fairly well. However, the rest of the globe is fighting an economic downturn, for the most part. Europe is still in big trouble and Japan has fallen back into a recession. For the time being, the US is hanging in there – but global forces will have at least some impact on domestic growth.

Perhaps the biggest economic/financial news over the past couple weeks has been oil’s descent. Crude oil broke below the key $80 per barrel barrier and has been sitting around $75. That’s good news for consumers who save money on cheaper gas prices. But, it’s certainly bad news for shale oil and deep sea drillers (with their expensive production costs).

Speaking of consumers, the holiday shopping season has started. You’ve probably noticed how busy the malls have already gotten. Given lower gas prices, we may see a better than expected retail season. It will be interesting to watch how retail stocks do over the next few weeks.

Now, let’s take a look at the 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.

  • The Gap (GPS) January 38 Calls – Our retail-themed trade has been a good one so far, with both of our bullish positions doing well. GPS has hit $40 a couple times and looks like it will test the 200-day moving average. For conservative traders, $40 was our exit point for taking profits. Aggressive traders can wait to see if $44 will be in play. At their peak, these calls have been as much as 71% winners.

 

  • CH Robinson (CHRW) January 70 Calls – Our second bullish retail trade also continues to perform very well. Conservative traders should have cashed out of CHRW already. But for those aggressive traders who held on, the January calls have been as much as 150% winners. Keep in mind, the aggressive exit point isn’t until $75.

 

  • Barnes & Noble (BKS) January 21 Puts – Retail stocks have done so well lately, that the market even pulled our inverse trade higher. BKS has ridden the wave of positive feelings higher and hit our risk control point for conservative traders. This looks like a near-term top for the stock, so aggressive traders who are still holding should get another downside shot on this one.

 

Category: AOA Updates