Update: October 27, 2014

October 27, 2014

 

Portfolio Update

The market started the week on a calm note after what’s been a crazy couple weeks. The S&P 500 was sitting at roughly 1,960 the first week of October. The index proceeded to drop all the way to 1,860, plunging through the 200-day moving average. A week later, the price shot all the way back up to 1,960 and is currently sitting at the 50-day moving average.

While it’s calm for now, I don’t expect the market to remain so. We have a lot of big news to digest this week. First and foremost, the Fed meeting results are released Wednesday. The Fed will address its bond buying program, which is slated to end this month. Plus, we’ll see how the language will change about the economy after the mid-October scare.

And don’t forget, it’s earnings season. There are still plenty of big names left to report, including Facebook (FB) and Starbucks (SBUX). Moreover, there will be the usual amount of economic reports to analyze. The biggest economic report, besides what the Fed says, will be durable goods orders.

Finally, macro conditions have softened a bit, particular as people freak out a little less over Ebola. The biggest concern has always been and continues to be Europe’s economy. Any good news from Europe could really give a boost to US stocks.

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.

• Diamond Offshore (DO) December 35 Calls – Most of our long-oil themed trade didn’t work out as the price of crude oil continues to plunge (against the expectations of most). However, DO has been the huge exception. The stock blew past our exit point for conservative traders and has been as high as a 317% winner. Aggressive traders can hold to $45.

 

• Yahoo (YHOO) November 39 Calls – I loved this YHOO trade more than most, so I’m not surprised it has been a huge winner. However, I’m a bit surprised at the path it took. The stock dropped all the way to $37 before spiking to near $45. The trade is now closed for both conservative and aggressive traders. We hit a high of 177% gains on this one.

 

• Total (TOT) November 65 Calls – TOT makes an interesting case study. Despite the continued drop in oil prices, our calls were as much as 43% winners before the stock finally breached our exit point for conservative traders. However, aggressive traders were still in the trade until the CEO of the company was killed in a plane crash. Obviously, this type of crazy incident is completely unpredictable. That’s why we roll out three positions with each theme, so we can take several shots at a winner each time out.

 

Category: AOA Updates