Weekly Update: April 14, 2016

| April 14, 2016

Weekly Update:  April 14, 2016


What To Watch

It looks like investors are starting to believe in stocks again, which should be good for at least a short-run continuation of the current rally.  Unless some major piece of negative news comes out, we’re looking at a slow and steady climb in stocks with individual equities diverging a bit based on earnings.

Since last week, the S&P 500 is up 2% and is now up 2.5% for the year.  The Nasdaq 100 and Russell 2000 are finally about even on the year after having strong weeks as well.  We may finally get to see if the major equity indices can maintain a rally long enough to reach new highs.

One of the big news items from the past week was the jump in the price of crude oil.  Supply issues may finally be starting to abate as shale oil production slows.  The price of crude jumped over 4% and is back above $41 a barrel.  It will be interesting to see if oil starts getting bid up again.

In economic news, initial jobless claims continue to sit at their lowest levels since 1973.  Despite the strong jobs news, it also appears the Fed will not be raising rates in April.  All in all, that’s very bullish news for the stock market.

Let’s take a look at our positions.


Portfolio Recap

Position #1: Bank of America (BAC) April 13 Calls

Price Paid: $0.82

Time Until Expiration: 1 day

Nice little pop in BAC at the very end (due to earnings). Everyone should be out. Peaks gains were 56%.


Position #2: Silver Wheaton (SLW) April 15 Puts

Price Paid: $1.05

Time Until Expiration: 1 day

Expires tomorrow.


Position #3: eBay (EBAY) April 25 Calls

Price Paid: $0.69

Time Until Expiration: 1 day

All the action happened at the very end.  Expires tomorrow.


Position #4: Freightcar America (RAIL) April 17.5 Calls

Price Paid: $0.75

Time Until Expiration: 1 day

Expires tomorrow.


Position #5: Box (BOX) April 12 Calls

Price Paid: $0.97

Time Until Expiration: 1 day

BOX is one of the very rare circumstances where the stock never hit any of our exit points.  We need to close out the options tomorrow so we don’t get assigned on the stock.  However, much of the value remains in the calls with the stock trading over $12.50.


Position #6: GoDaddy (GDDY) April 31 Puts

Price Paid: $0.95

Time Until Expiration: 1 day

GDDY ended up being a big winner as long as you were patient enough to wait for the drop.  These puts expire tomorrow.


Position #7: H&R Block (HRB) May 27 Calls

Price Paid: $0.55

Time Until Expiration: 36 days

The HRB trade didn’t work out as the stock didn’t get the tax-day bump I was looking for.  We’ve hit both of our risk-control exit points, so everyone should be out.  Getting out with over a month to go means we’re able to salvage some value out of the position that didn’t go our way.


Position #8: Wells Fargo (WFC) May 48 Calls

Price Paid: $0.88

Time Until Expiration: 36 days

While the HRB trade didn’t work, our most recent position has been a huge winner right out of the gate.  WFC posted better than expected earnings and has already climbed right up to our first profit-taking point.  With still over a month to go, our peak gains are already 107%.


Category: OTW Weekly Updates