Weekly Update: April 24, 2014

| April 24, 2014

Weekly Update:  April 24, 2014


What To Watch

Most of the interesting news from this week has been centered on earnings.  Overall, it’s been a fairly quiet, moderately bullish week for US equities.  The S&P 500 is up a bit under 2% since last week.  The Nasdaq-100 has done slightly better and is basically just below its 50-day moving average.

The two biggest earnings results for the week so far have been Apple (AAPL) and Facebook (FB).  In both cases, the results were much better than expected, particular for AAPL.  What’s more, AAPL announced a dividend hike and a 7 for 1 stock split.  Will the world’s largest company soon be added to the Dow Jones Industrial Average?

In economics news, the domestic economy continues to look good overall.  However, there was some negative news in the form of sales of new residential homes.  The number dropped quite a bit from last month.  Whether or not it’s simply an outlier remains to be seen.

In international news, the conflict between Ukraine and Russia is heating up with physical confrontations taking place.  Any serious military action could cause a spike in market volatility.  But, for the time being, the market doesn’t seem to be overly concerned.

Once again, there will be earnings coming up over the next week or so, and we’ll continue to look for solid trade opportunities.

Now on to the portfolio.


Portfolio Recap

Position #1: Abercrombie & Fitch (ANF) May $38 Puts

Price Paid: $1.68

Current Price: $1.75

Time Until Expiration: 22 days

ANF couldn’t break through support and has jumped back up above $37. It shouldn’t hold at these levels (and there’s plenty of resistance here).  I don’t think my ideal exit level of $34.50 is going to happen at this point, so we’re going to sell these puts for a profit on the next decent-sized down day.


Position #2: Pandora (P) May $32 Calls

Price Paid: $2.05

Current Price: $0.72

Time Until Expiration: 22 days

P is sitting around $28, well off the recent bottom of $25.  What the stock does next is entirely due to earnings that come out after close today.  If earnings are good, $34 could very well be the next stop for this volatile stock. Stay tuned.


Position #3: Freeport-McMorRan Copper & Gold (FCX) May $33 Calls

Price Paid: $1.20

Current Price: $1.35

Time Until Expiration: 22 days

FCX jumped to $34 a share on earnings results.  It’s sitting right at resistance at these levels.  With the positive reaction to earnings, it’s very possible we’ll see FCX make a sustained move higher.  $35 is the next resistance level and could make for a good exit point.


Position #4: Amazon (AMZN) May 17th $375 Calls

Price Paid: $1.70

Current Price: $2.60

Time Until Expiration: 22 days

AMZN has moved quite a bit higher from our entry point.  The calls are now up 53%.  The big news, however, will be earnings after close today.  That will determine the true direction for AMZN for the next few days and whether or not we’ll be hanging on to these options.


Position #5: Dunkin’ Brands (DNKN) June $47.50 Calls

Price Paid: $1.15

Current Price: $1.05

Time Until Expiration: 57 days

We just made the DNKN trade this morning.  With June options, we have plenty of time for this trade to develop.


Category: OTW Weekly Updates