Weekly Update: April 25, 2013

| April 25, 2013

Weekly Update:  April 25, 2013


What To Watch

The stock market’s indecisiveness continues to rule the day.  After a rough week last week, stocks have gotten back on the horse and are up just under 2% since last week.  As I mentioned last time, I’m not yet ready to give up on the bull market.

And as always, there are several factors at play.

Earnings season hasn’t been great, but it hasn’t been terrible either.  For instance, Apple (AAPL) posted mixed results, with investors not sure whether to buy or sell.  That pretty much sums up earnings season so far.  There are still plenty of big earnings to come, starting with Amazon (AMZN) tonight.

To put it into perspective, Bespoke Investments reports that roughly 57% of companies reporting so far have beat earnings expectations.  But, only 44% of companies have beat revenue expectation.  Once again, not great, but not bad.

On the economic front, jobless claims came in at 5-year lows today –  which is very nice to see.  The economic data has also been mixed, but so far, there doesn’t seem to be any real fear of another recession on the horizon.

We’ll be looking at another trade next week.  At the moment, I’m leaning towards adding puts, but let’s see where things stand.


Portfolio Recap

Position #1:  Deere & Co (DE) May $87.50 Calls

Price Paid: $1.43

Current Price: $1.43

Time Until Expiration: 22 Days

That’s better!  With the market recovery this past week, we’ve also seen a nice upward move in DE.  Our calls are now back to our initial buy price – and we’re closing in fast on our strike.  We still have over three weeks to expiration, so let’s go ahead and give the options a little more time to run.  If the stock breaks through the 50-day moving average, the sky’s the limit.


Position #2:  Weatherford International (WFT) June $12 Calls

Price Paid: $0.92

Current Price: $1.25

Time Until Expiration: 57 Days

That’s a nice start to our WFT trade.  In just over three days, we’re up 36%.  Not too shabby!

What’s more, the stock can climb another $0.50 or so before it hits resistance.  We may even get there before earnings on May 2.  Regardless, if the stock climbs to the next resistance level, we’re looking at nearly 100% gains.  And don’t forget, these are June options.  Let’s continue holding our calls and see what develops.


Category: OTW Weekly Updates