Weekly Update: August 11, 2016

| August 11, 2016

Weekly Update:  August 11, 2016


What To Watch

It’s been two weeks since our last update but it sure seems like we didn’t miss anything. It’s been about as low a volatility environment as you’ll ever see. At least part of it is August, which is the last big month of vacations until the end of the year.

For the year, the S&P 500 has earned over 8% gains, which is not bad at all. The Russell 2000 has the best major index performance, at roughly 9.5% gains. The top gaining major asset this year is silver, up a whopping 43.5% so far. On the other hand, crude oil has a done a major turnaround and is actually down 3.5% for the year.

With the job market looking as strong as it has been in years, we could finally see the Fed raise rates in September. Regardless, the central bank is going to be very conservative about hiking rates. There are still some obstacles to overcome for the economy to be able to handle higher rates.

Action should start picking up again in September, and it will be certainly easier to make money in long options once we have a bit more volatility.

Let’s take a look at our positions.


Portfolio Recap

Position #1: First Solar (FSLR) August 52.50 Calls

Price Paid: $1.05

Time Until Expiration: 8 days

FSLR lowered guidance and the stock got crushed. We’ve been stopped out of this position.


Position #2: Delta Air Lines (DAL) August 41 Calls

Price Paid: $1.12

Time Until Expiration: 8 days

Well, DAL did have some decent momentum… and then the company got him by awful technical problems and had to ground many flights for multiple days. Needless to say investors didn’t like the news. We haven’t been technically stopped out of the position, but with 8 days to go, it’s hard to imagine the share price will make a strong recovery in time.


Position #3: Cameco (CCJ) September 10 Calls

Price Paid: $0.75

Time Until Expiration: 36 days

CCJ is slowly but surely trending in the right direction. If the positive momentum continues, we should be in the black in the near future on our September calls.


Position #4: Gilead Sciences (GILD) September 85 Calls

Price Paid: $0.77

Time Until Expiration: 36 days

The stock hasn’t done much, but the options perked up a bit on one of the up days. At one point, our calls hit over $2 per option (164% gains on the position) before pulling back. We’ve still got plenty of time for the share price to make a more definitive move higher.


Position #5: 3D Systems (DDD) September 15 Puts

Price Paid: $0.97

Time Until Expiration: 36 days

We just made this trade, so not much to report yet. We’ll check back in next week and see what has transpired.


Category: OTW Weekly Updates

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