Weekly Update: August 8, 2013

| August 8, 2013

Weekly Update:  August 8, 2013

 

What To Watch

The market’s taking a bit of a breather this week, but the general trend is still very positive.  The S&P 500 is off its all-time highs, but still hovering around 1,700.  The benchmark index is up 20% for the year.  Meanwhile, small caps are having an even better year, with the Russell 2000 up nearly 24%.

Investors hesitated in their buying this week as concerns over Fed tapering have been making the rounds again. Although, this time the selling has been more measured.  That’s because the tapering talk is a consequence of strong economic data.

As long as tapering talk goes hand in hand with positive economic news, I don’t expect a major pullback to occur.  Ultimately, a better economy is good for everyone – and what we’ve all been waiting for.

Regarding the economy, jobless claims came in at their lowest level since January 2008. Moreover, new filings for unemployment dropped 10% from the same period last year.  The job market is clearly improving, and that’s great news for the economy in general.

I’ll be looking to roll out our next trade early next week.

 

Portfolio Recap

Position #1: Qualcomm (QCOM) August $65 Calls

Price Paid: $1.05

Price Sold: $1.80

As I mentioned last Friday, we got a nice move higher in QCOM right before time decay really started kicking in.  We took advantage of the move and locked in 71.4% profits on the trade.  Nice work!

 

Position #2: Freeport-McMoRan (FCX) September $29 Calls

Price Paid: $1.09

Current Price: $2.34

Time Until Expiration: 43 days

Gold and copper are both up big today and we’re seeing the results in the share price of FCX.  The stock’s up nearly 5% on the day and closing in on $31 per share.  Our calls are already 115% winners as of this writing.  But this time, we’re not going to sell.  We have over 40 days left on the options and the stock could easily head higher if it breaks the 200-day moving average.  We’re going to give this trade a chance to earn huge profits and see if FCX can break even higher.

 

Position #3: Broadcom (BRCM) September $28 Calls

Price Paid: $0.86

Current Price: $0.37

Time Until Expiration: 43 days

BRCM shares are down with the overall market, but they’re still easily within striking distance of our strike.  Nothing specific has come out about the company – it’s simply selling off with the broader market.  And, there are still plenty of reasons to like this clearly undervalued stock.  We’ll keep holding our calls as we have plenty of time to let the trade work.

 

Position #4: Potash (POT) September $32 Calls

Price Paid: $1.12

Current Price: $1.09

Time Until Expiration: 43 days

With a 3% jump today, our POT calls are right back at our entry level.  The stock’s climbing today with the rest of the basic materials sector.  There are several catalysts which could jolt the fertilizer giant higher.  And of course, we have lots of time to see where this trade takes us.  Stay tuned.

 

Category: OTW Weekly Updates