Weekly Update: December 10, 2015

| December 10, 2015

Weekly Update:  December 10, 2015

 

What To Watch

We’re seeing something of a pre-Christmas pullback in stocks.  Over the last week, the S&P 500 is down 1.5%.  The benchmark index is still up 1.5% for the year and has gained back a half percent today as of this writing.  Outside of some crazy news from the Fed, I don’t expect a sustained selloff in stocks for the remainder of the year.

One of the big “negatives” is the plunging price of oil.  Cheap oil tends to be consistent with a poor economy.  However, I don’t really believe that’s a real concern this time around and fears are overblown.  Ultimately, cheap oil should be very good for both consumer and business spending increases.

Once again, the US economy is showing resilience.  We had another great jobs report for November.  And, it looks like plenty of people are spending money on holiday shopping (albeit online).  It will be interesting to see what the retail numbers look like in January when all the data have been sorted.

Meanwhile, we’re all just waiting for the Fed.  Once the FOMC meeting results are known, we can pretty much pack it up for the rest of the year.  That’s the last important event of 2015 for most investors/traders.

Let’s take a look at the portfolio.

 

Portfolio Recap

Position #1: Cisco Systems (CSCO) December 26 Calls

Price Paid: $0.73

Current Price: $1.03

Time Until Expiration: 8 days

CSCO has pulled back with the broad market, so it’s become less likely we’ll hit our aggressive profit-taking point.  Nevertheless, most of you have probably exited this position for profits.

 

Position #2: Western Digital (WDC) December 63.50 Calls

Price Paid: $1.34

Current Price: $1.43

Time Until Expiration: 8 days

WDC has been close to our first profit-taking point, but it just hasn’t quite gotten there yet.  Time decay will really start to be a factor with expiration next week, so I’m supportive of closing this position for a profit whenever.  Peak gains so far have been 63%.

 

Position #3: Yelp (YELP) January 29 Puts

Price Paid: $1.35

Current Price: $1.40

Time Until Expiration: 36 days

We made this trade at the right time as it’s been a mostly down week for stocks.  Yelp is back up today but prior to that, we got to peak gains of 36%.  Still plenty of time on these January options.

 

Position #4: Corning (GLW) January 18 Calls

Price Paid: $0.53

Current Price: $0.51

Time Until Expiration: 36 days

We just made this trade yesterday so not much to report.  We should have more to discuss next week.

 

Category: OTW Weekly Updates