Weekly Update: December 17, 2015

| December 17, 2015

Weekly Update:  December 17, 2015

 

What To Watch

Editor’s Note:  Our offices will be closed for the holidays for the final two weeks of December.  There will be no trades or updates during that time.  We’ll get things kicked off the first week of January.  Hope you all have a happy holiday season!

The S&P 500 is up about 2% on the year and will probably close 2015 out somewhere near that level.  All the major news is basically done for the year and many investors and traders will take the next two weeks off.  The market may drift up (or down) during the final two weeks, but volume is likely to be low.

The moment we were all waiting for came and went without much fanfare.  The Fed did indeed raise rates in its final meeting of the year, but just the 25 basis points we expected.  The central bank will also be cautious about raising rates in the future and still isn’t seeing much in the way of inflation.  That’s basically bullish for equities heading into 2016.

The US economy is ending the year on a most positive note.  The jobs market is strong, and the housing market is decent.  As I’ve been saying all year, the next thing the economy needs will be an increase in consumer spending.  A boost to global economic output could also be a boon to the US manufacturing sector.

Let’s take a look at the portfolio.

 

Portfolio Recap

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

Price Paid: $0.73

Current Price: $1.00

Time Until Expiration: 1 day

These calls expire tomorrow.  Close the position for a profit if you haven’t already.

 

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

Price Paid: $1.34

Current Price: $0.10

Time Until Expiration: 1 day

WDC expires tomorrow.  Everyone should be out of this position.

 

Position #3: Yelp (YELP) January 29 Puts

Price Paid: $1.35

Current Price: $1.40

Time Until Expiration: 29 days

Yelp is a company that I’m generally bearish on, but I also wanted to have it as a proxy portfolio hedge.  It has served that purpose well.  The stock dropped with the overall market earlier this week and has hit our first profit-taking point.  Peak gains so far are 164%.

 

Position #4: Corning (GLW) January 18 Calls

Price Paid: $0.53

Current Price: $0.66

Time Until Expiration: 29 days

Despite the down market conditions early in the week, GLW has held its ground quite well.  In fact, the stock even made a run at our first profit-taking point.  Let’s see how it reacts in the coming days.  Peak gains so far are 117%.

 

Position #5: Oracle (ORCL) January 38 Calls

Price Paid: $0.43

Current Price: $0.42

Time Until Expiration: 29 days

We just made this trade this morning.  We don’t have an update until January, but I’ll update the peak price/gains on the website before the end of the year.

 

Category: OTW Weekly Updates