Weekly Update: December 19, 2013

| December 19, 2013

Weekly Update:  December 19, 2013


What To Watch

So we’re having a taper for the New Year after all.  Yesterday, the Fed announced it will in fact begin to cut bond purchases starting in January.

The funny thing is, it’s only $10 billion a month less (reducing purchases to $75 billion total) which for the economy means essentially nothing.  More importantly, it’s a chance for the Fed to start stepping back from its stimulus program without wreaking havoc in the market.

The other big news from the Fed is the central bank won’t raise the Fed Funds rate just because unemployment reaches 6.5%, as previously stated.  That’s a major change of policy and reflects the Fed’s concern over the low state of inflation.  It could be a sign that rates won’t go any higher for quite a bit longer.

Finally, the government actually did something proactive for a change and passed a 2-year budget.  This will avoid another disastrous government shutdown – but doesn’t address the looming debt limit approaching February.  Overall, major financial and political news should be pretty sparse heading into the holidays – generally a good thing.

I’ll be sending out a brief update next Tuesday with Christmas the following day.  Unless I have a surprise sell alert (not likely), the next trade will come the following week.  Enjoy the holidays!


Portfolio Recap

Position #1: Citrix Systems (CTXS) December $65 Calls

Price Paid: $1.39

Current Price: $0.00

Time Until Expiration: 1 day

We’re going to run out of time on CTXS, which is unfortunate because I still believe this stock has a run on $65 in its future.  We may look to take another chance on CTXS depending on how things shake out moving forward.


Position #2: Dominion (D) December $65 Puts

Price Paid: $1.45

Price Sold: $1.60

For those of you who weren’t able to get out of D yesterday, you had a shot this morning to get out near even as well.  If you sold yesterday at the time of the sell alert, you were able to lock in 10.3% gains on the trade.


Position #3: Millennial Media (MM) February $7.50 Calls

Price Paid: $0.65

Current Price: $0.85

Time Until Expiration: 64 days

MM has broken higher and is now trading above $7 a share.  The next resistance level is at the 200-day moving average, which happens to be our strike price of $7.50.  However, with two months to go, we’re holding for a much higher breakout than $7.50.  So far so good.


Position #4: Cree (CREE) January $60 Calls

Price Paid: $1.52

Current Price: $1.36

Time Until Expiration: 29 days

CREE has moved back up to the $58 level and is in position to test higher ground.  The stock has support just below with the 20-day moving average.  I believe the shares will make a run at $60 in the near future.  Stay tuned.


Position #5: General Cable (BGC) February $30 Calls

Price Paid: $1.25

Current Price: $1.10

Time Until Expiration: 64 days

BGC has been choppy in recent days but is slowly heading the right direction.  The 50-day moving average is a tick over $30 and that’s our next stop if the trend continues.  There’s plenty of upside potential with these options not due to expire until February.


Position #6: American Eagle (AEO) February $14 Calls

Price Paid: $0.98

Current Price: $1.05

Time Until Expiration: 64 days

AEO is off to a slow start with not much happening since we entered the trade.  Let’s see how the holiday shopping season ends up treating this company.  I believe AEO low-balled their guidance, but I guess we’ll know in due time.


Category: OTW Weekly Updates