Weekly Update: December 3, 2015

| December 3, 2015

Weekly Update:  December 3, 2015

 

What To Watch

With US stocks down today, and for the week, it definitely looks like the current trade channel is holding firm.  While I expect December to be a positive month for stocks, there’s probably a ceiling on how high we’re going to go.  I’m still expecting the S&P 500 to be up around 3% on the year, give or take a percent.

The new normal in US equities appear to be tepid gains with occasional higher bouts of volatility.  World geopolitical events and the coming interest rate hike should keep volatility more elevated than we’ve seen in the past several years.

However, the economy in the US is doing well enough not to worry about a major selloff – or a recession for that matter.  The job market is stable.  And, consumers did a ton of (online) shopping this past weekend.  Those are both healthy signs for the economy.

Once again, the biggest factor in December is going to be the Fed.  The rate hike is likely inevitable, but what the Fed says in its statement could dictate market moves for the coming weeks.  All eyes will certainly be on the FOMC meeting this month.

Let’s take a look at the portfolio.

 

Portfolio Recap

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

Price Paid: $0.73

Current Price: $1.13

Time Until Expiration: 15 days

CSCO continued on its nice run, until pulling back with the overall market today.  Given how close we’ve come to our aggressive exit point, I imagine many of you have closed for a profit by now.  Peak gains in CSCO are 164%.

 

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

Price Paid: $1.34

Current Price: $1.62

Time Until Expiration: 15 days

We’ve gotten pretty decent bullish action from our WDC call position.  The stock has slowly been moving towards the first exit point.  It’s particularly good news that the stock is up today on an otherwise down market day.  Peak gains so far are 49%.

 

Position #3: Yelp (YELP) January 29 Puts

Price Paid: $1.35

Current Price: $1.35

Time Until Expiration: 43 days

We just made this trade yesterday so not much to report.  The stock is down 2% today, so we’re off to a good start.

 

Category: OTW Weekly Updates