Weekly Update: February 11, 2016

| February 11, 2016

Weekly Update:  February 11, 2016


What To Watch

The only thing I can really say here, is what the heck?  I mean, we’re obviously in or on the cusp of a bear market.  However, the negativity in the markets doesn’t match the reality.  Yes, things are far from perfect in the US or around the globe.  But should the S&P 500 be at 1,800?  Personally, I think it’s a bit much.

Granted, crude oil is trading under $27 a barrel.  China, Japan, and Europe all have their own issues they’re dealing with (with China being the most severe).  And, even the stalwart US economy is showing some cracks.

Nevertheless, there’s a difference between a stalling economy and a recession.  The job market is still doing quite well, with jobless claims not far off the lows.  And, we actually saw some wage growth for the first time in quite a while.  It will help to see a bump in spending, and that’s definitely something that needs to be watched.

Now, attention is turned towards the Fed.  Obviously, rate increases are going to be postponed or tabled.  There’s even talk of using negative interest rates to encourage banks to loan out money.  We’ll see what the next few weeks bring, but the March FOMC meeting is probably going to be highly anticipated.

Now, let’s take a look at the portfolio.


Portfolio Recap

Position #1: Twitter (TWTR) February 20 Calls

Price Paid: $0.93

Current Price: $0.04

Time Until Expiration: 7 days

TWTR posted disgusting results (including no user growth) and the stock plunged.  We’re likely a long way from seeing any real upside in this dog.  Time to move on.


Position #2: Gilead Sciences (GILD) February 89 Calls

Price Paid: $1.36

Current Price: $1.30

Time Until Expiration: 7 days

On the other hand, GILD is hanging in there despite the bearish conditions.  We came within a few cents of hitting our first profit-taking point.  With expiration next week, go ahead and take profits on this name whenever you get a chance.  We want to make sure to close the trade before time decay starts to really kick in.


Position #3: Bank of America (BAC) April 13 Calls

Price Paid: $0.82

Current Price: $0.32

Time Until Expiration: 63 days

The BAC trade is off to a rough start as financial stocks have fallen out of favor in a big way.  If you haven’t closed your position (we did hit the first risk-control point), my advice is to hang on for now.  These are April options so we have time to wait.  Moreover, the financial sector is looking extremely oversold here.


Category: OTW Weekly Updates