Weekly Update: February 12, 2015

| February 12, 2015

Weekly Update:  February 12, 2015


What To Watch

The S&P 500 broke out of its trading range today and is close to setting new highs. While the index could still be trading near the top of a larger range, it was good to see the breakthrough given the global economic risk surrounding the US.

A potential peace treaty between Ukraine and Russia is helping ease some of the geopolitical risk. However, Europe and China still have a lot of work to do economically speaking. In other news, India has now passed up China as the world’s fastest growing economy.

While market volatility has come off a bit this week, oil volatility is still high. Crude oil may have set a bottom at around $45 per barrel and now has made several runs above $50. While the price of oil isn’t going to return to last year’s levels anytime soon, it’s good news for oil companies to finally see an alleged bottom.

Earnings season is about over, but US economic news continues to roll in. The overall story remains the same – the economic reports haven’t been great, but aren’t threatening a recession. Most importantly, US job growth continues to be in excellent shape.

I’m going to issue a new trade early next week, so be prepared (and don’t forget the market is closed on Monday).

Now, on to our positions.


Portfolio Recap

Position #1: Aeropostale (ARO) February 2.50 Calls

Price Paid: $0.25

Current Price: $1.05

Time Until Expiration: 8 days

Hah! Well, I guess I should have had more faith in my own prediction. ARO crushed earnings and skyrocketed higher on the news. We may even hit our aggressive exit point. However, with profits as high as 320%, go ahead and close this position at your discretion.


Position #2: PNC Financial Services Group (PNC) February 87.50 Calls

Price Paid: $1.80

Current Price: $4.15

Time Until Expiration: 8 days

Speaking of upside surprises, PNC has also kept up its impressive performance. The stock has hit our conservative profit taking point and is close to our aggressive exit. With expiration next week, go ahead and close this one as well. It’s been as high as a 136% winner.


Position #3: Pandora Media (P) March 17 Calls

Price Paid: $1.33

Current Price: $0.32

Time Until Expiration: 36 days

Well, I couldn’t have sent that last update in a more timely fashion. I recommended taking profits (which were good) with the uncertainty of earnings coming that evening. And sure enough, P missed earnings and plunged, hitting our conservative risk control point. I imagine most of you have closed this out by now.


Position #4: Micron Technology (MU) February 31 Calls

Price Paid: $0.99

Current Price: $1.35

Time Until Expiration: 8 days

What a turnaround for MU! The share price has bounced from support and climbed all the way to $32 this week. Now our position is a winner and within $0.50 from our first exit point. With expiration next week, feel free to take profits off the table at any point.


Position #5: King Digital Entertainment (KING) February 13.54 Calls

Price Paid: $0.95

Current Price: $1.90

Time Until Expiration: 8 days

Yet another winner! KING is getting bid higher ahead of tonight’s earnings. The stock hit our conservative profit taking point, so many of you likely exited today. We’ll see what earnings bring for the more aggressive traders. Our peak in this position so far is 116%.


Position #6: Red Hat (RHT) March 65 Puts

Price Paid: $2.10

Current Price: $0.90

Time Until Expiration: 36 days

RHT has moved against us so far, but it’s still early on this trade. We haven’t hit any exit points yet and we have over a month left until expiration. Plus, it’s nice to have a put in the portfolio. We shall see what next week brings.


Category: OTW Weekly Updates