Weekly Update: February 13, 2014
Weekly Update: February 13, 2014
What To Watch
We finally got a nice, full week from stocks. From this time last week, the S&P 500 is up 4%. While the benchmark index is still negative on the year, it’s closing in on positive territory.
The biggest news for the week (and surprise if you ask me) was the quick, painless voting by Congress to raise the debt ceiling. Both houses of Congress actually passed a clean debt limit bill without a ton of fanfare. The debt ceiling has been raised until March of 2015, effectively making it a non-issue.
What’s more, Janet Yellen gave her first speech as Fed Chair and promises more of the same. In other words, she’s going to stick to the easy money policies of Bernanke and continue the Fed’s bond buying program as long as needed. That’s good news for the markets, especially since the Fed’s tapering began in January.
Meanwhile, awful winter weather continues to hurt the economy. Most of the economic data has been worse than expected due to the inclement weather. On the bright side, spring will get here eventually.
Regarding our portfolio, with February expiration upcoming, I’ll be looking to aggressively sell open positions that still have value over the next few days – so keep an eye on your email.
Portfolio Recap
Position #1: Millennial Media (MM) February $7.50 Calls
Price Paid: $0.65
Current Price: $0.35
Time Until Expiration: 8 days
MM hasn’t been able to climb above the 200-day moving average around $7.50. I was hoping for bigger gains on this stock after it broke through $8 per share, but the market selloff torpedoed that plan. I’ll be looking to sell these calls out in the next day or so.
Position #2: General Cable (BGC) February $30 Calls
Price Paid: $1.25
Current Price: $0.55
Time Until Expiration: 8 days
BGC is the one February expiration trade we have that we may ride until the end. The company‘s fourth quarter results exceeded expectations and the stock popped to $30. One more up day and we could get some nice value back into our calls.
Position #3: American Eagle (AEO) February $14 Calls
Price Paid: $0.98
Current Price: $0.15
Time Until Expiration: 8 days
We’ve gotten a whole lot of nothing over the past week from AEO. I think it’s probably too late for these options. They’ll only be worth selling if the stock jumps quite a bit higher in the next couple days.
Position #4: First Solar (FSLR) February $60 Calls
Price Paid: $1.29
Current Price: $0.20
Time Until Expiration: 8 days
FSLR is trying to make things interesting for us. We’ve had something of a resurrection from the stock as it closes in on $53. We’re just one big day away from actually getting some value out of the calls. I’ll consider that a minor victory after writing off these options last week.
Position #5: Intel (INTC) March $26 Calls
Price Paid: $1.03
Current Price: $0.13
Time Until Expiration: 36 days
INTC is slowly but surely moving higher. The shares are about to test the 50-day moving average. If it breaks through, there will be plenty of room for the stock to run higher.
Position #6: Unisys (UIS) February $32 Puts
Price Paid: $1.60
Current Price: $0.60
Time Until Expiration: 8 days
UIS has dropped back down to support levels. However, with fears of a major market setback starting to dwindle, it’s probably time to cash these out while they still have some value. We have another put now in our portfolio which can serve as something of a hedge in case of a downturn.
Position #7: Freeport-McMoRan (FCX) March $32 Calls
Price Paid: $0.97
Current Price: $1.79
Time Until Expiration: 36 days
Well, we have one position I can’t complain about at all. FCX is currently an 85% winner. If it breaks into triple digit gain territory soon, we’ll go ahead and cash out. After a rough couple weeks, it will be nice to take some profits off the table.
Position #8: McKesson (MCK) March $165 Puts
Price Paid: $1.6
Current Price: $1.35
Time Until Expiration: 36 days
MCK has moved higher with the market since we put on our trade this week. That’s okay. Not only do we have plenty of time, this position also is a nice hedge in case we have an unexpected downturn in the market over the next several weeks.
Category: OTW Weekly Updates
