Weekly Update: February 14, 2013

| February 14, 2013

Weekly Update:  February 14, 2013


What To Watch

It’s been a fairly quiet week in the market.  Earnings season is nearly finished.  And, there were only a couple important economic reports released.  Overall, the major indices are up small since this time last week.

From my point of view, there’s still little reason to worry about stocks.  The VIX (S&P 500 Volatility Index) is nearing 52-week lows.  As a common gauge of investor fear, the VIX is currently showing that investors aren’t worried at all about a major market selloff at this time.

Earnings season has been solid all around.  With over 70% of companies reporting, just about every sector’s earnings are well above projections.  That’s always a good sign.

In economics news, retail sales remained positive – although there was some slowing this past month most likely due to higher taxes.  Plus, jobless claims put in another strong showing.  The job market is definitely improving, albeit slowly.

Investors most likely will shift their focus to political news and news out of Europe.  There could be some volatility in the coming weeks with major budget decisions on the horizon.

I expect to have a trade out tomorrow.  I’m leaning towards doing calls, although the market has been choppy.  Keep your eyes out for a trade alert.


Portfolio Recap

Position #1:  Intel (INTC) February 2013 $22 Calls

Price Paid: $0.53

Current Price: $0.00

Time Until Expiration: 1 Day

These will be off the books tomorrow.  Moving on…


Position #2:  Eli Lilly (LLY) March 2013 $52.50 Puts

Price Paid: $0.85

Current Price: $0.54

Time Until Expiration: 29 Days

LLY basically hasn’t moved since last week – the chart looks like a straight line.  Our options have lost some value due to time decay and lower volatility.  But, that’s to be expected if the stock doesn’t move.

With 29 days to go, there’s more than enough time for these puts to pay off.  Any sort of bigger than expected down move in the market or stock will bump the options’ value right back up.

Let’s keep holding these puts and see what develops.


Category: OTW Weekly Updates