Weekly Update: February 18, 2016

| February 18, 2016

Weekly Update:  February 18, 2016


What To Watch

So that was a lot better week than we had last time I sent out an update.  The overall fear level seems to be decreasing and stocks are showing signs of recovery.  The S&P 500 is up about 3% since last week, with the Nasdaq, Russell 2000, and Dow also having strong performances.

Even oil has stabilized, which is one of the big reasons the markets have been calmer.  Crude oil is up about 4% in a week’s time.  In addition, volatility levels have decreased about 15% over the time same period, while bonds have remained steady.

Besides the boost from oil, the Fed has also said it will be careful about interest rates moving forward.  There is even talk about reversing the rate hike from December.  I don’t necessarily expect that, but even a hint of it coming from the Fed means there’s no chance of a rate increase anytime soon.  Clearly, that’s good news.

Meanwhile, the economy is showing signs of life.  The brief flirtation with a recession may already be in the past.  Jobs numbers are once again very encouraging.  And, there was even a big turnaround in industrial production – almost a 1% increase in January.  Car sales were a big part of that – always a good sign of consumer spending.

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


Portfolio Recap

Position #1: Gilead Sciences (GILD) February 89 Calls

Price Paid: $1.36

Current Price: $0.88

Time Until Expiration: 1 day

We had a very helpful expiration week move from GILD, which hit our first profit-taking point just in time.  A solid week from the stock has allowed us to exit the position for a winner, just days before the options expire.  Peak gains this week were 108%.  Everyone should be out of these calls.


Position #2: Bank of America (BAC) April 13 Calls

Price Paid: $0.82

Current Price: $0.41

Time Until Expiration: 57 days

BAC also recovered from its lows this past week, although it still has a ways to go to get back into positive territory.  The good news is that we gained a lot of ground back quickly, and we are well off the lows from a week ago.  Don’t forget, we still have two months left on these calls.


Position #3: Brocade Communications Systems (BRCD) March 8 Calls

Price Paid: $0.32

Current Price: $1.75

Time Until Expiration: 29 days

It really can’t get any better than our trade in BRCD.  Sometimes, things just work out perfectly.  We were betting on good earnings this week… instead we got great earnings.  BRCD skyrocketed on the news today, climbing above both our profit-taking points.  Everyone should be out of this trade for huge gains.  Peak gains are a whopping 531%!


Category: OTW Weekly Updates