Weekly Update: February 4, 2016

| February 4, 2016

Weekly Update:  February 4, 2016


What To Watch

The equity markets continue to show some signs of stabilizing, although we’re still a long way from what I’d consider to be low volatility.  There are a number of factors creating volatility, which could take a while to sort through.  In other words, market volatility may remain elevated for the time being.

In the meantime, the major indices are slowly improving but remain down quite a bit for the year.  The S&P 500 is up about 1.5% from last week, but is still down 6% on the year.  The Russell 2000 is down 11% on the year and the Nasdaq 100 is down 9%.  There’s clearly still work to be done.

Crude oil is down 16% year-to-date and remains highly volatile. Oil’s woes have also been a major factor in keeping stocks from rebounding.  That, along with China and declining domestic economic news, is creating a tough environment for stock bulls.  On the other hand, there’s nothing to be overly worried about either.

At least there’s no reason for the Fed to continue raising rates.  In fact, I hope they’ve realized the December rate hike was clearly a mistake.  We’ll see what happens in March, but I would expect a softer tone and no change to the Fed Funds rate.

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


Portfolio Recap

Position #1: Twitter (TWTR) February 20 Calls

Price Paid: $0.93

Current Price: $0.57

Time Until Expiration: 15 days

TWTR is still in wait and see mode as earnings approach in just under a week.  Our options will hold value until earnings (assuming the stock remains stable).  This position is still very much in the air and pretty much hinges on earnings results.


Position #2: Shutterfly (SFLY) February 40 Puts

Price Paid: $1.35

Current Price: $3.25

Time Until Expiration: 15 days

We nailed SFLY!  The stock missed on earnings (and was already priced at an extremely rich valuation).  After the news came out, investors fled in droves and the stock price has subsequently plunged below both of our profit-taking points.  Highs on the position are 196% gains!  Everyone should be out of this position for gains as of today.


Position #3: Gilead Sciences (GILD) February 89 Calls

Price Paid: $1.36

Current Price: $1.05

Time Until Expiration: 15 days

Despite a tough environment for biotechs, our GILD position has held up nicely.  The current price is down a small bit due to time decay, but we’re much closer to the strike this week.  We still have two weeks and the stock price definitely looks to be headed in the right direction.  Peak gains so far are as high as 103%.


Category: OTW Weekly Updates