Weekly Update: February 5, 2015

| February 5, 2015

Weekly Update:  February 5, 2015


What To Watch

The S&P 500 is at the top of its recent trading range, so we’ll see if it can break new ground this time around.   Overall, the index is about flat on the year. Volatility continues to run at higher levels than we’re used to, although I’m not sensing panic among investors.

While it seems there’s more risk in the financial markets this year, there’s also not a feeling of impending doom coming from analysts and the like. Basically, there’s enough global event risk to keep the markets on its toes. But, there’s not one particular thing that investors believe will lead to a crash.

Economic news in the US continues to be mixed. On one hand, there’s some concern over many economic reports, which haven’t been beating expectations. On the other hand, the overall data are not showing any real signs of slowing in the economy. Most importantly, the job market is certainly improving considerably.

The meat of earnings season is about to come to a close. We’ve had some very interesting reports this season, which is par for the course. There are still a few big names left to report next week. And as always, I’ll keep an eye out for earnings-related opportunities.

Once again, I’ll issue a new trade tomorrow, so be prepared. Now, on to our positions.


Portfolio Recap

Position #1: Aeropostale (ARO) February 2.50 Calls

Price Paid: $0.25

Current Price: $0.20

Time Until Expiration: 15 days

Probably not much more likely to happen in ARO prior to expiration. It’s worth keeping an eye on, but as I said last week, most of you have probably closed this by now.


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

Price Paid: $1.80

Current Price: $2.00

Time Until Expiration: 15 days

PNC has been quite an enigma, but finally looks like it should hit our conservative exit point for profit taking. The stock got a huge boost this week, and our options are once again in the black. I imagine many will be closing this position soon if you’re still holding.


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

Price Paid: $1.33

Current Price: $2.35

Time Until Expiration: 43 days

Hooray for Pandora! The stock’s been on a very nice run and has hit our conservative exit point for profit taking. The calls have been as high as 95% winners so far. Here’s the deal. Earnings are after close, so this stock could go anywhere tomorrow. It could be a huge winner, or our options could be worthless within a day. As such, I certainly wouldn’t argue with anyone who wants to take profits off the table at this point. Not to mention, this position is already a nice winner.


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

Price Paid: $0.99

Current Price: $0.22

Time Until Expiration: 15 days

MU has done the opposite of what I expected and broke through support. However, it managed to reverse course over the last couple days. There’s still a chance we could get one more solid run out of this position in the next two weeks.


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

Price Paid: $0.95

Current Price: $1.10

Time Until Expiration: 15 days

Pretty solid start to our KING trade. So far, the trend has been positive. Given our trade uses February calls, it would be nice to see a more substantial move higher. However, there’s time for a slow grind higher to work for us as well.


Category: OTW Weekly Updates