Weekly Update: January 15, 2015

| January 15, 2015

Weekly Update:  January 15, 2015


What To Watch

Market choppiness and volatility continue to be the main themes as we head into earnings season. The S&P 500 is down about 2% for the year (just two weeks), but the path has involved a lot of ups and downs.

The biggest concerns to investors are crude oil prices, global economic weakness, and a possible slowing of the US economy. Regarding crude oil, I still firmly believe cheap oil is good for the economy – unless you’re in the energy sector.

On the other hand, global economic weakness is definitely a concern, with the Eurozone being the hardest hit. Once again, investors are worried about Greece. What’s more, Switzerland has thrown a serious wrench into the works with a significant change to its currency policy.

The US economy is still in decent shape, despite several weaker than expected economic reports. Keep in mind, we beat expectations on just about every report for the last month or two. So, a period of normalization wouldn’t be that unusual. At the moment, there’s not a whole lot to worry about based on current data.

Now let’s look at our positions.


Portfolio Recap

Position #1: Glu Mobile (GLUU) January 4 Calls

Price Paid: $0.28

Current Price: $0.00

Time Until Expiration: 1 day

The GLUU position expires tomorrow, but everyone should have closed this position by now.


Position #2: Salesforce.com (CRM) January17th 57.50 Calls

Price Paid: $1.45

Current Price: $0.10

Time Until Expiration: 1 day

The CRM calls also expire tomorrow and should’ve been closed for gains a while ago.


Position #3: Union Pacific (UNP) January17th 115 Puts

Price Paid: $1.65

Current Price: $4.00

Time Until Expiration: 1 day

The selloff over the past week in stocks actually pushed UNP down below our conservative exit point after all. I imagine most of you already closed your position for nice profits. But if not, make sure you do so now. Peak gain on these puts reached 233%!


Position #4: Aeropostale (ARO) February 2.50 Calls

Price Paid: $0.25

Current Price: $0.55

Time Until Expiration: 35 days

As expected, we hit our first profit-taking point in ARO. Conservative traders should be out of the position. The stock is still moving higher but has slowed its pace. Aggressive traders have over a month to see if the stock price gets to $4. Peak gains so far on this trade have reached 140%.


Position #5: PNC Financial Services Group (PNC) February 87.50 Calls

Price Paid: $1.80

Current Price: $0.65

Time Until Expiration: 35 days

We had the misfortune of buying these calls right before a major pullback in financials (due to softer than expected earnings from some of the major banks). Conservative traders should be stopped out of this position. However, aggressive traders have over a month left, with earnings coming out Friday. There’s still plenty of time for this trade to rebound for those holding the calls.


Position #6: Pandora Media (P) March 17 Calls

Price Paid: $1.33

Current Price: $1.05

Time Until Expiration: 63 days

P is down 3% today, but it’s nothing stock specific. The market is down overall and investors are avoiding Internet stocks at the moment. It’s nothing to worry about. We bought plenty of time on these calls (out to March) because Pandora can be a volatile stock to hold at times. Just be patient with this trade… there’s a reason why the calls are holding most of their value despite the dip today.


Category: OTW Weekly Updates