Weekly Update: January 16, 2014

| January 16, 2014

Weekly Update:  January 16, 2014


What To Watch

It seems like it’s been a poor start to the year for equities, but in actuality, the major indices are mostly flat year-to-date.  The S&P 500 is virtually even for the year, the Dow Industrials are down around a half percent, and the NASDAQ 100 is up roughly half a percent.

In the meantime, earnings season has begun with this week focusing on the financial sector.  The first major tech results come out tonight with Intel (INTC), which we have in our portfolio.  Next week, the action really starts to heat up with earnings reports coming in across multiple industries.

Economically speaking, the news is once again good.  Inflation is running at low levels, retail sales are up, and the job market is improving slowly.  There are essentially no red flags concerning economic growth at this point.  In fact, even the government has gotten itself out of the way by agreeing on a full-year budget without all the usual drama.

Looking ahead, our trades will likely focus on earnings for the next couple weeks.  We have lots of doozies starting next week, so there should be ample opportunities for trades.


Portfolio Recap

Position #1: Millennial Media (MM) February $7.50 Calls

Price Paid: $0.65

Current Price: $0.80

Time Until Expiration: 36 days

As expected, MM is back above $7.50.  Or calls are trading in the black again, but I think we can get more out of them.  With over a month to expiration, we’re going to give this position a little longer to break higher.


Position #2: General Cable (BGC) February $30 Calls

Price Paid: $1.25

Current Price: $1.80

Time Until Expiration: 36 days

BGC has shot higher, just like we thought.  It’s broken well above the 50-day moving average and will likely test the 200-day moving average (around $31) soon.  We’ll probably give it a chance or two to break $31 before deciding to take our profits off the table.


Position #3: American Eagle (AEO) February $14 Calls

Price Paid: $0.98

Current Price: $0.90

Time Until Expiration: 36 days

AEO pulled back today on negative sector news (from other companies).  Non-stock specific moves like this are often short-term.  In the meantime, the options are still around our entry point in terms of price.  We’ll certainly keep holding the calls for now.  Although, the next time the stock moves up to $15 or so, we may consider taking profits.


Position #4: First Solar (FSLR) February $60 Calls

Price Paid: $1.29

Current Price: $1.05

Time Until Expiration: 36 days

FSLR is headed back up the 20-day moving average.  If it breaks that resistance, the next stop is around $57 per share.  Our options will likely be solid winners at that level despite being below the strike price – as long as it happens in the next two weeks.  Otherwise, we’ll reevaluate the position.


Position #5: Intel (INTC) March $26 Calls

Price Paid: $1.03

Current Price: $1.30

Time Until Expiration: 64 days

Our INTC from this week is already up a moderate amount, but the big news comes tonight after close.  Depending on earnings, we could be exiting this position as soon as tomorrow.


Category: OTW Weekly Updates