Weekly Update: January 2, 2014

| January 2, 2014

Weekly Update:  January 2, 2014


What To Watch

Happy 2014!  Is it going to be another huge year for US equities?  Frankly, it doesn’t matter because we’ll make money regardless of what the market does.

Nevertheless, despite the major indices starting off the year in the red, the US economy picked up right where it left off in 2013.  That is, it looks like slow and steady growth will continue.

Jobless claims came in lower for the second week in a row and dropped back down to levels more in line with the overall downward trend. It basically erases the concerns over the jump in claims from December, which we can safely chalk up to volatile holiday numbers.

In other news, ISM Manufacturing came in at 57.  Anything over 50 is considered expansionary, so it’s a good sign for the manufacturing sector to see growth returning.  Most importantly, the new orders component of the index is at its highest level since 2010.

I’ll be looking to roll out our first trade of the year tomorrow or Monday, depending on what the markets are doing.  Keep an eye on your inbox and get ready for another successful year of trading!


Portfolio Recap

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

Price Paid: $0.65

Current Price: $0.85

Time Until Expiration: 50 days

Good news with MM breaking above the $7.00 level and trading right around our strike price.  There’s nothing left to keep a lid on the stock price from a technical standpoint.  With 50 days to go to expiration, we’re going to ride these calls higher.


Position #2: Cree (CREE) January $60 Calls

Price Paid: $1.52

Current Price: $2.75

Time Until Expiration: 15 days

CREE has been hanging out around the $62 level and is threatening to break out higher.  Right now, our calls are 81% winners, but I think we can wait a little longer before we cash out.  Let’s give the stock a few more days to break higher before we take down our profits.


Position #3: General Cable (BGC) February $30 Calls

Price Paid: $1.25

Current Price: $1.15

Time Until Expiration: 50 days

BGC couldn’t break through the 50-day moving average on this latest attempt and dropped back down to the 20-day moving average.  Fortunately, we have plenty of time to let the stock test the resistance level again.  Our calls have held on to most of their value as well.


Position #4: American Eagle (AEO) February $14 Calls

Price Paid: $0.98

Current Price: $1.25

Time Until Expiration: 50 days

Our calls are trading roughly at the same price as the last update, but are still nicely in positive territory.  More importantly, AEO made a solid run at $15 (the 50-day moving average).  With 50 days left to expiration, there’s plenty of time for the stock to break through and our options to gain significant value.


Category: OTW Weekly Updates