Weekly Update: January 22, 2015

| January 22, 2015

Weekly Update:  January 22, 2015


What To Watch

The S&P 500 is basically flat on the year, but the action has been anything but. In fact, we’re seeing more sustained volatility this month than we’ve seen since roughly 2011. I don’t expect volatility to remain this high, but it will be interesting to see when investors start becoming less concerned.

Crude oil has pretty much settled into a range between $40 and $50 per barrel. The daily movements are still quite extreme and oil volatility is high. That’s impacting the energy sector and making it hard to invest in individual energy names.

Meanwhile, the Eurozone is creating all kinds of market action. Last week we had the Swiss Franc debacle roiling the currency markets. This week, we have a massive stimulus plan from the ECB providing a boost for stocks.

The US economy still appears to be on solid footing. But, it will definitely help to see Europe improve. Also, any good news we get out of China will be a plus. Global events are going to be key market catalysts during the coming weeks. However, don’t forget we’re getting to the heart of earnings season. As always, stay tuned.

I plan on rolling out a new trade tomorrow. Let’s move on to our positions.


Portfolio Recap

Position #1: Aeropostale (ARO) February 2.50 Calls

Price Paid: $0.25

Current Price: $0.50

Time Until Expiration: 28 days

ARO tested the 50-day moving average support and has and has bounced back higher. That’s a good sign for aggressive traders who still hold these calls. It means the stock will test that $3 resistance level again soon. If it breaks through $3, it could continue to climb significantly higher.


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

Price Paid: $1.80

Current Price: $1.45

Time Until Expiration: 28 days

Good news from PNC, which tested our aggressive exit point before making a strong move higher. For those still holding the calls, we’re back in business. The options are back near their original value and the stock has a strong burst of momentum on its side. Let’s see what the next couple days bring.


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

Price Paid: $1.33

Current Price: $1.10

Time Until Expiration: 56 days

P has leveled out as expected and looks stable here. The shares are slowly but surely regaining lost ground. The next substantial move should be towards the $17 level. Don’t forget, these are March calls, so we have lots of time.


Category: OTW Weekly Updates