Weekly Update: January 28, 2016

| January 28, 2016

Weekly Update:  January 28, 2016

 

What To Watch

Things weren’t quite so bad this week, as the markets have settled down to some extent.  The S&P 500 is up about 1% in a week’s period, with oil jumping about 5%.  Volatility has remained elevated though according to the VIX, which was roughly unchanged from a week ago.

China has gotten some much needed help from its central bank, with a huge infusion of cash.  Oil, on the other hand, looked like was going to continue plummeting until rumors of a production cut surfaced today. I imagine oil will continue to be extremely volatile for the time being.  Whether the markets stay coupled to the commodity is anyone’s guess.

Economic news has been mostly disappointing lately, and earnings have been mixed.  Manufacturing numbers are down, but that’s no surprise.  Home buying and jobs are continuing to hold up for the moment.  Still, there’s nothing too scary out there or reason to believe a recession is coming.

I’m going to stay cautious with upcoming trades, and try to mix some undervalued call purchases with protective put buying.

Now, let’s take a look at the portfolio.

 

Portfolio Recap

Position #1: Cirrus Logic (CRUS) February 30 Calls

Price Paid: $1.25

Current Price: $3.00

Time Until Expiration: 22 days

It took a little waiting, but we got the move we’ve been waiting for in CRUS.  If you held on to your position during the market pullback, you’ve been handsomely rewarded.  Positive news about new iPhones gave a huge boost to CRUS shares (the company is a big supplier).  We’ve hit both of our profit-taking points with peaks gains reaching 140%.

 

Position #2: Twitter (TWTR) February 20 Calls

Price Paid: $0.93

Current Price: $0.64

Time Until Expiration: 22 days

TWTR has actually been fairly uneventful over the last week.  For those still holding, our big catalyst won’t be until earnings on February 10th.  Because earnings are almost two weeks away, our options are holding their value.  Don’t forget, this stock can be quite volatile, and you never know how fast it can move.

 

Position #3: Shutterfly (SFLY) February 40 Puts

Price Paid: $1.35

Current Price: $1.75

Time Until Expiration: 22 days

SFLY is our protective position at the moment and it’s doing a good job in its first week.  The position is already solidly in the black.  Peak gains so far are 59%.  Our profit-taking points aren’t too far away ($38 for the first one), although there is some support here.  Let’s see what next week brings.

 

Category: OTW Weekly Updates