Weekly Update: January 29, 2015

| January 29, 2015

Weekly Update:  January 29, 2015


What To Watch

The S&P 500 continues to trade in a range, albeit a large one. Since the beginning of the year, the benchmark index has fluctuated from roughly 2,000 to 2,050. Over the same period, volatility has mostly remained at a higher level than usual.

The plunge in crude oil prices has slowed, but the general direction is still down. Some analysts think we could see $40 a barrel before the slide stops. So far, $45 seems to be the level where oil is trading around, for now.

The Eurozone continues to be the top concern among investors. However, the region got a huge boost with the ECB launching its own version of quantitative easing. The central bank’s unconventional monetary policy should stabilize the debt markets in Europe. However, it remains to be seen if the program can fend off deflation.

The US economy is showing mixed results so far in January. This week, durable goods orders came in much worse than expected. However, jobless claims had their lowest showing in 15 years. In the meantime, consumer confidence is as high as it’s been in a while, at least in part due to cheap gasoline.

Let’s see what opportunities we can uncover as earnings season rolls on. There will be a new trade tomorrow, so be prepared to trade.

Now, on to our positions.


Portfolio Recap

Position #1: Aeropostale (ARO) February 2.50 Calls

Price Paid: $0.25

Current Price: $0.30

Time Until Expiration: 22 days

Not much to report on ARO, which has been trading sideways since last week. Many of you have probably closed this position by now. We’ll see if aggressive traders get another shot at an up move next week.


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

Price Paid: $1.80

Current Price: $0.65

Time Until Expiration: 22 days

PNC has been fairly volatile this week, with plenty of ups and downs. We still have three weeks to go on this position, so there’s time for anyone still holding these calls to make money.


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

Price Paid: $1.33

Current Price: $1.50

Time Until Expiration: 50 days

We got the move we were looking for in P this week, with a big spike higher. The stock didn’t quite hit our conservative exit point, but the options have been as high as 77% winners for us. As these are March options, there’s lots of time for this trade to earn even bigger profits.


Position #4: Micron Technology (MU) February 31 Calls

Price Paid: $0.99

Current Price: $0.85

Time Until Expiration: 22 days

Last week’s trade has been up and down, but neither move has been too substantial. The stock price is sitting right at a support level which it’s very unlikely to breach. The next big move from here should be a test of the 200-day moving average, over $31.


Category: OTW Weekly Updates