Weekly Update: January 31, 2013

| January 31, 2013

Weekly Update:  January 31, 2013

 

What To Watch

It could have been quite the volatile week.  After all, the Fed meeting came about on Wednesday.  Several important earnings were released, including Amazon (AMZN) and Facebook (FB).  And, the economic calendar was in full swing.

But, as we all know, the market rarely behaves as expected.  In fact, it’s been a pretty tame week.  The S&P 500 is up around half a percent since last week.  And, the Dow Industrial is up just under a percent.

Basically, the Fed is holding the line, with no new info on its part.  AMZN and FB both had interesting earnings reports/calls.  However, there wasn’t enough impact news to move the markets significantly.

Meanwhile, economic data was meaningful but mixed.  GDP was worse than expected but due mostly to one-time defense spending cuts.  Personal income was better than expected but due mostly to special payments based on dividend and capital gains taken ahead of potential tax changes.  And, ADP jobs data was strong but the more important jobs number comes out tomorrow.

All in all, it was a mixed week with no compelling directional moves in the market.  We’ll see what next week brings.  I’m looking to roll out another trade during the week, possibly on the put side.  Stay tuned.

 

Portfolio Recap

Position #1:  Freeport McMoRan (FCX) February 2013 $34 Calls

Price Paid: $1.41

Current Price: $1.57

Time Until Expiration: 15 Days

As I predicted, FCX calls have climbed back into positive range.  The earnings news was simply too strong for the stock to stay depressed for long.

Now, our gains are relatively small at the moment, 11% as of this writing.  However, another move higher in the stock and our profits will multiply.  Although, we’re also going to be bumping up against time decay very soon.

Let’s see how the jobs number looks tomorrow and go from there.  We could sell as early as tomorrow, or it may be some time next week.

 

Position #2:  Intel (INTC) February 2013 $22 Calls

Price Paid: $0.53

Current Price: $0.05

Time Until Expiration: 15 Days

We saw the beginnings of a climb in INTC this week.  It wasn’t quite enough to lift our call price to sell territory.  But, as I’ve said before, we’re one very good day away from being able to exit INTC at a reasonable price.

At this point, INTC should track the overall market fairly closely (beta of 1.02).  As such, if we see a big jump in stocks in the next week, it should give us the opportunity we’re looking for.  One possible catalyst… Friday’s job numbers.

Let’s see what the next few days bring.

 

Category: OTW Weekly Updates