Weekly Update: January 8, 2015

| January 8, 2015

Weekly Update:  January 8, 2015


What To Watch

Welcome to our first update of 2015! It’s been an eventful month already, with the stock market kicking off the year with big moves in both directions. At first, oil and global economics pushed stocks down big. However, positive jobs news in the US has sent the major indices back up strong.

The big news is still crude oil, which is trading below $50 a barrel, and could be headed even lower. There’s no end in sight to the oil crash, which is occurring for fundamental reasons. That is, the supply glut is expected to continue for most of the year. Excess supply and lower demand are tough nuts to crack for oil producers.

In the meantime, the US economy still looks to be in good shape. We opened the year with some soft economic data. However, jobs data continues to look strong. And, it should continue to drive domestic economic growth.

Our positions are doing well overall. I’m going to start using tighter exit points as we actually may hit expiration without reaching a single exit point in a couple of our positions. Also, I plan to send out a new trade tomorrow.

Let’s look at our positions.


Portfolio Recap

Position #1: Glu Mobile GLUU) January 4 Calls

Price Paid: $0.28

Current Price: $0.15

Time Until Expiration: 8 days

GLUU continues to trade sideways after making its move up to $4. I don’t expect the stock to climb to $4.50 at this point, but there’s a good chance our options could finish in the money. As such, go ahead and close these calls whenever you feel comfortable. Just make sure they’re closed by next Friday expiration.


Position #2: Salesforce.com (CRM) January17th 57.50 Calls

Price Paid: $1.45

Current Price: $1.85

Time Until Expiration: 8 days

At this point, I imagine most of you have closed this position for nice gains. Not much more to say at this point.


Position #3: Union Pacific (UNP) January17th 115 Puts

Price Paid: $1.65

Current Price: $1.10

Time Until Expiration: 8 days

UNP collapsed during the early selloff earlier this week. We came close to hitting our exit point, but didn’t quite get there. This is a case where I should have set the exit points a bit tighter. Hopefully, some of you sold the options when they were at or near the high of 155% gains. If not, go ahead and close these out at your discretion. Just remember, expiration is fast approaching.


Position #4: Aeropostale (ARO) February 2.50 Calls

Price Paid: $0.25

Current Price: $0.50

Time Until Expiration: 42 days

We nailed ARO. This position was a play on holiday sales and undervalued clothing stores… and we got it exactly right. ARO performed better than expected over the holidays and the stock shot higher today on the news. In fact, we’ve already hit 100% gains. Since these are February options, you can wait to hit the exit points. Or, if you’re happy with 100% gains, go ahead and sell… it’s a nice way to start the year!


Category: OTW Weekly Updates