Weekly Update: July 3, 2014

| July 3, 2014

Weekly Update:  July 3, 2014


What To Watch

Happy Independence Day! Just one quick administrative note – I’ll be on vacation next Thursday, so the update will come out on Friday.

No surprise, but as the weather heats up, the markets cool down – at least in terms of activity. It’s been pretty boring lately, although the Dow Jones Industrial Average did just break the 17,000 barrier for the first time. As a reminder, the DJIA means very little to us unless you happen to own some of the stocks making up the index.

Meanwhile, the S&P 500 also hit a record high of 1,985 after adding another 1% from this time last week. We’re one good day away from the benchmark index hitting the milestone 2,000 mark. Let’s see what next week brings, after the long weekend.

Economically, it’s mostly sunshine and happiness. June non-farm payrolls smashed expectations and increased by 288,000. Unemployment dropped to 6.1%. It’s hard to argue those numbers are anything but very positive for the economy.

About the only thing which could derail this rally is international risk. It still pays to keep an eye on what’s going on overseas. But for now, US equities are looking good for the summer.


Portfolio Recap

Position #1: Target (TGT) July $60 Calls

Price Paid: $0.94

Current Price: $0.40

Time Until Expiration: 15 days

Finally, a nice move from TGT. After two solid up days, the stock is closing in on our strike and the 200-day moving average. Our calls are also starting to pick up value. We’re one solid up-move away from our options being in the money.


Position #2: Medallion Financial (TAXI) July $12.50 Calls

Price Paid: $1.20

Current Price: $0.20

Time Until Expiration: 15 days

We have a little more this week to be optimistic about regarding TAXI. The stock bounced off support and climbed back to the 20-day moving average. It even tested resistance close to $13 today before pulling back. Articles are starting to appear suggesting TAXI may not be threatened by Uber and others after all. Let’s see what next week brings.


Position #3: THL Credit (TCRD) July $12.50 Calls

Price Paid: $1.05

Current Price: $1.55

Time Until Expiration: 15 days

TCRD has basically been flat since our last update. We’ll likely look to exit next week for moderate profits.


Position #4: Pacific Coast Oil Trust (ROYT) July $12.50 Calls

Price Paid: $0.95

Current Price: $0.50

Time Until Expiration: 15 days

ROYT looks like it’s in a serious consolidation phase. The only question is, will the move higher occur before our time runs out?


Position #5: United Parcel Service (UPS) July $100 Puts

Price Paid: $1.10

Current Price: $0.15

Time Until Expiration: 15 days

UPS is testing 52-weeks highs and is sitting at resistance currently. We need a fairly sharp down move next week if our puts are going to be in play.


Position #6: First Majestic Silver (AG) July $10 Calls

Price Paid: $0.68

Current Price: $0.90

Time Until Expiration: 15 days

AG is a modest winner for us. The stock is slowly but surely climbing higher. We may not see another spike in silver before expiration, so it’s possible we’ll close this position out next week for gains.


Position #7: Franco-Nevada (FNV) August $55 Puts

Price Paid: $1.38

Current Price: $1.40

Time Until Expiration: 43 days

We just made the FNV trade today and the options closed right around our buy price. We have about a month and a half until expiration, but I don’t think we’ll need that long.


Category: OTW Weekly Updates