Weekly Update: June 12, 2014

| June 12, 2014

Weekly Update:  June 12, 2014


What To Watch

Well, international events have finally had some impact on the markets, just not the events we expected.  First off, the S&P 500 is still up around 6% for the year.  The benchmark index may sell off a bit longer and return to the channel it’s been trending in for some time.  By the way, the channel I mentioned is clearly moving higher.

However, we had bit of a surprise on the international front with militants in Iraq taking over several cities in the northern part of the country.  Iraq is the second largest oil producer in OPEC, so what’s going on in the embattled nation is seen as a big deal to the oil markets.  In fact, crude oil shot past $105 per barrel.  Higher oil prices are certainly not a good thing for the economy.

Nevertheless, the domestic economy is still in good shape overall.  The annual trend in retail sales remains strong.  The recent jobs numbers all looked healthy overall.  And, bullish sentiment continues to rise among investors.

In general, there isn’t a whole lot to worry about, but the Iraq situation bears watching.

I’ll be rolling out a new trade tomorrow or Monday – so stay tuned.


Portfolio Recap

Position #1: Dunkin’ Brands (DNKN) June $47.50 Calls

Price Paid: $1.15

Current Price: $0.05

Time Until Expiration: 8 days

DNKN was not able to break the important resistance level at $46.  After failing to break higher, the stock has since pulled back even farther.  Most likely these options are no longer in play with just over a week to expiration.


Position #2: Goldman Sachs (GS) June 21st $165 Calls

Price Paid: $1.39

Price Sold: $2.33

We closed our GS calls today for 67.6% gains.


Position #3: Target (TGT) July $60 Calls

Price Paid: $0.94

Current Price: $0.29

Time Until Expiration: 36 days

TGT has rotated around its 20-day moving average and looks to be consolidating.  Based on the price action, I believe the stock will test the 50-day moving average soon (and the 200-day average soon after).  We have over a month to go on these calls so sit tight.


Position #4: Abecrombie & Fitch (ANF) June 21st $36 Puts

Price Paid: $1.90

Current Price: $0.00

Time Until Expiration: 8 days

ANF has gone straight up over the last two weeks, ever since its better than expected earnings.  The company has clearly surprised me (and many others) becoming a popular turnaround play.  I don’t believe in this rally, but that doesn’t matter given our expiration is in 8 days.  Moving on…


Position #5: Medallion Financial (TAXI) July $12.50 Calls

Price Paid: $1.20

Current Price: $0.75

Time Until Expiration: 36 days

TAXI has sold off to the bottom of its six-month range.  There is huge support here, so I don’t believe it will go much lower.  In fact, it should be set up for a move higher.  Meanwhile, our calls are holding most of their value.


Position #6: THL Credit (TCRD) July $12.50 Calls

Price Paid: $1.05

Current Price: $0.95

Time Until Expiration: 36 days

TCRD only sold off because it went ex-dividend.  Nothing to really worry about and it should continue it slow climb upward in the near future.


Position #7: Pacific Coast Oil Trust (ROYT) July $12.50 Calls

Price Paid: $0.95

Current Price: $0.60

Time Until Expiration: 36 days

ROYT has a surprise secondary offering which caused the shares to drop.  It’s not the sort of event that should have a lasting impact on the stock price, so I expect the share price to start moving higher soon.  Our calls are holding value, which is a good sign.


Category: OTW Weekly Updates