Weekly Update: June 16, 2016

| June 16, 2016

Weekly Update:  June 16, 2016


What To Watch

Before we get to the update, I have a quick administrative announcement.  Next week our office is closed for summer vacation.  As such, we won’t have any updates or trades until the following week.  We’ll do a trade early in the week when we reopen, just as a heads up.

Back to the markets, it’s a fairly eventful week after not having much action lately.  Concerns over Brexit, along with the Fed meeting, gave a boost to volatility. Although the market hasn’t sold off all that much, there’s definitely a lot of caution out there.

For the year, the S&P 500, DJIA, and Russell 2000 are all positive around 2%.  The 10-year treasury is up 5.5%, so bonds are clearly outperforming stocks in 2016.  Gold spiked on the Fed announcement, and is up 22% year-to-date.  It still looks like the “safety” trade is winning out this year in terms of overall performance.

The Fed results were pretty boring overall.  As expected, there won’t be a rate hike in the next couple months.  The FOMC wants to see more improvement in the economy before it raises rates.  The committee does still expect two hikes to happen in 2016, although that seems like a stretch given the current economic data.

Let’s take a look at our positions.


Portfolio Recap

Position #1: Foot Locker (FL) June 57.5 Calls

Price Paid: $0.70

Time Until Expiration: 1 day

FL never deviated from its nearly straight line path.  The position expires tomorrow, so nothing to see here.


Position #2: Gilead Sciences (GILD) July 90 Calls

Price Paid: $1.04

Time Until Expiration: 29 days

GILD pulled back with the market selloff this week, but is still within our holding range.  There’s plenty of time for this quick-moving biotech to get back into profitable territory for us.


Position #3: Apple (AAPL) July 105 Calls

Price Paid: $0.49

Time Until Expiration: 29 days

AAPL had a pretty darn good conference this week.  I believe that once the broad market selling is done with, AAPL shares will get a boost.  Still plenty of time on these calls, so stay tuned.


Position #4: Newmont Mining (NEM) July 33 Puts

Price Paid: $1.08

Time Until Expiration: 29 days

Gold spiked after the Fed announcement and brought NEM shares with it.  It’s too strong of a reaction in my opinion, and I still believe gold is due for a regression.  NEM came close to our risk-control exit point, but I wouldn’t sell the puts here as we have a month left before expiration – and the options still have plenty of value.


Category: OTW Weekly Updates