Weekly Update: June 18, 2015

| June 18, 2015

Weekly Update:  June 18, 2015


What To Watch

Things have been a bit more interesting the past week.  The stock market is seeing bigger moves in June than we have for much of the last two months.  Volatility is up, but still at reasonably low levels relative to historical levels.

The S&P 500 is up a half percent from last week, and just a half percent from record highs.  The benchmark index is also up 4% on the year.  However, it took a drop below the 50-day moving average last week for the index to see another surge of buying.

Once again, the biggest news is out of Europe, with Greece being front and center in the headlines.  The country is getting closer to an exit from the Euro, although I still think that scenario is a long-shot.  European leaders aren’t going to want to open the door for other countries to exit the monetary union, so I believe they will find a way to resolve this.

Meanwhile, the US economy continues to shine this month.  As usual, jobless claims numbers have been excellent.  The Fed also sees the economy strengthening.  While it’s most likely the central bank raises rates at some point this year, it’s going to keep policy as accommodative as possible for the time being.

Let’s take a look at our portfolio.  See below for an explanation of what happened with yesterday’s TWTR trade.


Portfolio Recap

Position #1: Bank of America (BAC) June 16 Calls

Price Paid: $0.36

Current Price: $1.38

Time Until Expiration: 1 day

We didn’t quite hit the aggressive exit point, but BAC has been a great trade for us.  Make sure you cash out before tomorrow’s expiration if you’re still holding the calls.


Position #2: Apple (AAPL) June 135 Calls

Price Paid: $1.52

Current Price: $0.00

Time Until Expiration: 1 day

These options also expire tomorrow, but I imagine everyone’s out of this position by now.


Position #3: Facebook (FB) June 80 Calls

Price Paid: $1.65

Current Price: $2.90

Time Until Expiration: 1 day

FB was another excellent trade for us that didn’t quite make it to the aggressive exit level.  Once again, most of you have probably exited for a nice profit by now.


Position #4: Yahoo (YHOO) June 43 Calls

Price Paid: $0.92

Current Price: $0.00

Time Until Expiration: 1 day

YHOO is one of the only non-winning trades we’ve had in some time.  These calls expire tomorrow.


Position #5: Arm Holdings (ARMH) July 50 Puts

Price Paid: $0.85

Current Price: $0.75

Time Until Expiration: 29 days

ARMH has bounced around a bit since last week.  The stock did make another run at recent lows before recovering.  There’s still plenty of time for this stock to make a run at $48 (the 200-day moving average).


Position #6: KB Home (KBH) July 15 Calls

Price Paid: $0.38

Current Price: $0.63

Time Until Expiration: 29 days

KBH is slowly trending upward and looks like it could test the 200-day moving average very soon (just over $15).  Our calls are just about at-the-money right now but have already gained as much as 71%.  As such, there’s still plenty of upside left to this trade.


Position #7: Twitter (TWTR) July 35 Calls

Price Paid: $1.20

Current Price: $1.20

Time Until Expiration: 29 days

As many of you probably noticed, there was a problem with the trade alert yesterday.  My broker (Optionsxpress) had a July 34.50 strike listed for regular July expiration.  Unfortunately, no such strike exists in reality, and I’m not sure why they have it listed.  The trade should have been for the July 35 calls for around $1.20.  If you can still get that price tomorrow, feel free to execute the trade.  I’m also bumping up the conservative profit-taking point to $37.  I’m not sure what happened, but I apologize for the errant information.  Fortunately, the stock has barely moved, and the options are still priced at $1.20.  Try to grab those tomorrow morning if you can – up to $1.35 is still a good entry point.  For those of you who bought the 34 strike instead, that works fine as well.


Category: OTW Weekly Updates