Weekly Update: June 19, 2014

| June 19, 2014

Weekly Update:  June 19, 2014


What To Watch

It’s still been fairly quiet in the financial markets overall, although some activity has picked up due to events this week. Investors are keeping a close eye on the situation in Iraq, but it’s had more of an impact on commodities than equities.

The S&P 500 has rebounded nicely this week and is up about 4% over the last month and nearly 7% on the year. The benchmark index jumped yesterday after the FOMC meeting statement/results were released.

As expected, Yellen and the Fed continued its tapering program, reducing bond purchases by $10 billion to $35 billion total. Once again, the Fed plans on rates being near zero until 2015. And, the only minor change was a small bump in rate expectations for the short-term. Basically, there wasn’t much to see.

While equities and bonds haven’t done much since the Fed meeting, commodities have seen some action. In particular, gold and silver are on tear. Both energy and metals are worth keeping an eye on in the coming weeks.

I’ll have another trade out in the next day or two, so watch your inbox.


Portfolio Recap

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

Price Paid: $1.15

Current Price: $0.00

Time Until Expiration: 1 day

DNKD is starting to move higher, but it’s too little too late for our June calls. Ours expire after tomorrow.


Position #2: Target (TGT) July $60 Calls

Price Paid: $0.94

Current Price: $0.48

Time Until Expiration: 29 days

I called it last week, with TGT breaking over the 50-day moving average and looking like the share price is headed over $60. Our calls are finally starting to pick up some value. Another $1 or so in the stock is all it will take to get back to our entry point. After that… it’s all profit.


Position #3: Abecrombie & Fitch (ANF) June 21st $36 Puts

Price Paid: $1.90

Current Price: $0.00

Time Until Expiration: 1 day

Our ANF puts expire after tomorrow.


Position #4: Medallion Financial (TAXI) July $12.50 Calls

Price Paid: $1.20

Current Price: $0.15

Time Until Expiration: 29 days

TAXI has gotten crushed on something completely unexpected… the successful fundraising of Uber and other ride-sharing services. Apparently, investors believe the taxicab business is in trouble due to the growing popularity of ride-sharing companies like Uber and Lyft. I don’t expect TAXI to remain depressed given its high yield, but we may look to exit after the stock rebounds.


Position #5: THL Credit (TCRD) July $12.50 Calls

Price Paid: $1.05

Current Price: $1.10

Time Until Expiration: 29 days

The second of our high-yield plays, TCRD is faring much better than the first. The stock is up to nearly $13.50 and our options have regained full value and then some. I expect the share price to continue marching towards $14.50.


Position #6: Pacific Coast Oil Trust (ROYT) July $12.50 Calls

Price Paid: $0.95

Current Price: $0.40

Time Until Expiration: 29 days

ROYT is basically back where it was after its surprise secondary offering. The stock did make a run at the 20-day moving average before pulling back. Once it breaks through resistance, there’s some room for it to run higher. We’ll keep a close eye on this one.


Position #7: United Parcel Service (UPS) July $100 Puts

Price Paid: $1.10

Current Price: $0.60

Time Until Expiration: 29 days

UPS climbed about $1 on positive news from FedEx (FDX), but I don’t expect the shares to climb much higher. The stock is sitting at a major resistance point. From here, the clear move for UPS is down, especially if the price of crude oil remains elevated. Let’s give this trade time to work.


Category: OTW Weekly Updates