Weekly Update: June 30, 2016

| June 30, 2016

Weekly Update:  June 30, 2016


What To Watch

Well, that was a wild week.  In fact, the past week is about as crazy as one week can get in terms of stock movement.  We went from a huge selloff to a “ho-hum, nothing to see here” scenario in just a few days.  I think the investment community needs to stop sniffing glue.

Just to recap, global stocks plunged when the UK public voted to leave the EU, otherwise known as Brexit.  The US didn’t get hit nearly as hard as some other regions, but major indexes still took a pretty big shot to the jaw.  Yet, just a couple days later, stocks were back up to pre-Brexit levels.  It’s as if the whole thing was a bad dream that people already forgot about.

The truth is, the extreme selling was overdone… but the quick bounce back also seems to be too enthusiastic.  The UK made a horrible economic decision, and it will affect them adversely in the long-run.  On the other hand, there should be little to no impact in the short-term.  As far as the US, it really shouldn’t impact most stocks here all that much.

It will be interesting to see the aftermath, but for now, we’re going to continue on with business as usual.  For the year, the S&P 500 is up 3.5% and the Russell 2000 is up over 2%.  Crude oil has retreated, but is still up 9% for the year.  Gold is up nearly 25% and has done very well with all the uncertainty of late.

Let’s take a look at our positions.


Portfolio Recap

Position #1: Gilead Sciences (GILD) July 90 Calls

Price Paid: $1.04

Time Until Expiration: 15 days

GILD got hit along with the rest of the market during the Brexit selloff.  The sharp decline in the stock means we reached both risk-control exit points.  Not much we can do about that, as it’s a highly unusual scenario.


Position #2: Apple (AAPL) July 105 Calls

Price Paid: $0.49

Time Until Expiration: 15 days

AAPL also sold off due Brexit. However, we only hit our first risk-control exit point.  Aggressive traders can still be holding this position.


Position #3: Newmont Mining (NEM) July 33 Puts

Price Paid: $1.08

Time Until Expiration: 15 days

Gold was one of the few beneficiaries of the Brexit selloff, as investors rushed into safe-haven assets.  Given the uncertainty in the markets, I’ve definitely changed my outlook on gold for the near-term.  Regarding this position, we hit both of our risk-control exit points.


Position #4: First Solar (FSLR) August 52.50 Calls

Price Paid: $1.05

Time Until Expiration: 50 days

On the bright side, with Brexit causing such a big pullback, we were able to get into FSLR at a reasonable price.  In just two days, we already have a 52% peak gain!  We’ll see what the coming weeks bring, but we’re certainly off to a great start.


Category: OTW Weekly Updates