Weekly Update: March 12, 2015

| March 12, 2015

Weekly Update:  March 12, 2015


What To Watch

US equities are down a fair amount from last week, but have rebounded in a big way today. The S&P 500 is off about 3% from last week’s update. However, the benchmark index did regain about 1.5% today.

Basically, investors were reacting (negatively) to the strengthening of the dollar, which has been on a tear lately. The USD is climbing as the crowd now expects the Fed to raise interest rates sooner rather than later. Current predictions are for a June rate hike.

Interest rate fears were sparked by the results of the February jobs report. Jobs added last month came in much higher than expected. Yes, that’s very good news for the economy… just not for interest rates. I don’t expect some major selloff however. Ultimately, adding tons of jobs is better long-term than ultra-low interest rates.

Not to mention, wage growth is still missing. We’re not going to have to worry about a significant rise in rates until workers are earning more cash. What’s more, retail sales disappointed this week, suggesting people are spending less than expected this year.

I’m going to send out a new trade tomorrow, so keep an eye on your inbox.


Portfolio Recap

Position #1: Pandora Media (P) March 17 Calls

Price Paid: $1.33

Current Price: $0.10

Time Until Expiration: 8 days

Nothing to see here. Expiration is in a week.


Position #2: Overstock.com (OSTK) March 22.50 Calls

Price Paid: $1.35

Current Price: $1.60

Time Until Expiration: 8 days

Good news on OSTK, which just about hit our first exit point. The trade is now clearly in the black. If we don’t hit the exit point tomorrow, feel free to take profits off the table. With expiration next week, those options could lose value in a hurry once Monday hits.


Position #3: Intel (INTC) April 34 Calls

Price Paid: $1.25

Current Price: $0.18

Time Until Expiration: 36 days

INTC just punched us in the jaw when we were looking the other direction. The company cut first quarter revenue outlook by nearly $1 billion. And, the stock predictably got crushed. We’ve already hit the risk-control exit point for conservative traders. Aggressive traders are still in, but I have serious doubts the stock will rebound enough by April expiration.


Position #4: Take Two Interactive Software (TTWO) April 25 Calls

Price Paid: $1.15

Current Price: $0.85

Time Until Expiration: 36 days

TTWO hasn’t done a whole lot since we added it last week. That’s fine. It’s still sitting at the important 200-day moving average. And, we have plenty of time left for it to move higher.


Category: OTW Weekly Updates