Weekly Update: March 19, 2015

| March 19, 2015

Weekly Update:  March 19, 2015


What To Watch

Equities could be interesting over the next couple months as we wait on economic news.  Meanwhile, the S&P 500 is up about 1% from last week’s update.  In addition, volatility was sucked out of the equity markets once the Fed meeting was completed.

Basically, there was a lot of pent up concern heading into the FOMC meeting.  Yet, despite the Fed removing the “patient” pledge from the announcement, it still seems we have plenty of time before a rate hike occurs.

Investors will now be paying extra close attention to economic reports to try to gain clues when rates may actually rise for the first time in years.  The Fed will be looking for wage growth, employment stability, consumer confidence increases, and higher inflation.

What that could mean is there may be volatility heading into certain economic news release days.  After the reports come out though, volatility could come right back down.  This may provide us some interesting trade opportunities, although I don’t like to try to time the market in such a narrow window.  We shall see what opportunities arise in the coming weeks.

Once again, I’m going to send out a new trade tomorrow.  Make sure you watch your inbox for the trade alert.


Portfolio Recap

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

Price Paid: $1.33

Current Price: $0.04

Time Until Expiration: 1 day

Expires tomorrow.


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

Price Paid: $1.35

Current Price: $1.25

Time Until Expiration: 1 day

OSTK came very close, but didn’t quite hit our first exit point.  Hopefully, you took my advice and sold prior to the weekend, before time decay ate away at the option’s value.  Make sure you sell these calls out if you’re still holding.  You don’t want to accidentally get long the shares after expiration (because the calls are in-the-money).


Position #3: Intel (INTC) April 34 Calls

Price Paid: $1.25

Current Price: $0.08

Time Until Expiration: 29 days

I mentioned the disappointment with INTC last week, so no need to reiterate.  I don’t expect much to happen before next month’s expiration, but you never know for sure.


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

Price Paid: $1.15

Current Price: $1.35

Time Until Expiration: 29 days

Okay, that’s more like it.  TTWO finally climbed off the 200-day moving average and is sitting just under the 20-day moving average.  Our calls are now winners, but could have much more upside in the next month.  If the stock breaks the next support level, the next stop is the 50-day moving average around $27.50.


Position #5: Prudential Financial (PRU) April 82.50 Calls

Price Paid: $1.77

Current Price: $1.25

Time Until Expiration: 29 days

PRU has been interesting in the week we’ve held the calls.  The day I recommended the trade, the stock shot higher. It proceeded to reach as high as 56% in gains the next trading day.  The shares have since sold off all the way back down to about $80.  You typically don’t see insurance companies this volatile, but the share price appears to be holding at the 50-day moving average.  Still plenty of time on this trade, so stay tuned.


Category: OTW Weekly Updates