Weekly Update: March 28, 2013

| March 28, 2013

Weekly Update:  March 28, 2013


What To Watch

What to make of this market?  On one hand, the S&P 500 closed at record highs, just under 1,570.  On the other hand, Europe is causing problems again.

Investors couldn’t seem to decide if Cyprus was something to be worried about or not.  As a result, we had plenty of choppy action in the market.  Nevertheless, the major indices still managed to finish the week at the highs.

What’s more, the S&P 500 closed out the quarter at over 10% gains.  Not a bad quarter, no matter how you slice it.

However, March closed with softer than expected economic data.  Durable goods and GDP revision were just okay, but jobless claims were worse than expected.  I’m still not worried about the domestic economy overall, but we could see some shorter-term softness.

I owe you a trade.  Choppy markets, like we had this week, are the worst time to trade options the way we do.  However, with today’s near-term climax of events in Cyprus (banks reopening), I believe we’re good to go on the next trade.

Tomorrow is Good Friday and the markets are closed, but we will absolutely have a trade Monday morning.  I’m giving you plenty of notice, so be ready!


Portfolio Recap

Position #1:  Freeport-McMoRan (FCX) April 2013 $34 Calls

Price Paid: $0.72

Current Price: $0.39

Time Until Expiration: 22 Days

FCX has been almost exactly as choppy as the market.  With the stock still above $33, there’s plenty of time for it to hit our strike.  We have a little over a week before time decay will start to become a problem.  As such, I’m going to give these options one more week to reach their potential before pulling the plug.


Position #2:  F5 Networks (FFIV) April 2013 $105 Calls

Price Paid: $0.92

Current Price: $0.17

Time Until Expiration: 22 Days

FFIV is roughly in the same position as last week.  However, the stock is finally trending up towards its key moving averages.  If it breaks through the 20-day average, it could easily climb to the 200-day level – in the mid 90’s.  That would certainly spike the value of our calls.

Let’s hang on to our FFIV options while we still have three weeks left to go.


Position #3:  Amazon.com (AMZN) April 2013 $280 Calls

Price Paid: $1.10

Current Price: $1.45

Time Until Expiration: 22 Days

That’s more like it.  Our AMZN calls are up 32% and the stock has turned sharply higher in recent days.  There’s nothing but blue skies above – so if AMZN continues higher, we could be off to the races.

With three weeks left to expiration, let’s hang on to the calls for a chance at a really big winner.


Category: OTW Weekly Updates