Weekly Update: March 6, 2014

| March 6, 2014

Weekly Update:  March 6, 2014


What To Watch

US equities are once again flirting with all-time highs.  The S&P 500 is nearing the 1,900 milestone and is also approaching 2% gains on the year.  So much for that early February correction!

Markets are shrugging off the volatile situation in Ukraine.  Early in the week, it looked like Russia’s troop presence in Ukraine was going to spook investors.  However, Russia backed down on its aggressive position to some extent, and volatility dropped.  It appears a military conflict in the region will be avoided.

In the meantime, we had yet another mixed week in the US in regard to economic data.  The ADP job number was slightly below expectations, while the ISM Non Manufacturing Index was much lower than expected.  On the other hand, jobless claims dropped by 26,000 – a nice surprise for the labor market.

The jobless claims number is important because it’s forward looking.  That means it could be signaling weather related issues are abating.  And, hopefully economic reports will begin to show an improvement.  I’m pretty sure American businesses can’t wait for spring weather to get here.

Tomorrow is the release of the non-farm payrolls report for February.  The number will still likely show the effects of the arctic winter, so I wouldn’t read too much into it.  March’s number (next month) is going to be more important in the grand scheme of things.


Portfolio Recap

Position #1: Intel (INTC) March $26 Calls

Price Paid: $1.03

Current Price: $0.02

Time Until Expiration: 15 days

INTC remains in a consolidation pattern and hasn’t done much since last week.  We have roughly another week for this stock to break to the upside for our options to still be viable.  Let’s see what next week brings.


Position #2: McKesson (MCK) March $165 Puts

Price Paid: $1.6

Current Price: $0.10

Time Until Expiration: 15 days

MCK didn’t behave as I hoped and has moved sharply higher over the last couple days.  I don’t believe this upward move will hold.  However, with just two weeks to go until expiration, we don’t have a lot of time left for a reversal.


Position #3: Verizon (VZ) April $47 Calls

Price Paid: $1.08

Current Price: $1.29

Time Until Expiration: 43 days

Our VZ calls have remained strong over the last week.  The share price nearly hit $49 midweek before pulling back.  Still, at roughly $47.50, the stock is well above our strike price and in a good spot to move higher.  Our calls are currently 20% winners but we’ll almost certainly be able to capture much higher gains on this position.


Position #4: Green Mountain Coffee Roasters (GMCR) April $90 Puts

Price Paid: $0.95

Current Price: $1.10

Time Until Expiration: 43 days

GMCR is starting to look like a big move lower is coming.  The stock had been hovering around current levels until today’s 3% down move.  There’s nothing but air from here down to the 50-day moving average just above $90 a share.  We have an opportunity for big profits on this trade, so stay tuned.


Category: OTW Weekly Updates