Weekly Update: May 1, 2014

| May 1, 2014

Weekly Update:  May 1, 2014


What To Watch

There’s been something of a divergence lately between Nasdaq stocks and the rest of the market.  The Nasdaq-100 is flat on the year, while the S&P 500 is up about 2.5%.  The flight to “proven” stocks has mostly continued over the last week.  However, the Nasdaq did make back some of its lost ground late in the week.

The market has been quiet the last couple days despite a host of economic reports and a Fed meeting.  Most likely, investors and traders are awaiting the April jobs number coming out tomorrow.

Regarding the Fed meeting, the result was a whole lot of nothing.  Basically, almost nothing changed from the previous FOMC statement released in January.  The Fed continues to see reasonable but slow growth in the US economy.  And, the central bank continues to cut bond purchases by $10 billion per meeting.

In other economics news, consumer spending, personal income, and manufacturing all are showing strong gains.  Of course, that’s a very good signal the economy is shifting into a higher gear.  On the other hand, jobless claims and GDP were disappointing, but neither contained any red flags in the results.

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

Now on to the portfolio.


Portfolio Recap

Position #1: Abercrombie & Fitch (ANF) May $38 Puts

Price Paid: $1.68

Current Price: $1.30

Time Until Expiration: 16 days

ANF continues to be whipsawed by company-specific news.  Fortunately, after “good” news today, the stock closed at the lows.  We should have a chance to sell our puts for profits in the next couple days.  Given the volatility in this name, we’ll probably exit the position sooner rather than later.


Position #2: Pandora (P) May $32 Calls

Price Paid: $2.05

Current Price: $0.05

Time Until Expiration: 16 days

P got crushed after releasing worse than expected earnings.  While the share price has rebounded from its lows, there’s still a ways to go for our options to be in play.  Most likely, we’ll be writing this one off.  It’s very hard to overcome an earnings miss in a short period of time.


Position #3: Freeport-McMorRan Copper & Gold FCX) May $33 Calls

Price Paid: $1.20

Current Price: $1.35

Time Until Expiration: 16 days

FCX is still sitting around that $34 level with our calls trading for a small profit.  We’ll wait to see if we can make a run for $35 in the next week before deciding what to do with these options.


Position #4: Amazon (AMZN) May 17th $375 Calls

Price Paid: $1.70

Current Price: $0.00

Time Until Expiration: 16 days

In an extremely frustrating development, AMZN got hammered after earnings last week.  It’s really quite silly as the earnings results were not bad at all.  And, the company continues to be a market leader and innovator.  I can’t control investor behavior but I can continue to believe in this stock.  We will likely run out of time on these calls, but we’ll certainly be doing another trade in this name soon.


Position #5: Dunkin’ Brands (DNKN) June $47.50 Calls

Price Paid: $1.15

Current Price: $0.60

Time Until Expiration: 51 days

DNKN pulled back a bit with the overall market, but generally it hasn’t done much.  This trade is going to take a little more time to develop which is why we bought June calls instead of May.  There’s plenty of time for the options to perform as we expect.


Category: OTW Weekly Updates