Weekly Update: May 15, 2014

| May 15, 2014

Weekly Update:  May 15, 2014


What To Watch

Today’s the first somewhat noisy day in what’s otherwise been a quiet week. The S&P 500 was up small for the period but will end today around even from our last update. For once, the Nasdaq is faring slightly better than the S&P 500 and the DJIA.

!0-year Treasuries are doing well once again with yields heading lower. The 10-year yield was below 2.5% at one point today and ended up closing right around that level. Bonds remain attractive to investors, especially with interest rates looking like they’ll be at historic lows for quite a while longer.

The usual suspects are creating a moderate level of investor uncertainty. That is, Ukraine and China continue to be the biggest negative catalysts in terms of macro risks.

Meanwhile, the US economy continues to show moderate improvement. A whole slew of economic reports came out this week. Jobless claims came in at 297,000, the lowest level since May 2007. The Producer Price Index also showed a healthy increase in prices. Retail Sales results were neutral, while Industrial Production showed a surprising decline – but with the annual rate of increase still looking good.

All in all, external variables are doing their best job to keep the market in a sideways motion for now. As the summer is rapidly approaching, we may continue to drift for the next several weeks. Of course, that can always change at a moment’s notice. As usual, stay tuned.

I plan to roll out another trade tomorrow, so keep an eye on your inbox.


Portfolio Recap

Position #1: Pandora (P) May $32 Calls

Price Paid: $2.05

Current Price: $0.00

Time Until Expiration: 1 day

This position expires tomorrow.


Position #2: Freeport-McMorRan Copper & Gold FCX) May $33 Calls

Price Paid: $1.20

Price Sold: $2.35

We sold the FCX calls this week for 95.8% gains!


Position #3: Amazon (AMZN) May 17th $375 Calls

Price Paid: $1.70

Current Price: $0.00

Time Until Expiration: 1 day

This position also expires tomorrow.


Position #4: Dunkin’ Brands (DNKN) June $47.50 Calls

Price Paid: $1.15

Current Price: $0.20

Time Until Expiration: 36 days

DNKN pulled back a little this week but is holding strong at support. I think $46 is next likely target, which it could easily hit next week. After that, the next stop is $47, around the 200-day moving average.


Position #5: Goldman Sachs (GS) June 21st $165 Calls

Price Paid: $1.39

Current Price: $0.60

Time Until Expiration: 36 days

GS made a strong move above $160 during the week, pushing our options into profitable range. However, a pullback in the financial sector has taken GS with it. Fortunately, the lows during this consolidation appear to be getting higher. That suggests the stock breakout will be to the upside. Moreover, there’s plenty of time for the share price to break above $165.


Category: OTW Weekly Updates

About the Author ()

Marcus Haber is the co-editor of Options Trading Research and boasts well over a decade of real-life options experience. Learning from some of the biggest names in the business, Marcus has served as an Options Strategist for a number of firms and was also appointed to the Options Advsiory Board with Pershing, a branch of the Bank of New York.