Weekly Update: May 16, 2013
Weekly Update: May 16, 2013
What To Watch
The bulls are in the driver seat and it doesn’t look like they’ll be taking their foot off the accelerator anytime soon. Of course, anything is possible. But, for now, there’s no reason to believe the market is headed far south in the near future.
Over the past week, the S&P 500 is up 1.7% while the Dow Industrials climbed 1.2%. Interestingly, small caps had the best week, with the Russell 2000 climbing over 1.8%. A jump in small caps suggests investors are willing to take on more risks with their money.
The decline in risk aversion is being supported by economic data. Although the data was mixed this week, there were no significantly negative surprises. Industrial production, jobless claims, and housing starts were worse than expected. However, the bad news was countered by solid retail sales and a jump in building permits.
Perhaps the most important bit of info floating around lately is the data suggesting 50% of Americans are still not in the stock market. That means this rally could be far from over.
Finally, I’m looking to do a trade tomorrow so pay attention to your inbox!
Portfolio Recap
Position #1: LinkedIn (LNKD) June $150 Puts
Price Paid: $1.18
Current Price: $0.59
Time Until Expiration: 36 days
Up until the last couple days, this position had been a small winner for us. It looked like it may even become a huge winner once the stock crossed the 50-day moving average. However, LNKD has since bounced higher and is sitting in the low $180s.
I’m okay with where we are. I still believe LNKD is overbought at the moment. And, we’re one down day away from these puts getting back to even. And, more importantly, we’re protected on the downside should anything happen to this market. Let’s hang on to these puts.
Position #2: Fusion-io (FIO) June $14 Calls
Price Paid: $1.15
Current Price: $1.60
Time Until Expiration: 36 days
FIO got off to a great start and has remained a winner since we bought the calls. Currently, our position is up nearly 40% – and yesterday we were sitting at over an 80% winner for a time. However, I’m not ready to take profits yet.
I believe this stock will climb above its 50-day moving average before long. That means over $16 a share and over 100% profits in the options. With over a month left, we’re going to hold our options for bigger upside potential.
Category: OTW Weekly Updates
