Weekly Update: May 21, 2015

| May 21, 2015

Weekly Update:  May 21, 2015


What To Watch

Here we go again in US equities.  The major indices are once again trading at record highs.  The S&P 500 is up about 1.5% since last week and has passed 4% returns on the year.  Small caps have also gotten a boost, with the Russell 2000 gaining 2% since last week and up around 5% for the year.

As the summer rapidly approaches, we can expect market-moving news to lessen as well.  It’s typical for the market to move mostly sideways over the summer months.  I don’t expect this summer to be any different.

Of course you never know.  Geopolitical events can always crop up at any time.  And while stocks have been relatively quiet, bonds and oil have been pretty active of late.  Volatility from different markets can spill over into stocks at times.

Ultimately though, the biggest factor driving stocks is when interest rates will go up.  Right now, June isn’t even on the radar for the Fed.  We’re looking at September at the earliest, with the odds favoring December at the moment.  However, let’s not forget, forthcoming economic news could shift that timetable.

I’m going to roll out a new trade next week, so stay tuned.


Portfolio Recap

Position #1: Bank of America (BAC) June 16 Calls

Price Paid: $0.36

Current Price: $0.77

Time Until Expiration: 29 days

BAC is sitting at an important resistance point right around $16.75.  If it breaks through this level, $18 could be a real possibility.  In the meantime, the calls have done extremely well, with a high so far of 150% gains.


Position #2: Apple (AAPL) June 135 Calls

Price Paid: $1.52

Current Price: $1.20

Time Until Expiration: 29 days

AAPL is quickly building up towards our aggressive exit point of $135.  While conservative traders have already taken profits, those still holding the calls have a fair amount of upside potential left in this trade.


Position #3: Facebook (FB) June 80 Calls

Price Paid: $1.65

Current Price: $2.22

Time Until Expiration: 29 days

FB has settled in somewhat around $80.  It’s good to see the stock not give up the big gains from a week ago.  The stock is dealing with a bit of resistance here, but once it breaks through, we could easily hit our profit-taking points.


Position #4: Yahoo (YHOO) June 43 Calls

Price Paid: $0.92

Current Price: $1.55

Time Until Expiration: 29 days

I’m not going to say our trade of YHOO calls yesterday was a gimme, but it’s about as close as you’ll find in this business.  The stock dropped on rumors, and once they were proved false, the shares regained lost ground.  We haven’t hit a profit-taking point yet, but the calls have already been up 78% after less than 1 day of making the trade!


Category: OTW Weekly Updates