Weekly Update: May 5, 2016

| May 5, 2016

Weekly Update:  May 5, 2016


What To Watch

It’s been a pretty choppy last week as the markets try to parse through global economic data and earnings.  We’re definitely on the down slope of the earnings release curve, so that aspect will be quieting quite a bit.  On the other hand, there’s a fairly big jobs report tomorrow which could move the markets.

The S&P 500 is down about a percent from last week, but is up on the year still (about 1%).  The Russell 2000 is back down 2% after falling this week. The Nasdaq 100 was not helped by earnings (except for AMZN) and is down 6% on the year.

Crude oil gave back over 3% this week and now up just 3% on the year.  Actually, it wasn’t a good week for most commodities or other asset classes. The USD moved higher and so did bonds, but that’s about it.  The best performer last week was orange juice!  That’s pretty random of course, but OJ did pick up 7% last week.

The Fed seems inclined to leave things alone for now.  Outside the Fed, major political decisions will probably be few and far between as we wait on the election cycle.  For now, investors will be watching the jobs report tomorrow, as I mentioned earlier, for clues on the economy.

Let’s take a look at our positions.


Portfolio Recap

Position #1: Wells Fargo (WFC) May 48 Calls

Price Paid: $0.88

Time Until Expiration: 14 days

WFC pulled back this week, but most of you should be out for gains by now.


Position #2: Ciena (CIEN) May 18 Calls

Price Paid: $0.62

Time Until Expiration: 14 days

CIEN continues to disappoint and has now hit our first risk-control point.  Not a lot of good right now in this stock, but we do have two weeks left until expiration.


Position #3: Western Digital (WDC) May 46.50 Calls

Price Paid: $1.35

Time Until Expiration: 14 days

WDC had been such a good early story for us that it’s painful to look at it now.  After being a big winner right away, WDC tanked on poor earnings. The stock has now dropped below both our risk-control levels, so everyone should have exited.  If you managed to exit back when we were closing in on our first profit point (prior to earnings), nice work and great decision-making!


Position #4: Apple (AAPL) May 95.50 Calls

Price Paid: $0.92

Time Until Expiration: 14 days

AAPL has already been all over the place since our trade.  We got in at the early week lows and immediately saw big gains. Now the stock has pulled back again.  Given what’s going on so far, we’re likely to see plenty of volatility over the next two weeks.  That means there still should be plenty of opportunities for these calls to be winners.  Peak gains so far are 95%.


Category: OTW Weekly Updates