Weekly Update: May 7, 2015

| May 7, 2015

Weekly Update:  May 7, 2015


What To Watch

We’re seeing an uptick in volatility in the financial markets this week and US equities have pulled back a bit.  The S&P 500 is down a little over 1% since last week and is once again sitting at the important 50-day moving average trend line.

Over the same time frame, the Nasdaq 100 dropped 2.5% and the Russell 2000 gave back 2%.  It looks like investors are shying away from small caps and tech stocks for the time being.  I don’t believe this is an overly worrisome sign as there was going to be some mean reversion among the various major indices.

In commodity news, crude oil spiked above $60 a barrel before dropping back to around $59.  I don’t necessarily think oil is in full rebound mode just yet.  There’s still plenty of oversupply at this time.  While the price of crude may slowly work its way upward, I don’t expect a sustained spike in prices.

Jobs news continues to impress with jobless claims at 15 year lows.  April non-farm payrolls come out tomorrow, and should give us a clearer picture on hiring activities for the past few weeks.

I’m going to roll out a new trade tomorrow. 


Portfolio Recap

Position #1: Blackberry (BBRY) May 10 Calls

Price Paid: $0.70

Current Price: $0.11

Time Until Expiration: 7 days

BBRY didn’t have enough juice to go any higher than last week and has sold off with the market.  This trade is probably done, but I imagine none of you are still holding these calls at this point.


Position #2: Cree (CREE) May 37.50 Calls

Price Paid: $1.47

Current Price: $0.01

Time Until Expiration: 7 days

Everyone should be out of CREE at this point.


Position #3: GoPro (GPRO) May 48 Calls

Price Paid: $1.55

Current Price: $2.45

Time Until Expiration: 7 days

With GPRO expiring next week, you should go ahead and take profits on this trade if you haven’t already.  My guess is many of you cashed in on these calls when they were over 300% winners.


Position #4: Splunk (SPLK) May 60 Puts

Price Paid: $1.48

Current Price: $0.15

Time Until Expiration: 7 days

SPLK has been our only downside bet in case of a big selloff.  It doesn’t look like we’ll hit a profit-taking point with these puts, as expiration is next week.  However, it was nice to have some piece of mind knowing at least one of our positions would likely earn huge profits on a major selloff.


Position #5: Bank of America (BAC) June 16 Calls

Price Paid: $0.36

Current Price: $0.56

Time Until Expiration: 42 days

It didn’t take long for BAC to reach our first profit-taking point.  Conservative investors had a chance to cash out for 119% gains after just about two weeks of making the trade.  The $18 aggressive exit point is definitely in play with about 5 weeks to go to expiration.


Position #6: Apple (AAPL) June 135 Calls

Price Paid: $1.52

Current Price: $0.99

Time Until Expiration: 42 days

AAPL has been a fun trade for us and it hasn’t even been a week yet!  Immediately after we bought the calls, the stock climbed all the way to $1.30, hitting the profit-taking point for conservative investors. The trade’s high point so far is 66% in gains.  And since then, the stock has already pulled back to $125.  Aggressive traders still have more than enough time to see $135 (and bigger profits) with as much as the stock has been moving lately.


Category: OTW Weekly Updates