Weekly Update: November 13, 2014

| November 13, 2014

Weekly Update:  November 13, 2014


What To Watch

There have been two main themes to the financial markets over the past week or so. First, US equities continue to set record highs. After dropping all the way to flat for the year in mid-October, the S&P 500 is now up 12% year-to-date… and sitting at its highest price ever. Talk about a quick rebound!

On the other hand, crude oil prices continue to plunge. At under $75 per barrel, West Texas crude is as cheap as it’s been since 2010. The plummeting price, which has fallen farther than just about anyone believed possible, is due primarily to oversupply. There are many who never thought we’d see $75 crude ever again.

The low oil price is being reflected in low gas prices as well. That’s obviously good for consumers and could lead to more holiday retail spending than expected. On the other hand, cheap oil is significantly hurting shale oil and deep sea drillers, who have a high cost of production.

The next couple weeks should be quiet overall, but you never know for sure. Many investors will be focused on the retail numbers as we get closer to the holidays. As always, stay tuned.


Portfolio Recap

Position #1: Transocean (RIG) November $37 Calls

Price Paid: $1.28

Current Price: $0.00

Time Until Expiration: 8 days

Crude oil plunged below $75 per barrel today, so stick a fork in drillers for the time being. Oil continues to surprise to the downside, and it’s clearly going to take time for black gold to recover. This one is going to expire at the end of next week. Moving on.


Position #2: Cliffs Natural Resources (CLF) December $10 Calls

Price Paid: $1.11

Current Price: $1.40

Time Until Expiration: 36 days

CLF has been mostly headed sideways lately. The question is when should we take profits? Well, the stock’s still sitting at support, and I still believe a run towards $13 or higher is coming. With a December expiration, we can give this trade more time.


Position #3: Travelzoo (TZOO) December $12.50 Calls

Price Paid: $0.51

Current Price: $0.55

Time Until Expiration: 36 days

TZOO has essentially been flat since last week. It hasn’t made a run towards $13 just yet, but it will. We still have over a month until expiration, and there’s definitely going to be some action before then.


Position #4: Splunk (SPLK) November 59 Puts

Price Paid: $1.46

Current Price: $1.00

Time Until Expiration: 8 days

SPLK continues to be extremely volatile, which makes it difficult to trade at times. On one hand, we had a chance to get out of our puts for profit last week. On the other hand, the stock could plunge and net us huge gains at any moment. Not to mention, it’s currently our only put in the portfolio. Regardless, we’re running out of time so we need to close this position in the next couple trading days.


Position #5 Kate Spade (KATE) December 29 Calls

Price Paid: $1.50

Current Price: $1.25

Time Until Expiration: 36 days

KATE represents our first trade in the new format. Since we just made this trade yesterday, we weren’t likely to hit any of our exit points by today. Plus, the stock hasn’t done anything worth discussing since yesterday. Next week, we may have more to discuss.


Category: OTW Weekly Updates