Weekly Update: November 23, 2012

| November 23, 2012

Weekly Update:  November 23, 2012


What To Watch

Welcome to the special Friday Thanksgiving edition of the Weekly Update.  Next week, we’ll return to our normal Thursday update schedule.

It’s been a mostly uneventful week given the holiday and the shorter trading hours.  On the bright side, stocks rallied to post decent gains, with the S&P 500 up 2.5% for the week.  However, trading volume was clearly lower as many traders and investors were on vacation.

It will be interesting to see if the rally holds next week with investors back in action.  The good news is the fiscal cliff seems to be heading towards some form of resolution.  On the other hand, Europe is getting messy again.

What’s more, we’re likely to continue seeing worse than expected economic numbers in the short-term based on Hurricane Sandy.  Although, most of the data should even out over the next few weeks.

Finally, holiday shopping season has officially begun.  I’ll be paying close attention to the numbers coming out of the retail sector to see if any trading opportunities exist.  As always, keep an eye out for trade alerts.


Portfolio Recap

Position #1:  Netflix (NFLX) December 2012 $62.50 Puts

Price Paid: $1.41

Current Price: $0.30

Time Until Expiration: 28 Days

NFLX has slowly climbed above the 200-day moving average resistance level, but it hasn’t made a sharp move higher.  In fact, I believe it may have topped out this week.

There’s still 28 days for the stock to head back to the 50-day moving average level.  If we get back to that area in the next week or two, our options will certainly be profitable.  If the stock holds at current levels or pulls back very slowly over the next week, we’ll look to sell out of the position sooner while some value remains.

Let’s hang on to the puts for now, but I’ll be keeping a close eye on the stock for a possible exit point.


Position #2:  Starbucks (SBUX) December 2012 $50 Calls

Price Paid: $1.02

Price Sold: $1.56

We sold our SBUX calls right before Thanksgiving for over a 50% gain.  That’s always a nice way to start a holiday!

The stock had been down with the overall market despite the company posting strong results.  As such, it was an excellent candidate to rebound when the market rallied.  Not to mention, we had strong support at the 50-day moving average.

Of course, it all worked out perfectly and we cashed out for a nice gain.


Category: OTW Weekly Updates