Weekly Update: November 29, 2012

| November 29, 2012

Weekly Update:  November 29, 2012


What To Watch

The story of the week is clearly the ongoing negotiations over resolving the fiscal cliff.  The market has been reacting to any and all news related to progress – or lack thereof – related to the budget talks.

As such, the intraday movement has been somewhat choppy as stocks react immediately to positive or negative comments on the negotiations.  But, fortunately, the trend appears to be upward with the S&P 500 up over 1.6% for the week.

Basically, investors are cautious but optimistic a deal will get done.  That’s my belief as well.  As I’ve said before, I just don’t see a scenario where we fall off the cliff.  There’s simply too much at stake for either party.

Meanwhile, the retail shopping season is in full swing.  Numbers are starting to come out and the early results are encouraging.  I’ll continue to closely watch retail stocks for any trade opportunities.


Portfolio Recap

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

Price Paid: $1.41

Current Price: $0.14

Time Until Expiration: 22 Days

NFLX has finally turned lower the last couple days but we have a long way to go.  With 22 days left to expiration, there’s enough time for the stock to make a downward move towards one or more of the key moving average levels.

Because the stock appears to have topped out this week, I believe it’s worth holding our puts for another week.  Since NFLX tends to be volatile, one big down day will significantly boost the price of the puts.

Let’s hang on for a bit longer.


Position #2:  McMoRan Exploration (MMR) January 2013 $9 Calls

Price Paid: $0.92

Current Price: $1.15

Time Until Expiration: 50 Days

I figured investors wouldn’t take long to realize MMR was oversold.  But, to our benefit, it looks like they already started buying back into the stock.

In fact, our position is up 25% in just one day.

There’s simply too much upside in MMR for savvy investors to remain on the sideline for long.  I predict big things with this position, so let’s hold on for bigger gains ahead.


Category: OTW Weekly Updates