Weekly Update: November 6, 2014

| November 6, 2014

Weekly Update:  November 6, 2014


What To Watch

The biggest news of this past week is political, with the Republicans taking over control of Congress starting in 2015.  This basically ensures gridlock for the next two years – generally a favorable situation for stocks.  There could be some sticky situations ahead, but for the most part, I expect a whole lot of nothing.

I want to shift the focus to a major change we’re making in this service.  From this point on, there will be no more Sell Alerts on new trades.  I’ll still send out Sell Alerts on the four existing positions, if needed.  But beyond that, we’re changing the way we exit our positions.

In order to accommodate different trading styles and risk tolerance levels, I’m going to give several different exit points for each new trade.  There will be a conservative profit-taking level, an aggressive profit-taking level, a conservative risk control level, and an aggressive risk control level.

Please note, you will be responsible for selling at whatever level you are comfortable with, on your own.  There will be no alerts.  I’ll mention if we hit any of the various levels in the weekly updates, but you’ll do the selling on your own accord.  Of course, you’ll be able to check the exit points on the website whenever you want.

I believe this change will accommodate a much more diverse set of traders than the previous method.  It will also give you an opportunity to judge how conservative or aggressive your own trading preferences tend to be.

I’ll roll out a new trade early next week utilizing the new method.


Portfolio Recap

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

Price Paid: $1.28

Current Price: $0.05

Time Until Expiration: 16 days

Drillers just can’t catch a break.  Crude oil has dropped below $80 per barrel, surprising most analysts.  At these prices, drilling and fracking operations start to become unprofitable.  It may take a while for oil (and drillers) to recover from this plunge.


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

Price Paid: $1.11

Current Price: $1.55

Time Until Expiration: 44 days

CLF is still a solid winner for us, but I think we can capture bigger profits.  The stock is fighting the 50-day moving average.  If it can break through the resistance, there’s plenty of room for this thing to run.


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

Price Paid: $0.51

Current Price: $0.60

Time Until Expiration: 44 days

TZOO made a run at $13 but was blocked by the 20-day moving average this time around.  The shares are trading right around our strike, and are poised to test resistance once again.  With over 40 days left, there’s plenty of time for the shares to break through.


Position #4: Splunk (SPLK) November $59 Puts

Price Paid: $1.46

Current Price: $1.80

Time Until Expiration: 16 days

Our SPLK puts got off to a good start.  The stock went straight down for several days before recovering somewhat today.  The puts are still solidly in the black, but once again, I think we can do better.  I believe the stock will test the 200-day moving average around $60 well before expiration hits.  Stay tuned.


Category: OTW Weekly Updates