Weekly Update: October 1, 2015

| October 1, 2015

Weekly Update:  October 1, 2015

 

What To Watch

If you just looked at the final tally – the S&P 500 is basically flat from last week – it would appear that not much has happened since our last update.  However, the market has actually been fairly volatile over the week period.

Overall, the S&P 500 is down 5% for the year, while the Russell 2000 has dropped 8%.  Small caps have taken more of a beating in recent weeks as investors have moved away from perceived riskier assets.  Meanwhile, the Nasdaq 100 is down less than a percent as some of the big tech stocks have been holding their own.

The biggest bloodbath so far in 2015 has been in commodities.  Commodities as a whole are down a whopping 19% year-to-date.  It’s not just energy either.  Across the board, commodities have been hit due to major oversupply and lack of demand.  It’s just another negative effect of China’s slowing economy.

Once again, the US economy continues to be fine.  Yes, manufacturing is still weak, but that’s not new.  Consumption and employment are up, and those are what are most important to the economy.  We’re still likely to see a rise in interest rates by the end of the year, but it will only be of the quarter point variety.

Keep an eye out for a new trade coming out tomorrow.

 

Portfolio Recap

Position #1: King Digital Entertainment (KING) November 14 Calls

Price Paid: $1.00

Current Price: $0.85

Time Until Expiration: 50 days

KING continues to move mostly sideways.  The stock has been ranging from $13 to $14.  We’re looking for a break above $14 to really get our options in play.  Fortunately, there’s still plenty of time left on these calls.

 

Position #2: Prudential Financial (PRU) October 82.50 Calls

Price Paid: $1.30

Current Price: $0.17

Time Until Expiration: 15 days

PRU continues to take punishment in step with financials.  I like this company a lot over the long-term, but we’re running into a serious time decay challenge now.  We need a sharp move higher in the next two weeks for this trade to get back into play.

 

Position #3: Cisco Systems (CSCO) October 26 Calls

Price Paid: $0.68

Current Price: $0.39

Time Until Expiration: 15 days

CSCO has been moderately bullish despite a mostly bearish week in stocks.  The stock keeps threatening to break out higher.  The only issue we have is there are just two weeks left on these options, so we need the move to happen fast.

 

Position #4: Bank of America (BAC) November 20 Calls

Price Paid: $0.68

Current Price: $0.49

Time Until Expiration: 50 days

BAC has jumped around over the week since we made the trade, but has remained in roughly a 50 cent range.  I like this stock – and financials in general – moving forward.  Still plenty of time for this trade to be a good one.

 

Category: OTW Weekly Updates