Weekly Update: October 17, 2013

| October 17, 2013

Weekly Update:  October 17, 2013

 

What To Watch

Well, that was a close one.  If not for a last minute agreement in Washington, today would have marked the debt limit for the US government.  That means the US would have begun defaulting on its obligations as the country would have quickly run out of cash.

The agreement also reopened the parts of the government that were shut down for the past 16 days and provided back pay to the 800,000 federal workers who were furloughed.  The government now has funds to operate through January 15th, while the debt ceiling has been extended to February 7th.

This time, the deal includes stipulations that Congress meets by mid-December to discuss the budget – hopefully avoiding another mess like we just witnessed.  Frankly, we were lucky not to be hit harder in terms of market volatility.  Most investors believed a default was never a real possibility.  Next time around, I doubt the markets will be so forgiving.

Should we get into this unfortunate situation again, I’ll definitely be more aggressive about buying protection (puts).  As it stands, most put purchases would have not worked out as the markets have rallied back near records.

Now, we can get back to business and focus on things like earnings and undervalued companies.  In fact, stay tuned for another trade soon.

 

Portfolio Recap

Position #1: Exxon Mobil (XOM) October $90 Calls

Price Paid: $0.73

Current Price: $0.00

Time Until Expiration: 1 day

XOM has recovered, but not fast enough or far enough to make our calls worth anything before tomorrow’s expiration.  We were hurt by a combination of the US government mess and lower crude oil prices.  The stock is now sitting at a key technical level and could move either direction from here.  Regardless, we’ll be sitting on the sidelines this time.

 

Position #2: ZAGG (ZAGG) November $4 Calls

Price Paid: $0.68

Current Price: $0.85

Time Until Expiration: 29 days

ZAGG saw a nice 7% jump today and our calls are solidly in the black.  Investors may have been waiting for the government to solve its issues before buying into this one.  And while ZAGG’s third quarter revenues are slightly below expectations, there are still plenty of things to like about this company.  Let’s keep holding our options for bigger gains ahead.

 

Position #3: Barrick Gold (ABX) November $19 Calls

Price Paid: $0.97

Current Price: $0.65

Time Until Expiration: 29 days

Gold got a big boost today and it showed up in ABX shares, which climbed 5%. Gold’s big move was caused by a combination of short covering and a lower dollar.  Now, ABX is sitting just below the 50-day moving average.  If today’s surge continues, there’s nothing but room to climb should the stock break through resistance.

 

Position #4: Citrix Systems (CTXS) December $65 Calls

Price Paid: $1.39

Current Price: $0.70

Time Until Expiration: 64 days

CTXS fell a bit further from our entry point with the government-induced volatility and the CEO’s leave of absence for personal reasons.  However, both events should prove to be temporary drags on the stock.  I expect with today’s opening of the government, CTXS will get back to the business of climbing.  We have over two months left on these options… plenty of time for this one to work out.

 

Category: OTW Weekly Updates

About the Author ()

Marcus Haber is the co-editor of Options Trading Research and boasts well over a decade of real-life options experience. Learning from some of the biggest names in the business, Marcus has served as an Options Strategist for a number of firms and was also appointed to the Options Advsiory Board with Pershing, a branch of the Bank of New York.