Weekly Update: October 2, 2014

| October 2, 2014

Weekly Update:  October 2, 2014


What To Watch

Selling continues in the US equities markets, and volatility has picked up in recent days. The S&P 500 is down over 2.5% since last week. It’s up 6.7% for the year, down from a high of near 10% gains. Small caps have been hit the hardest though, down 4% since last week and declining nearly 6% so far this year.

After basically ignoring headline risk throughout the summer, investors are finally letting macro events worry them. Anti-China protests in Hong Kong are causing some concern, along with the battle against ISIS. The spread of Ebola is also starting to impact certain stock sectors.

There hasn’t been one particular event causing concern, it’s more of a general negative feeling about geopolitical events. I don’t believe this sentiment will continue unless we’re hit with even more bad news.

At home, the news remains mostly positive. While ISM manufacturing came in a bit worse than expected, the overall trend is positive. Meanwhile, both ADP and initial jobless claims look strong, suggesting the job market continues to be in better shape. We’ll see tomorrow with the release of the September jobs number.

I’ll be looking to roll out a new trade tomorrow, so keep an eye on your inbox.


Portfolio Recap

Position #1: ZAGG (ZAGG) October $6 Calls

Price Paid: $0.30

Current Price: $0.15

Time Until Expiration: 16 days

ZAGG shares rebounded in a big way today, up nearly 7%. The stock looks like it will test the 50-day and 20-day moving averages just above this level. If it breaks through, the next stop could be much higher.


Position #2: Transocean (RIG) November $37 Calls

Price Paid: $1.28

Current Price: $0.20

Time Until Expiration: 51 days

Drillers were absolutely hammered throughout September, mostly due to the falling price of oil. Fortunately, we saw an encouraging bounce today in RIG, which closed almost 2% higher. I’m not going to call the bottom, but let’s hope we finally got there. With over 50 days left, there’s plenty of time on this trade.


Position #3: Yahoo (YHOO) November $42 Calls

Price Paid: $1.51

Current Price: $1.50

Time Until Expiration: 51 days

It’s been a pretty solid week for YHOO, which traded well into the $41 range on a few occasions this week. The stock is looking to break the 20-day moving average, just below $41. Above that resistance, there’s basically nothing to stop the shares from rocketing much higher.


Category: OTW Weekly Updates