Weekly Update: October 22, 2015

| October 22, 2015

Weekly Update:  October 22, 2015


What To Watch

We mostly had a quiet week in US equities until today.  After solid earnings from McDonald’s (MCD) and bullish news out of Europe, stock exploded higher.  The S&P 500 closed up 1.6% and has finally made up all the lost ground from the August correction.

Meanwhile, the Nasdaq 100 is up about 5% on the year, suggesting tech stocks have been in demand more than other sectors.  On the other hand, that index is particular top heavy, so big years from certain big names, like Google/Alphabet (GOOGL) can skew it heavily.  By the way, GOOGL is up over 26% this year.

Overall, the news has been mixed.  Economic reports continue to show some softness in the US, although the jobs news continues to be very good.  Housing numbers have also been decent, along with consumer confidence.  Once again, it doesn’t look like we’ll see a rate hike in 2015.

Earnings news had also been mixed, but after-close today is looking far more bullish.  Google, Amazon (AMZN), and Microsoft (MSFT) all beat expectations and are up big.  Stocks could have another good day tomorrow, especially Nasdaq companies.

Once we see how things shake out tomorrow, we’ll roll out another trade.


Portfolio Recap

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

Price Paid: $1.00

Current Price: $1.55

Time Until Expiration: 29 days

Being patient on KING paid off, as we finally hit our first profit-taking point for conservative investors.  Slowly but surely, the stock made its way higher.  Our high point on the trade so far has been 60% gains.  Plus, there’s still time for our aggressive exit to be hit at $17.


Position #2: Bank of America (BAC) November 16 Calls

Price Paid: $0.68

Current Price: $0.46

Time Until Expiration: 29 days

BAC made a run at the 200-day moving average, but didn’t quite break through.  We’ll need a solid close above that important resistance line in order to appease many potential investors.  Fortunately, we have plenty of time for this scenario to occur.


Position #3: Citigroup (C) November 52.50 Calls

Price Paid: $1.12

Current Price: $1.14

Time Until Expiration: 29 days

C acted much like BAC this week, almost breaking out and closing above the 200-day moving average – but not quite yet.  My software suggests our calls traded for as high as $3 today, but that doesn’t seem right to me.  I’ll correct our records if the price changes/gets fixed.  Meanwhile, the calls have held value and we still have a month to go.


Position #4: Twitter (TWTR) November 33 Calls

Price Paid: $1.43

Current Price: $0.87

Time Until Expiration: 29 days

TWTR ticked up for a day or two after our trade but has dropped back down a bit.  It’s still easily capable of shooting higher, as it can be a very volatile stock.  With a month to go, these calls are definitely in play.


Category: OTW Weekly Updates