Weekly Update: October 24, 2013

| October 24, 2013

Weekly Update:  October 24, 2013


What To Watch

Not a bad week for equities, with the S&P 500 up just over 1% since last week.  The benchmark index is now up nearly 25% for the year.  It’s certainly a good year to be invested in the US stock market.

Most of the upside has been driven by solid earnings reports and Fed news (that is, no tapering likely this year).

Regarding the Fed, tapering expectations have been pushed out to 2014 on lukewarm economic reports combined with economic damage from the shutdown.  It remains to be seen when the Fed will be expected to reduce bond purchases, but early predictions are for March of next year.

In the meantime, a majority of earnings results have come in better than expected.  Roughly 76% of the companies reporting beat profit forecasts, as of this writing.  The market could really get a boost tomorrow from strong results from both MSFT and AMZN.

Our portfolio is looking much better these days.  Tweaking of the strategy has paid dividends for us.  We have a couple nice winners with the other positions in striking distance.  I’ll be looking at rolling out a new trade in the next couple days.


Portfolio Recap

Position #1: ZAGG (ZAGG) November $4 Calls

Price Paid: $0.68

Current Price: $1.00

Time Until Expiration: 22 days

ZAGG is on the move and is approaching $5 per share.  Our calls are currently 47% winners, with significantly more upside potential.  The company just introduced new products for the new Apple (AAPL) iPad Air.  A new product line could do wonders for ZAGG’s sale growth.  Let’s see how this one develops over the next week.


Position #2: Barrick Gold (ABX) November $19 Calls

Price Paid: $0.97

Current Price: $1.45

Time Until Expiration: 22 days

Gold’s been on a tear and that’s great news for ABX.  In fact, ABX has climbed just above a key resistance level and could be headed to the 200-day moving average (around $22 per share).  Our calls are now 50% winners.  Gold looks like it could have some upside potential now, so we may hold on to the ABX calls for the time being – or we may take profits as early as tomorrow.  Stay tuned.


Position #3: Citrix Systems (CTXS) December $65 Calls

Price Paid: $1.39

Current Price: $0.75

Time Until Expiration: 57 days

CTXS jumped 5% today on better than expected earnings results.  Of course, the company lowered revenue and EPS guidance, but we already knew that was coming.  Investors seem to really appreciate the $500 million increase to the company’s share repurchase program.  With the stock finally headed in the right direction, I like our chances to make money on these calls.


Position #4: Nike (NKE) November $75 Puts

Price Paid: $1.16

Current Price: $1.08

Time Until Expiration: 22 days

NKE hasn’t been able to break resistance despite higher overall markets, which is good news for us.  The shares may test the 20-day moving average, about 3% lower from here.  That would provide nice gains for our puts if it happens soon.  And, if the stock breaks below the 20-day average line, there’s no support until under $70.


Category: OTW Weekly Updates