Weekly Update: October 31, 2013
Weekly Update: October 31, 2013
What To Watch
Equities are celebrating Halloween today by basically doing nothing at all. The major indices are nearly flat for the day, although the S&P 500 is up another 1% since last week. We’re once again at record highs for the major benchmarks.
The Fed delivered mostly expected news this week by not tapering and not changing their language all that much. Most people still expect no tapering to occur in 2013. In fact, a December taper would certainly send the markets lower at this point.
However, I find a 2013 taper to be highly unlikely under current circumstances. Most of the recent economic data has been worse than expected, including jobs data, retail sales, and consumer confidence. Meanwhile, earnings season is past the halfway point and will be ratcheting down after next week.
Given the Fed statement, earnings, and economic news, I don’t see a lot of market volatility ahead… but you never know for sure. The next areas for investors to focus on – holiday season sales and consumer spending.
Let’s take a look at the portfolio.
Portfolio Recap
Position #1: ZAGG (ZAGG) November $4 Calls
Price Paid: $0.68
Current Price: $0.75
Time Until Expiration: 15 days
ZAGG hit resistance at $5 per share and has slowly declined to the 50-day moving average, which should provide strong support. We have some time left for the stock to bounce off support and make another run at $5. However, I’ll likely be inclined to sell the calls before expiration week. Once again, the benefit to buying in the money calls is there isn’t a whole lot of risk to waiting for a bounce as long as ZAGG remains above support.
Position #2: Barrick Gold (ABX) November $19 Calls
Price Paid: $0.97
Price Sold: $1.57
We locked in 61.9% profits on ABX… and just in time. Today, the stock has dropped nearly $1 on a pullback in gold. As such, I feel pretty good about the timing of our sale. Not to mention, over 60% profits is not too shabby!
Position #3: Citrix Systems (CTXS) December $65 Calls
Price Paid: $1.39
Current Price: $0.40
Time Until Expiration: 50 days
CTXS has fallen back to near our entry point, but the options are much cheaper due to time decay/lower volatility. That’s okay for now. Not only do we have plenty of time on these options, but the stock is also likely to bounce back to the 20-day moving average (near $60). Nothing has changed about my thesis, so there’s no reason to give up on this position.
Position #4: Nike (NKE) November $75 Puts
Price Paid: $1.16
Current Price: $0.80
Time Until Expiration: 15 days
Our NKE options are still in play and are hovering near our strike. There seems to be fair support at $75, but if it breaks that barrier… look out below. We have about a week to make a decision on this position. I believe it’s definitely worth holding into next week, unless we have a very big down move tomorrow.
Position #5: Symantec (SYMC) December $22 Calls
Price Paid: $0.70
Current Price: $1.15
Time Until Expiration: 50 days
SYMC is off to a roaring start, up nearly 65% as of this writing. The stock has gapped up after being oversold on negative earnings news. In fact, the company president just bought 100,000 shares – a very bullish sign. Let’s hang on to these calls for even bigger profit potential.
Category: OTW Weekly Updates
