Weekly Update: October 6, 2016

| October 6, 2016

Weekly Update:  October 6, 2016


What To Watch

First off, let me throw in a quick programming note:  There won’t be an update next week as I’ll be travelling.  However, there will be a trade early in the week, so keep your eyes peeled.

The big question this week is if interest rate risk has been replaced by political/election risk.  It’s my belief that the answer is no. For one, the election doesn’t seem like it will be that close at this point.  Perhaps more importantly, interest rates still have the potential to be far more impactful than what comes out of the future White House.

Stocks have gone up mostly across the board since our update last week.  With three quarters in the books, the S&P 500 is up 7.25% for the year, the Russell 2000 is up 11.25%, and the Dow and Nasdaq 100 are both up around 6.50%.  We’re closing in on having a moderately good year for stocks after all is said and done.

The big news this week could come from the September jobs report tomorrow.  It could give us some clues as to how soon the Fed will consider raising rates.  Gold, which has been hammered this week, could also see some action depending on what the jobs report does to the dollar.

Let’s take a look at our positions.


Portfolio Recap

Position #1: Cisco Systems (CSCO) October 30 Calls

Price Paid: $0.98

Time Until Expiration: 15 days

CSCO is still slowly edging higher.  With two weeks to go until expiration, the stock still has a chance to hit our aggressive profit-taking point.


Position #2: Himax Technologies (HIMX) October 10 Calls

Price Paid: $0.60

Time Until Expiration: 15 days

HIMX hasn’t recovered at all from its downgrade in the last week.  As such, there’s probably not much left to expect from this position.


Position #3: Southwest Airlines (LUV) October 38 Calls

Price Paid: $0.95

Time Until Expiration: 15 days

LUV spiked above $40 this week before pulling back a bit.  On the day of the spike, our options got bid in a big way, with peak gains hitting 322% on that day.  Let’s see if there’s more upside left before expiration.


Position #4: Ciena (CIEN) October 21 Calls

Price Paid: $1.05

Time Until Expiration: 15 days

CIEN has jumped back higher and is giving us a legit chance at hitting the aggressive profit-taking point.  Let’s see what next week brings.


Position #5: KB Homes (KBH) October 16 Calls

Price Paid: $0.37

Time Until Expiration: 15 days

KBH is still hanging around near the 52-week high.  The stock could get a boost from coming economic releases.


Position #6: JPMorgan Chase (JPM) November 67.5 Calls

Price Paid: $1.20

Time Until Expiration: 43 days

A new trade has brought us yet another nice winner out of the gates.  JPM hasn’t hit our first profit-taking point yet, but the stock has gone nearly straight up since our trade.  Peak gains have already hit 79% in just 3 days.


Category: OTW Weekly Updates