Weekly Update: September 11, 2014

| September 11, 2014

Weekly Update:  September 11, 2014


What To Watch

US equities have once again done very little this week. The S&P 500 is trading right around where it was at the time of our last update. The same holds true for the Dow Jones Industrials, which have barely moved over a week’s time. Tech stocks are up a bit, but are still under a 1% higher than a week ago.

In the US, the biggest story this week was the launch of three new Apple (AAPL) products. AAPL gave a boost to the tech sector after the company announced two new iPhone 6 models plus an Apple Watch.

The main macro focus of the markets continues to be on international events. While Ukraine is in a ceasefire with Russia, there are still plenty of issues to be resolved. The big news out of Europe came from the ECB, which is enacting a Fed-like bond buying program and lowering rates in order to combat deflation and ultra-slow growth.

Domestically, the US economy still looks to be in good shape. August payrolls came in much lower than expected (142,000 compared to 220,000). However, August numbers are historically prone to being revised upward. And, the rest of the economic news supports the overall (moderate) strength of the economy.

Our next trade will come early next week, so be sure and keep an eye on your inbox, as always.


Portfolio Recap

Position #1: Altera (ALTR) September $34 Calls

Price Paid: $1.35

Current Price: $1.90

Time Until Expiration: 8 days

ALTR peaked around $36.50 before pulling back somewhat. At the current price, our calls are 41% winners. We’ll give the stock one more chance to make another run at this week’s highs before pulling the trigger and collecting our gains.


Position #2: Rocket Fuel (FUEL) September $20 Calls

Price Paid: $1.10

Current Price: $0.15

Time Until Expiration: 8 days

After doing nothing for weeks, FUEL rocketed higher today for over a 13% gain. The stock is also up big after-hours. So far, there isn’t any news sparking this move, but I’m sure something will come out soon. Meanwhile, this is exactly what we need. If tomorrow is anything like today, our calls are suddenly going to be in play in a big way.


Position #3: O’Reilly Automotive (ORLY) September $150 Puts

Price Paid: $1.37

Current Price: $0.30

Time Until Expiration: 8 days

Finally, ORLY makes the move we’ve been waiting for. The share price has pulled back in a hurry to just about the 50-day moving average. If the stock should fall through the support level, the next stop won’t be until below $150. We have just over a week on our options for the next big down move to occur.


Position #4: Splunk (SPLK) October $60 Calls

Price Paid: $1.60

Price Sold: $3.70

We closed this position today for a gain of 131%! Well done!


Position #5: ZAGG (ZAGG) October $6 Calls

Price Paid: $0.30

Current Price: $0.40

Time Until Expiration: 37 days

Not a bad start for our ZAGG trade. The stock has steadily climbed higher since last week and is nearing its 52-week high. Given how much time we still have on these options, we’re going to give the shares ample opportunity to set new highs before taking profits.


Category: OTW Weekly Updates