Weekly Update: September 12, 2013
Weekly Update: September 12, 2013
What To Watch
It seemed like a pretty tame week for the market. But, the S&P 500 actually gained over 2% since our last update. And, now it’s back over 20% year-to-date.
The situation in Syria has calmed down a bit. Although the outcome is still uncertain, an attack is no longer a foregone conclusion. This has soothed the financial markets to some extent.
The big news next week is the Fed meeting. The crowd is expecting at least some level of tapering to the $85 billion per month bond buying program. If the Fed decides not to taper this month, it will be considered a bullish surprise. On the other hand, more tapering than expected could result in a selloff.
Looking down the road a bit, we’re just over a month away from the next debt ceiling standoff. The whole thing is a joke if you ask me (not the funny kind) – and does nothing more than roil the markets unnecessarily.
Once again, don’t be surprised if we have some added volatility in the markets in the upcoming weeks.
Portfolio Recap
Position #1: Broadcom (BRCM) September $28 Calls
Price Paid: $0.86
Current Price: $0.03
Time Until Expiration: 8 days
BRCM is the September position I felt was the most likely to be a winner for us. Instead, the “breakout” move was nothing more than a head fake. These options are almost dead in the water, but we’ll wait out next week in the hopes of a last minute surge.
Position #2: Potash (POT) September $32 Calls
Price Paid: $1.12
Price Sold: $0.56
I felt pretty good about getting out of POT with 50% of our capital still intact. And of course, the next day after we closed the trade, it would have been a flat-out winner. That’s the nature of options though – there’s always that bit of uncertainty out there to make things interesting. Still, I told you I’d sell POT on the first big move so that’s what we did. And you know by now that I believe in sticking to my guns. The bottom line is, you have to have a plan in this business or you’ll surely get run over.
Position #3: Cree (CREE) September $65 Calls
Price Paid: $1.30
Current Price: $0.10
Time Until Expiration: 8 days
CREE made things interesting this week and our options almost gained enough value to be worth selling. One more big move like that and we’ll be able to get out of our calls for at least something. On the bright side, it was good to see the shares breakout of the narrow trading range they’ve been in.
Position #4: Exxon Mobil (XOM) October $90 Calls
Price Paid: $0.73
Current Price: $0.68
Time Until Expiration: 36 days
XOM continues to be volatile with the Syria outcome still uncertain. However, the general direction of the stock continues to be up. I’m still looking at the 50-day moving average (just over $90) as a potential target for the stock/exit point for this trade.
Position #5: Zillow (Z) October $75 Puts
Price Paid: $1.45
Current Price: $0.90
Time Until Expiration: 36 days
Of course, Z has been just as choppy and volatile as I would have expected. We’re still waiting for the more pronounced down move to the 20-day moving average and beyond. But for now, this position remains our one hedge to the downside should a market selloff occur.
Position #6: Outerwall (OUTR) October $65 Calls
Price Paid: $1.53
Current Price: $.070
Time Until Expiration: 36 days
OUTR is still sitting at the key support level I mentioned in the trade alert. I fully expect it to bounce off this level in the near future and head towards the $61 level, where the first major resistance is. Right now, we’re still in wait and see mode.
Category: OTW Weekly Updates
