Weekly Update: September 15, 2016

| September 15, 2016

Weekly Update:  September 15, 2016


What To Watch

So that’s what volatility looks like!  We actually had some real, bona fide action last week, with a decent-sized selloff on Friday.  Although we’ve regained much of the lost ground this week, there’s been enough up and down action to keep volatility levels elevated (to some extent).

So what caused the selloff on Friday and the subsequent jump in volatility?  Interest rates of course.  Or more precisely, fear of interest rates going up.  Of course it’s no secret the Fed wants to start raising rates.  The question is when will the central bank start hiking and how often?  Last Friday, the sentiment seemed to be sooner rather than later.  However, those fears have subsided somewhat this week.

Once again, the next FOMC meeting (next week) is going to be on everyone’s minds as it approaches.  The result of that meeting could be the biggest market moving event we’ve seen since the summer began.  On the other hand, it could also be a whole lot of nothing, and result in another long stretch of low volatility.  We shall see.

Let’s take a look at our positions.


Portfolio Recap

Position #1: Cameco (CCJ) September 10 Calls

Price Paid: $0.75

Time Until Expiration: 1 day

Expires tomorrow.


Position #2: Gilead Sciences (GILD) September 85 Calls

Price Paid: $0.77

Time Until Expiration: 1 day

Expires tomorrow.


Position #3: 3D Systems (DDD) September 15 Puts

Price Paid: $0.97

Time Until Expiration: 1 day

Expires tomorrow, but served as a decent downside hedge, holding a lot of value until near expiration.  We’ll look at adding another put to our portfolio soon.


Position #4: Cisco Systems (CSCO) October 30 Calls

Price Paid: $0.98

Time Until Expiration: 37 days

CSCO has been whipsawed a bit this past week, but has mostly held its gains.  Still plenty of time for the stock to hit the aggressive profit-taking point of $33.


Position #5: Himax Technologies (HIMX) October 10 Calls

Price Paid: $0.60

Time Until Expiration: 37 days

HIMX sold off with the big market drop last Friday, but has regained all of its ground back and then some.  We’re closing in on our first profit-taking point at $11.


Position #6: Southwest Airlines (LUV) October 38 Calls

Price Paid: $0.95

Time Until Expiration: 37 days

After shooting up and hitting our first profit point, LUV has settled back down into the range it was trading before hand.  It will be interesting to see what happens if the stock tests those recent highs again in the near future.


Position #7: Ciena (CIEN) October 21 Calls

Price Paid: $1.05

Time Until Expiration: 37 days

We just made this trade yesterday, so not much to report.  We’ll have more data next week.


Category: OTW Weekly Updates