Weekly Update: September 18, 2014

| September 18, 2014

Weekly Update:  September 18, 2014


What To Watch

US equities are back to their bullish ways this week. Although the S&P 500 is just about a half percent higher than this time last week, it’s good enough for a new record high. Moreover, the benchmark index is up nearly 10% on the year.

Dow Industrials haven’t performed quite as well. While still setting record highs, the highly watched (but not all that relevant) index is only up about 5% on the year. However, if Apple (AAPL) ever gets added to the DJIA, it could be interesting to see what the impact will be.

The US economy, as expected, continues to roll on. Today’s jobless claims beat gives some credence to the “August non-farm payrolls will be revised higher” theory, which several analysts have mentioned. The Fed is almost done with its bond buying program, expected to wrap up next month. The central bank also hasn’t changed its opinion on when rates will need to be hiked.

Tomorrow should be interesting with the results of the Scottish independence election and the Alibaba IPO. Both situations could impact investor behavior in unpredictable ways. We could be in for a volatile day.

September options expire tomorrow after close. I’m shooting for a new trade by the middle of next week.


Portfolio Recap

Position #1: Rocket Fuel (FUEL) September $20 Calls

Price Paid: $1.10

Current Price: $0.00

Time Until Expiration: 1 day

The potential for industry consolidation sent FUEL briefly higher, but the rumors fizzled out… and so did the rally. We’re moving on from this trade, which expires tomorrow. I want to take another shot on this company in the near future, as I believe the stock is going to move substantially higher in due time.


Position #2: O’Reilly Automotive (ORLY) September $150 Puts

Price Paid: $1.37

Current Price: $0.00

Time Until Expiration: 1 day

ORLY didn’t break through the key 50-day moving average support level. So, the stock didn’t get low enough this week to justify selling it out. I don’t mind in this case, as I felt ORLY served as a decent hedge in case the market took a sharp turn for the worse.


Position #3: ZAGG (ZAGG) October $6 Calls

Price Paid: $0.30

Current Price: $0.33

Time Until Expiration: 30 days

ZAGG did move up on the AAPL news, but has faded a bit since hitting a double-top above $6. However, we’re at strong support here with the 50-day moving average. I think ZAGG is going to take another shot above $6 very soon. We still have a month on these options.


Position #4: Transocean (RIG) November $37 Calls

Price Paid: $1.28

Current Price: $0.85

Time Until Expiration: 65 days

RIG continued falling after our trade, but did manage to post a gain today. It could be the sign of a bottom. We bought November calls because I wanted to make sure to give this trade plenty of time to play out. However, these calls could very quickly become winners if the stock rebounds from here.


Category: OTW Weekly Updates