Weekly Update: September 22, 2016

| September 22, 2016

Weekly Update:  September 22, 2016

 

What To Watch

Volatility levels were elevated for all of about one week before heading south again the last couple days.  It did provide some excitement for traders this past week, but it looks like September isn’t going to get the sustained volatility bump we’ve seen in some previous years.

Much of the action in the market was due to the impending Fed meeting.  Now that the meeting is over, there isn’t a whole lot to worry about (until the next Fed meeting).  The Fed refrained from raising rates this month, but seems in a position to do so by the end of the year.  Current odds favor a small rate increase coming in December.

Besides interest rates, investors aren’t all that worried about, well, anything.  The election could come into play next month, but I wouldn’t count on it.  Oil prices and international economics still play a role, but nothing like they have in the past.

Basically, we’re an interest rate-focused investment community at this point in time, and it likely won’t change anytime soon.  The good news is there are still plenty of trading opportunities for options traders.  Lately, we’ve been able to capitalize off them quite nicely.

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: 29 days

CSCO got a nice boost today and is close to reaching new 52-week highs.  Conservative traders should have exited weeks ago, but aggressive traders can still hold for bigger gains.

 

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

Price Paid: $0.60

Time Until Expiration: 29 days

HIMX is on the verge of hitting our first profit-taking point at $11.  The trade continues to be a big winner for us.

 

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

Price Paid: $0.95

Time Until Expiration: 29 days

LUV is starting to make another move higher.  Let’s see if we can bypass our high from a couple weeks ago.

 

Position #4: Ciena (CIEN) October 21 Calls

Price Paid: $1.05

Time Until Expiration: 29 days

After a 2% climb today, CIEN is rapidly closing in on our first profit-taking point.  Peak gains so far are 62%.

 

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

Price Paid: $0.37

Time Until Expiration: 29 days

We just executed this trade, so more news next week.

 

Category: OTW Weekly Updates