Weekly Update: September 5, 2013
Weekly Update: September 5, 2013
What To Watch
The market gained a little steam back this week, with the S&P 500 up roughly 1.5% since our last update. The widely followed benchmark is now sitting right at its 50-day moving average. So, we could be on the verge of a big move… one way or another.
Of course, the big market moving news over the past several days is the situation in Syria. Will Obama get enough votes to attack? Is an airstrike a foregone conclusion? Should what happens in Syria really impact stocks this much?
The key thing to remember is war in any form means uncertainty. And, investors hate uncertainty. Regardless of what happens with the Syria vote, we can expect some volatility in the short-term.
In the meantime, the economy is looking better and better. The ISM Services number came in at the highest level since December 2005. And, jobless claims dropped once again. The decline in jobless claims is part of a clear trend and very good sign for the economy in general.
We’re running out of time on our September options, so I’ll be looking at any exit opportunities over the next week, should they arise. I also expect to roll out another trade tomorrow, so keep an eye on your inbox.
Portfolio Recap
Position #1: Broadcom (BRCM) September $28 Calls
Price Paid: $0.86
Current Price: $0.25
Time Until Expiration: 15 days
BRCM jumped 3.5% today on news it will acquire LTE assets from Renesas Electronics. The stock finally broke above the 20-day moving average and could be primed for a run to the 50-day. If that happens, we may just have enough time left to earn some profits off this trade. We’ll see how the stock trades the next couple days and make a decision.
Position #2: Potash (POT) September $32 Calls
Price Paid: $1.12
Current Price: $0.25
Time Until Expiration: 15 days
Trade in POT has been fairly stagnant. We’ll likely exit this position on the next decent up day and attempt to conserve as much capital as possible. We’re at the point where time decay could hurt us – so I’ll be looking to move quickly if the stock climbs higher.
Position #3: Cree (CREE) September $65 Calls
Price Paid: $1.30
Current Price: $0.12
Time Until Expiration: 15 days
Barring a big move higher in the next couple days, I’m not optimistic on this CREE trade. I still believe the stock is due for a bounce back, but we’re quickly running out of time. With the options being too cheap to sell at this point, we’ll hold on to them in hopes of a spike in the stock price.
Position #4: Exxon Mobil (XOM) October $90 Calls
Price Paid: $0.73
Current Price: $0.75
Time Until Expiration: 43 days
XOM has been volatile lately with the situation in Syria escalating. Oil and oil stocks are likely to move quite a bit as the Syrian scenario develops. That should keep our calls bid up in value regardless of which way the stock moves. Still, the most likely direction for XOM to travel is up towards the 50-day moving average. In that case, we’ll do very well on our calls.
Position #5: Zillow (Z) October $75 Puts
Price Paid: $1.45
Current Price: $1.20
Time Until Expiration: 43 days
Z is likely going to be a volatile position for us and this first week in the trade is showing just that. I expect pretty large moves to occur regularly with this stock. And, that means it’s more probable our trade will be a winner. With the downturn today, the stock looks like it could be setting up for a move lower. Stay tuned.
Category: OTW Weekly Updates
