EOT position update April 23, 2014

April 23, 2014

Market Snapshot

The change in market leadership we identified a month or so ago has required a major change in strategy.

In short, buying call options on high flying momentum stocks is no longer working.

These stocks are out of favor with investors.  And there simply isn’t enough fire power to drive these stocks back to new highs.

As they say, when one door closes, another opens.

And there are plenty of new opportunities for our call and put buying strategy to profit from in the current environment.  In fact, our put option on high flying growth stock GMCR and the call option on the undervalued energy stock APA are both showing solid gains.

What’s more, the improving global economy will provide even more opportunities in the weeks and months ahead.

Right now many cyclical stocks in sectors like energy, industrials, and materials have great profit margins.  But they’ve been held in check by slower than normal sales growth.

As the economy accelerates, these cyclical stocks should see sales growth accelerate as well.  And when you combine high profit margins with strong sales growth, you have a recipe for strong earnings growth and higher stock prices.

The bottom line is this is an exciting change that will provide us with countless opportunities to put money in our pockets in the weeks and months ahead.

Let’s move onto the updates…

Position Updates

Just a quick note:  Remember, we won’t update every open position every week.  I try to focus on the positions that have some significant news or price movement.

APA May 2014 $85 Calls
APA surged to a high of $88.32 today.  Our call option is now well in-the-money and is up nearly 80%.  The bullish momentum in this US onshore oil and gas company is building into their quarterly earnings announcement in a few weeks.  Continue holding… Support is at $80.00 and $77.50.  Resistance is at $90.00 and $94.00.

GMCR May 2014 $90 Puts
GMCR continues to trend lower.  It dropped more than 4.5% today to around $94 per share.  Our put options reacted by climbing back near their recent highs.  All signs point to a further selloff in GMCR.  Continue holding as the selloff accelerates into their quarterly earnings announcement in a few weeks.  Support is at $90.00 and $80.00. Resistance is at $110.00 and $115.00.

Category: EOT Update