EOT position update August 27, 2014
August 27, 2014
Market Snapshot
The S&P 500 closed above 2,000 for the first time ever on Tuesday. It’s an impressive milestone for the large cap index.
But most people hardly even noticed…
A recent Gallup poll showed that just 7% of Americans knew that the S&P 500 was up 30% last year. Given those stats, I guess the lack of a celebratory party for the S&P hitting 2,000 shouldn’t come as a surprise.
What’s more, with the end of summer and the Labor Day holiday weekend approaching, the achievement has come with very little volume. In other words, this impressive new high is the Rodney Dangerfield of milestones… it gets no respect.
Nevertheless, I find the achievement impressive and the fact that nobody seems to care is evidence the bull market has room to run.
Consider this, the S&P 500’s now 27% above the 2007 high. And amazingly, the S&P is up 200% since the current bull market began back in March of 2009!
In today’s world, the majority of active investors own a few different ETFs that make up the bulk of their investments and they use options to speculate on specific stocks.
Any way you slice it, the only way an investor has been burned by the S&P 500 is by not owning it or selling it. Simply owning the S&P 500 through an ETF like the SPDR S&P 500 (SPY) has been a winning investment.
And there’s no denying we’ve been racking up some spectacular gains on our speculative options here.
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.
BDBD December 19th 2014 $12.50 Calls
BDBD shot to the upside yesterday after another organic food company reported solid earnings and boosted their revenue and earnings forecast. The organic and real food craze is just beginning. This is largely a grass roots movement being led by word of mouth. People are simply telling others of the amazing health benefits they have received by cutting out all of the processed garbage the “food” companies have been selling us for years. BDBD is right in the heart of this movement. Continue holding for the next leg higher… Resistance is at $15.00 and $17.50. Support is at $12.00 and $11.00.
ADI September 19th 2014 $50 Calls
ADI rallied right up to the $53 resistance level on Monday. Congratulations to the conservative traders that cashed in these options as they reached highs of 90% above our initial buy price. The aggressive traders that are looking for a bigger move got some good news from the Q3 earnings report… revenue beat estimates and EPS met estimates. And the company raised their revenue forecast. That’s typically the type of thing that propels stocks to new highs… however, the after-hours trading in ADI was volatile. Aggressive traders should continue holding… The next resistance is at $55.00. Support is at $48.00 and $47.00.
HIMX September 2014 $7 Calls
HIMX has broken out to its highest level in months. Our option hit a new high of $1.60 this week. It’s time to take our 68% gain on this trade and walk away. Go ahead and sell this option to close this trade now. Congratulations on a successful trade.
Category: EOT Update
