EOT Position Update – June 10, 2015

| June 10, 2015

Market Snapshot

Volatility picked up over the last week.  But the majority of it was confined to the bond market where long duration bonds have suffered a 15% correction since January.

The bond sellers were out in full force after some strong economic data last week.

For instance, jobs growth, personal income, and hourly earnings were all better than expected last week.  That was enough for bond holders to believe the US economy could be accelerating enough to cause the Fed to hike rates later this year.

Here’s the bigger question… Where will all of that money from the bond sales go now?

It’s hard to believe they’ll just leave it in cash for very long.  And if it’s not going back into bonds, then stocks are the likely destination for much of this capital.

This could be the catalyst that finally jars the S&P 500 out of the trading range it has been stuck in much of the year.

Let’s move onto the updates…


Position Updates

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

LULU June 19th 2015 $65 Calls

LULU delivered the better than expected quarter and the upbeat forward guidance I expected.  The stock surged from $61.43 when I recommended it to above our first resistance at $68.00 yesterday.  The option hit a peak value of $3.85… that’s a whopping 138% gain in 3 days.  Congratulations to everyone that locked in these impressive gains.  The stock is in a volatile period right now.  Some of the traders that were trapped in the stock the last time LULU reached these levels are selling to get out without a loss.  But there seems to be more bullish fuel for the stock to move higher over the next week.  Aggressive traders have until June 19th to take their profits on this option.

GDDY August 21st 2015 $24 Puts

GDDY has continued to rally… but the lock-up period is looming in September.  That’s the first time that company insiders will be able to sell their shares.  Don’t forget that GDDY is owned by private equity companies KKR and Silver Lake.  There’s bound to be plenty of speculation surrounding the timing and impact of their equity sales as the lock up period approaches.   The stock has traded up to $29.00.  Conservative traders should sell this option to conserve capital.  More aggressive traders can continue holding.  The next resistance is at $30.00.  Support is at $24.00 and $20.00.

Category: EOT Update

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