EOT position update June 25, 2014
June 25, 2014
Market Snapshot
The S&P 500 climbed to an all-time high of 1,968 yesterday before a 20 point selloff in afternoon trading dropped the large cap index 1% below the day’s high.
The funny thing about the 1% drop is it was considered a volatile day for the markets… at least compared to recent history.
It’s now more than two years since the S&P has gone through a 10% correction. The lack of volatility over the last few years is really unusual. We typically have a correction of 10% to 15% ever year or so.
In fact, market volatility as judged by the CBOE VIX recently dropped to its lowest level since 2007. That’s good news for us.
Option prices are directly impacted by market volatility. The lower the VIX – the cheaper it is to buy options. And that’s what we do… buy options.
What’s more, it means the current bull market is still going strong. And the uptrend for stocks is still firmly entrenched.
This is one trend that’s been very friendly to us over the years. And as long as it remains in place, I’ll continue to lean toward call options versus put options. There’s just no reason to fight the rising tide if we don’t need to.
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.
TPLM October 2014 $12.50 Calls
The price action on TPLM over the last few days has been volatile… but extremely bullish. TPLM broke out above resistance around $11 a week ago. Then it pulled back to test this new support level and it immediately rebounded higher. This gave everyone an opportunity to get into this trade at a great price. Now, sit back and watch rising oil prices and increases in production at TPLM push this stock higher. Resistance is at $14.00 and $17.50. Support is at $10.75 and $10.00.
GLOG August 2014 $25 Calls
GLOG has been a rock star over the last few weeks. Its recent performance has been even better than expected. The stock shot past our $30 resistance level last week and has continued to soar to new heights. Aggressive traders can cash this option in for a whopping 437% gain if you haven’t already done so. This is a great company that presented a great opportunity and we knocked it out of the park. Congratulations to everyone on a great trade.
HIMX September 2014 $7 Calls
HIMX is stuck in oversold territory. But the pessimism around the company is beginning to wane. The bottom line is HIMX is in a strong position to capitalize on the latest tech trends. This speculative stock should rebound as more investors look past the hype and see the true value of this company. Continue holding… Support is at $5.75 and $5.00. Resistance is at $9.00 and $11.00.
Category: EOT Update
