EOT Position Update – May 13, 2015
Market Snapshot
It was another choppy weak for financial markets.
Nothing was immune from the increased volatility. Stocks, bonds, and currencies all saw sharp and quick price swings.
And through it all, the S&P 500 stayed locked in the consolidation pattern that has been in place for the last few months.
As I’ve pointed out before, a period of consolidation isn’t a great market for long call or put buying. Our strategy works much better when the overall market is trending higher or lower.
For the last few years, the markets have been trending higher. So, we have focused mostly on call buying.
If the markets reverse into a downtrend, we can profit from that too.
But these periods devoid of an uptrend or a downtrend work against us. The time value decays away as the stock prices fluctuate up and down but don’t go anywhere.
The good news is the period of consolidation appears to be drawing to a close.
We’ll be poised to pounce on the opportunity to initiate new trades as soon as the consolidation period ends.
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.
GDDY August 21st 2015 $24 Puts
GDDY is a new trade. Take a look at the trade alert for more details.
CDW June 19th 2015 $40 Calls
CDW beat Q1 earnings estimates. But it came up short of revenue forecasts. That’s not good enough for a stock that has risen 25% over the last year. As a result, the stock price has slipped lower since reporting earnings. But it’s holding above our support levels. The uptrend is still in place. And we should see a snap back rally if the market can break out of the consolidation pattern. Continue holding. Resistance is at $40.00 and $42.50. Support is at $36.00 and $34.00.
WEN May 15th 2015 $11 Calls
WEN hasn’t been able to build on the bullish momentum after their earnings report. Sell these options now to conserve capital.
Category: EOT Update
