EOT Position Update – October 28, 2015

| October 28, 2015

Market Snapshot

Major League Baseball’s World Series got underway last night.  I grew up going to Kansas City Royals games and even named my first son Brett after my childhood baseball hero, George Brett.

So, you can guess who I’m rooting for… sorry Mets fans.

The Royals took game one in a marathon 14 inning game that took more than 5 hours to determine a winner.  There were multiple lead changes, errors, home runs, and clutch plays.

If the rest of the series is anything like game one, fans are in for a great show.  I couldn’t help but think how much baseball parallels options investing.

There is so much strategy that goes into both of them.  There are ebbs and flows, hot streaks and cold streaks, homeruns and strikeouts.  And most importantly, both take a commitment to the process.

I’ve been investing in options for a long time.  And I’ve been sharing my recommendations with you right here for nearly eight years.

During that time, we’ve enjoyed long periods of trending markets.  In 2008 and early 2009, the S&P 500 was clearly in a downtrend.  And from mid-2009 through the early part of 2015, the S&P 500 was in an uptrend with short periods of correction and consolidation.

S&P 500

2015 has been an entirely different environment.  The S&P 500 has been range bound and hovering near breakeven for the vast majority of the year.  This has led to a more difficult environment for picking options.

Nevertheless, there are still opportunities and we’ve been able to cash in with many great trades so far this year.

Now, 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.

CAT November 20th 2015 $67.50 Puts

CAT reported earnings last week.  Their dismal forecast for 2016 sales and profits sent the stock plummeting and our option skyrocketing.  The value of our option shot up 126% on the day they reported.  But the company’s plans to restructure and cut costs kept the stock from continuing its downward trajectory.  The stock is stuck below resistance of the downward trending 50-day moving average.  Aggressive traders should continue holding for the next leg down.  The support levels are at $65.00 and $62.50. Resistance levels are at $72.25 and $75.00.

C November 20th 2015 $50 Puts

Citigroup stock has broken through the 200-day moving average to the upside after the Fed put the chance of a December interest rate hike back on the table.  It’s time to close this trade and look for better opportunities.

AAPL November 20th 2015 $120 Calls

The initial reaction to Apple’s quarterly earnings didn’t send the stock soaring higher.  But it has laid the ground work for AAPL to continue moving higher.  Our option has seen some solid gains after the announcement.  It should continue moving higher from here.  Support is at $109.00 and again at $105.00.  Resistance is at $120.00 and $130.00.

Category: EOT Update

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