Mid-day Update: That Escalated Quickly

Well, risk certainly happens fast, doesn’t it? The S&P 500 is quickly giving back all of the days gains as we appear to be filling this morning’s gap up. The $SPX traded as much as 1.12% higher early in today’s session, but comments from John Boehner that signaled Republican support of a Syrian strike reinvigorated bears and sent a wave of fear through the markets. Few names have held their gains from the early morning surge as the Syrian situation is acting as the wildcard we expected it to be. We tried to capitalize on the morning’s gains by taking a day trade in $DDD that we probably should have been more prudent with, as the stock traded as much as $1.48 above our entry of 53.30, but the stock never reached our initial aggressive target of $55 and we were stopped out at break even (actually, pennies above breakeven).

We initiated a position in FuelCell Energy $FCEL October $1 calls for $.35, and we remain the only action in the contracts on the day. The stock has held up well despite the accelerating selloff in the broader market, and we anxiously await earnings after the bell tomorrow. For more on this name, check out our post from yesterday here.

With the $VIX moving higher on speculation regarding military action in the Middle East, we are considering a position in $GLD as it approaches a potential breakout above $137.50. If you’ve been paying attention to the precious metal since the YTD bottom in late June, you are likely aware of the heaving buying activity that has been taking place at Goldman Sachs $GS – the same firm that was calling for gold selling for the majority of the second quarter. Perma-bears Zero Hedge highlighted the activity well here, and Syria may be the catalyst gold needs for another leg higher.

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Our portfolio has benefited from the sell-off for the most part, though we were doing fine with the morning’s rally thanks to our $AAPL position. $FCEL is down small while $AAPL is trying to hold its gains, but the aggressive sell-off in $T has been a boon for our puts, which have swung from $.18 to $.30 in half of a session. Our $TAP puts have also rebounded nicely and are trading $1.80/$1.90 at the time of writing.

We will keep you posted on any new positions we initiate, particularly in $GLD, $OIL or possibly $SPY if we close on the lows. It’s going to be hard to have conviction one way or the other on the broader market given the external variables, but there are still opportunities to capitalize on.

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Posted on September 3, 2013, in Uncategorized and tagged , , , , , , , , , , , , . Bookmark the permalink. Leave a comment.

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