Tuesday Update: The Fed & Option Expiration
Tuesday and Wednesday the Fed is meeting and as usual the meeting will culminate with a decision on whether or not to raise interest rates. In the old days these decisions were apt to trigger short-term volatility in either direction. More recently interest rate decisions have already been baked into the cake via leaks and consensus. As a result, post-decision volatility has been rare. One of these days, just when the market is most complacent, an interest rate move will trigger something bigger than a Janet Yellen press conference. For now, just a heads up that tomorrow may not necessarily be a typical Wednesday afternoon.
Friday is June option expiration and there are two Jun holdings in our portfolios that must be rolled over; BABA in the Intermediate portfolio (Blue Line Classic Service) and TSLA in the Short-Term portfolio (Blue Line Prime Service).
BABA- Intermediate Tern
This is the second rollover for the BABA Jan 6, 2017 Buy Signal. The first was in the April $95 calls which went on to generate a gain of 183%. Those calls were rolled over at April expiration into the Jun $110 calls, which have generated a gain of 386%. DO NOT EXPECT EVERY TRADE TO PERFORM THIS WELL. Just some of them. We will be rolling those June calls into the Sep $145 calls.
TSLA - Short-Term
The TSLA May 10th Buy Signal has the Short-Term portfolio buying the Jun $330 calls at $11.20. Those are trading today at $38.30 for a gain of 242%. As with the BABA calls, not all trades in the portfolio do this well, but enough do to, "take all trades." We will be rolling these calls into the July $380. These are a little far out of the money than is normal for the short-term option trades, but, so were the Jun $330's and we see how well those turned out.