The Ramulous Reader

Portfolio Allocation - 1/31/12

2012-02-01T17:37:00.001-05:00

Here is my month end (1/31/12) portfolio allocation. For simplicity, unless otherwise noted, all positions are long call option positions. As I mentioned in a previous post, due to the new symbol formats for options (and extra manual work required), I will only be able to update my allocation monthly. As such, I will no longer include each position's allocation when they are mentioned in regular blog posts throughout the month.

SPPI - 52.7%
ARIA - 27.3
KERX - 13.3 (common 8.7, calls 4.6)

Cash - 6.6

Only biotechs remain after expiration

2012-01-17T17:18:00.002-05:00

January options expire at the end of the week, and all of my non-biotech call positions will likely expire worthless. Those positions include financials, tech, and commodities, which suffered badly during last summer and fall, and which could not recover in time. So after expiration, I will only have a few remaining positions, all biotechs. I made some trades in those holdings today, which have performed well lately. The main trade was to push out the expiration date of my call position in Ariad Pharmaceuticals. The new contracts expire this spring. I also added a very small amount to my long call position in Keryx Biopharmaceuticals, although at a later expiration date than the existing call position.

Portfolio Allocation - 12/31/11

2012-01-03T12:09:00.000-05:00

Here is my month and year end (12/31/11) portfolio allocation. For simplicity, unless otherwise noted, all positions are long call option positions. As I mentioned in a previous post, due to the new symbol formats for options (and extra manual work required), I will only be able to update my allocation monthly. As such, I will no longer include each position's allocation when they are mentioned in regular blog posts throughout the month.

SPPI - 59.9%
ARIA - 20.1
KERX - 11.2 (common 9.4, calls 1.8)
BAC - 0.2
FNSR - 0.2
ANR - 0.1
C - 0.1
GIGM - 0.1

Cash - 8.1

Moving up strike prices

2011-12-07T14:49:00.001-05:00

With the continued move higher in Spectrum Pharmaceuticals, I made some trades to adjust my position. Specifically, I sold two thirds of my existing long dated call position, and added a greater number of calls at higher strike prices. This has the effect of making the position more aggressive, but there are plenty of months left to see the trade come to fruition. I also added a small amount of long call exposure to Keryx Biopharmaceuticals, in anticipation of a binary type event upon the release of Phase 3 data early next year. These moves reduced cash to under 10% of the portfolio.

Portfolio Allocation - 11/30/11

2011-12-01T19:44:00.002-05:00

Here is my month end (11/30/11) portfolio allocation. For simplicity, unless otherwise noted, all positions are long call option positions. As I mentioned in a previous post, due to the new symbol formats for options (and extra manual work required), I will only be able to update my allocation monthly. As such, I will no longer include each position's allocation when they are mentioned in regular blog posts throughout the month.

Of note this past month, biotech is still the vast majority of the portfolio. Though I raised cash weeks ago, my other non-biotech holdings retreated, while my two biggest holdings surged. As such, the portfolio is still too biotech heavy, which I will try to remedy in 2012.

SPPI - 58.1%
ARIA - 18.4
KERX - 8.8 (common 7.9, calls 0.9)
FNSR - 1.3
ANR - 0.9
BAC - 0.8
XLF - 0.1
C - 0.1
GIGM - 0.1

Cash - 11.5

Pushing out expiration dates

2011-11-10T10:42:00.001-05:00

This morning I made a couple trades to push out the expiration date on my call position in Spectrum Pharmaceuticals. Specifically, I closed my November calls, and bought a slightly smaller dollar amount of May calls. The differential in dollar amounts will be kept in cash, which is now back above 10% of the portfolio. Extra cash seems reasonable at this time, given uncertainty in global financial markets.

Portfolio Allocation - 10/31/11

2011-11-01T17:33:00.002-04:00

Here is my month end (10/31/11) portfolio allocation. For simplicity, unless otherwise noted, all positions are long call option positions. As I mentioned in a previous post, due to the new symbol formats for options (and extra manual work required), I will only be able to update my allocation monthly. As such, I will no longer include each position's allocation when they are mentioned in regular blog posts throughout the month.

Of note this past month, biotech is now the vast majority of the portfolio. As such, I'll be looking to rebalance the portfolio in the next few weeks.

SPPI - 49.5%
ARIA - 19.7
KERX - 13.7 (calls 3.1, common 10.6)
BAC - 5.4
FNSR - 3.9
ANR - 2.6
XLF - 1.4
C - 0.4
GIGM - 0.1

Cash - 3.3

Earnings on tap

2011-10-27T17:19:00.001-04:00

Some of my call positions are in large caps (notably banks) which have already reported earnings. But the majority of my holdings deal with smaller companies (such as biotechs), which tend to report numbers a bit later. Many of those will report in the next week or two, which I am looking forward to with great interest. Since most of my call positions expire in the coming months, this will be the last earnings season before I must make trades. Earnings aside, I was pleased to see today's sharp rally for the broader markets, which were relieved by the prospects for resolution of Europe's debt problems. It remains to be seen if the recent momentum can be sustained into year end.

European headlines have markets on edge

2011-10-18T18:55:00.001-04:00

Broader market averages resumed their recovery today, after yesterday's setback. Gains accelerated in the afternoon, following a story from a U.K. newspaper which purported to have details of an enlarged rescue package for Europe. The sharp and instant market reaction shows how dependent we are on a European resolution for sustained gains.

Another factor on an individual stock level is obviously the quality of third quarter earnings, though most of my holdings have yet to report numbers. This week's results from Citigroup and Bank of America were lackluster, but still well received in terms of stock price reaction, which is somewhat encouraging. I own call options on both, though the Citigroup calls are a minimal position. This is because the current stock price is quite far away from my strike prices, with relatively little time left to expiration. It would take a sustained and powerful rally through year end to extract some decent value from those calls.

Portfolio Allocation - 9/30/11

2011-10-02T19:07:00.001-04:00

Here is my month and quarter end (9/30/11) portfolio allocation. For simplicity, unless otherwise noted, all positions are long call option positions. As I mentioned in a previous post, due to the new symbol formats for options (and extra manual work required), I will only be able to update my allocation monthly. As such, I will no longer include each position's allocation when they are mentioned in regular blog posts throughout the month.

ARIA - 26.5%
KERX - 24.0 (common 18.1, calls 5.9)
SPPI - 21.5
BAC - 10.5
FNSR - 6.1
ANR - 2.9
XLF - 2.5
C - 0.6
GIGM - 0.1

Cash - 5.4

Looking behind the averages

2011-09-15T17:44:00.000-04:00

Broader market averages have rallied for the last four days in a row, but I am looking at individual stocks to help analyze the quality of the rally. Interestingly, some of my higher beta biotechs performed better during the downturn, but are now underperforming a bit during the recovery. This is counter to the usual pattern, although perhaps not surprising in this strange trading environment. With the end of the third quarter approaching, I hope that earnings and catalysts for my individual companies will help them outperform, regardless of the macro environment.

Portfolio Allocation - 8/31/11

2011-09-01T18:13:00.001-04:00

Here is my month end (8/31/11) portfolio allocation. For simplicity, unless otherwise noted, all positions are long call option positions. As I mentioned in a previous post, due to the new symbol formats for options (and extra manual work required), I will only be able to update my allocation monthly. As such, I will no longer include each position's allocation when they are mentioned in regular blog posts throughout the month.

SPPI - 20.7%
ANR - 19.8
KERX - 19.0 (common 10.8, calls 8.2)
ARIA - 16.4
BAC - 13.9
FNSR - 3.9
XLF - 2.9
C - 0.7
GIGM - 0.1

Cash - 2.7

Adding bank exposure

2011-08-24T14:30:00.001-04:00

Today I initiated a long call position in Bank of America, which I have owned in the past, although not recently. I used most of my remaining cash position to fund the purchase. The call options do not expire until January, so there is plenty of time to see how it plays out. Even a modest rebound in the underlying common stock (to the price levels of just last month) should produce some decent gains in the options.

Rebuilding three positions

2011-08-11T13:15:00.002-04:00

Today I rebuilt three positions which were greatly diminished in the recent downturn. I added to my call positions in Alpha Natural Resources and Ariad Pharmaceuticals, and also bought common stock in Keryx Biopharmaceuticals. I was pleased to see recent insider buying at Keryx, which provides a bit more confidence in their prospects. The net effect of these purchases was to reduce cash to about 15% of the portfolio.

Portfolio Allocation - 7/31/11

2011-08-01T17:32:00.001-04:00

Here is my month end (7/31/11) portfolio allocation. For simplicity, unless otherwise noted, all positions are long call option positions. As I mentioned in a previous post, due to the new symbol formats for options (and extra manual work required), I will only be able to update my allocation monthly. As such, I will no longer include each position's allocation when they are mentioned in regular blog posts throughout the month.

SPPI - 32.9%
ARIA - 12.7
KERX - 6.1
ANR - 5.2
MOO - 5.1
XLF - 4.4
FNSR - 1.7
C - 1.4
GIGM - 0.1

Cash - 30.5

Considering a hedge

2011-07-28T18:21:00.000-04:00

The continued impasse in the debt ceiling debate has markets nervous again, with this morning's modest gains for the broader indexes wiped out by the close. Today I considered adding a short term index ETF hedge to protect against additional downside, on the chance that an agreement can not be reached in time. But since volatility is elevated, such a hedge will be more expensive than usual, so for now I am just watching and waiting.

Political concerns loom large

2011-07-19T16:52:00.001-04:00

Recent market declines and worries about raising the debt ceiling were reversed today on hopes that a bipartisan deal is near. I'm trying to ignore some of these macro concerns, and focus instead on company earnings. These have been a mixed bag, with financials notably weak. I've had the best price performance from biotech, which is now a disproportionately large percentage of my portfolio. But with several upcoming catalysts (earnings, FDA filings, clinical data releases, etc) I am inclined to let them run a while longer.

Jobs report derails the rally

2011-07-08T14:13:00.001-04:00

The recent sharp rally in the market averages was halted by a poor employment report this morning. The indexes are well off the lows of the morning, but most sectors are still negative. In contrast, some smaller biotechs are outperforming today, as is agriculture, but those are the rare winners on a down day. Next Friday is July options expiration, and I have several call positions which will likely expire worthless, barring any significant company news for those particular holdings. I will have to decide at that time whether or not to expend cash to rebuild those positions.

Portfolio Allocation - 6/30/11

2011-07-01T12:35:00.001-04:00

Here is my month and quarter end (6/30/11) portfolio allocation. For simplicity, unless otherwise noted, all positions are long call option positions. As I mentioned in a previous post, due to the new symbol formats for options (and extra manual work required), I will only be able to update my allocation monthly. As such, I will no longer include each position's allocation when they are mentioned in regular blog posts throughout the month.

SPPI - 19.5%
ARIA - 12.2
ANR - 8.4
KERX - 8.1
XLF - 6.7
MOO - 5.6
C - 2.3
FNSR - 2.1
SDS - 0.5
PWER - 0.4
ETFC - 0.2
GIGM - 0.1

Cash - 34.0

Watching for a bounce

2011-06-24T11:25:00.001-04:00

The broader market averages continue to slide this morning. Some of my best relative performers are biotechs, which are less correlated with the indexes than most of my other holdings. Commodity names are not faring as well, and I'll be watching for a potential market bounce to add back exposure. This may include rebuilding positions in miners such as Hecla, which I no longer own since my call position expired last week. It may also include some energy names, as I have been lacking exposure in that area for a while now.

Renewing a hedge

2011-06-15T14:33:00.001-04:00

Today I closed my existing call position on the ProShares UltraShort S&P500, which was about to expire. I reinvested about half the proceeds in calls on the same underlying security, but with a later expiration date. This was done to keep a hedge in place, in light of the recent selloff. I also switched my long dated calls on Ariad Pharmaceuticals for a larger number (but smaller dollar amount) of calls at a higher strike price. The net effect of these trades was to raise cash by more than 5 percent.

An uneven rebound

2011-06-09T19:35:00.002-04:00

Today saw a modest rally for the broader averages, although it may just be a temporary reprieve from the recent selloff. My holdings did not respond as evenly as the indexes, and showed a mixed performance. Many of my commodity names have struggled badly in June, as have financials and some technology issues. Biotech has also suffered, although Ariad Pharmaceuticals has been quite strong lately, and on heavy volume. My call position in Ariad is long dated, so I have the rest of the year to see how it plays out. I have waited to initiate positions in the energy sector, which worked out well lately, since the sector has also sold off heavily. As valuations come down further, I may make a move to add exposure there in the coming weeks.

Portfolio Allocation - 5/31/11

2011-06-01T18:49:00.001-04:00

Here is my month end (5/31/11) portfolio allocation. For simplicity, unless otherwise noted, all positions are long call option positions. As I mentioned in a previous post, due to the new symbol formats for options (and extra manual work required), I will only be able to update my allocation monthly. As such, I will no longer include each position's allocation when they are mentioned in regular blog posts throughout the month.

SPPI - 23.9%
ANR - 14.5
KERX - 8.4
MOO - 6.7
ARIA - 6.6
XLF - 6.3
FNSR - 5.7
HL - 2.1
ETFC - 1.7
C - 1.3
PWER - 1.1
SDS - 0.9
GIGM - 0.1

Cash - 20.6

Rebuilding a position

2011-05-20T10:57:00.001-04:00

I closed out the May portion of my call position in Spectrum Pharmaceuticals, recovering very minimal value, as the stock price was barely above my strike price. I left the other portion (Aug calls) of the existing position intact, and in addition, I rebuilt the position by adding even more calls at a later expiration date. This will allow me to benefit from a continued rebound in the underlying stock in the coming months, should one occur. I am also looking to initiate some call positions in the energy sector, but I will hold off on that action, until after I evaluate current weakness for the broader market averages.

Waiting on trades

2011-05-16T18:36:00.001-04:00

I have been waiting to make some trades this week, but may no longer have to make them, due to recent price action. I had planned to close part of my call position in Spectrum Pharmaceuticals to recover minimal value, as that portion expires on Friday. But since the underlying common stock slipped below my strike price and has stayed there for days, it likely will not regain it's footing unless there is an unexpected catalyst this week. So the more likely scenario will be to let that portion expire worthless; luckily the entire cost basis was just part of the profits realized in earlier Spectrum trades. I also planned to make moves in some call positions which will expire this summer, but since they have decent relative strength lately, I'll likely also leave those positions alone for now. This includes my modest call position in Power-One, which has been drifting higher lately.

Commodities slide through earnings

2011-05-08T19:55:00.000-04:00

We are cruising through earnings season, and despite several of my portfolio companies posting solid earnings, the commodity names are selling off. Most notable is the sharp drop in spot silver prices, although the deterioration in the coal equities has also caught my attention. In the coming weeks I'll have to determine how much of this drop is temporary, and whether any adjustments are needed. This is also true of my biotech holdings, some of which have also struggled, despite generally positive news flow.

Portfolio Allocation - 4/30/11

2011-05-01T13:22:00.001-04:00

Here is my month end (4/30/11) portfolio allocation. For simplicity, unless otherwise noted, all positions are long call option positions. As I mentioned in a previous post, due to the new symbol formats for options (and extra manual work required), I will only be able to update my allocation monthly. As such, I will no longer include each position's allocation when they are mentioned in regular blog posts throughout the month.

SPPI - 16.2%
ANR - 13.8
FNSR - 9.6
MOO - 6.7
XLF - 6.4
KERX - 6.2
HL - 5.4
ARIA - 5.1
PWER - 1.9
C - 1.9
ETFC - 1.1
SDS - 0.8
GIGM - 0.1

Cash - 24.7

Waiting on data

2011-04-22T18:14:00.001-04:00

I will be watching markets carefully next week, for both earnings data and potential catalysts for my biotech holdings. Thursday's low volume pre-holiday trading was upbeat, with nice gains across several sectors, so I hope the momentum continues next week. I'm also considering additions to some existing call positions, including E*Trade, after marked improvement in their operating metrics.

Renewing a hedge

2011-04-14T18:11:00.001-04:00

The broader market averages have stalled out in recent days, with rotation into defensive sectors partially offsetting selling in commodity and cyclical areas. Today I renewed my modest market hedge, by pushing my call position on the ProShares UltraShort S&P500 from an April expiration to June. So while the position is a small percentage of the portfolio, it will provide some minimal downside cushion should the markets sell off further.

Sector rebalance completed

2011-04-07T14:54:00.002-04:00

Today I made several trades to rebalance my portfolio, which resulted in a more rational sector allocation. Specifically, I lowered biotech exposure, which had exceeded 40% of the portfolio. I did this by reducing the dollar amount of my call positions in Spectrum Pharmaceuticals and Ariad Pharmaceuticals. I also raised strike prices, however, to retain the same number of calls. This will allow for decent leverage if there is further price appreciation in the underlying common stocks, but also limit the dollar amount at risk. Obviously, it will now also be more difficult to reach the raised strikes. I also made some moves to add exposure to my call positions in Hecla and Power-One, which had been diminished in recent months. The net effect of these trades was an increase in cash, to about 25% of the portfolio. Given the recent rally for the broader averages, that is also prudent at this time.

Planning to rebalance

2011-04-05T19:22:00.001-04:00

Sharp moves higher in names such as Ariad Pharmaceuticals and Spectrum Pharmaceuticals have boosted my call positions, raising the biotech portion of my portfolio to a level that is somewhat out of my preferred range. So I'll be looking to trim some positions and add to others in the coming weeks, to rebalance the portfolio. Alternatively, I may simply leave the proceeds in cash, which would also be a decent option to reduce overall risk as the broader averages continue to rally.

Portfolio Allocation - 3/31/11

2011-04-01T18:23:00.000-04:00

Here is my month and quarter end (3/31/11) portfolio allocation. For simplicity, unless otherwise noted, all positions are long call option positions. As I mentioned in a previous post, due to the new symbol formats for options (and extra manual work required), I will only be able to update my allocation monthly. As such, I will no longer include each position's allocation when they are mentioned in regular blog posts throughout the month.

SPPI - 23.5%
ANR - 16.5
ARIA - 9.2
XLF - 7.7
MOO - 7.5
FNSR - 7.1
KERX - 6.2
PWER - 2.9
HL - 2.4
C - 2.1
ETFC - 1.6
SDS - 1.3
GIGM - 0.1

Cash - 11.9

Data shrugged off

2011-03-29T17:51:00.000-04:00

The major averages were up again today, despite the weak economic data released this morning. My best sector was biotech, with several of my holdings in that area outperforming the averages. Excitement over upcoming conferences is probably at least part of the catalyst for that move. I'm less impressed with the financials, which continue to struggle on a relative basis. Over the next few days I'll be examining whether I need to make any portfolio adjustments prior to Friday's key monthly employment report.

Negativity melts away

2011-03-24T18:17:00.001-04:00

It seems that the relentlessly negative news flow has been endured, and the resilient markets have staged an impressive comeback. As such, my index ETF hedge has lost much of it's value, which is totally acceptable because it is far outweighed by the gains in the rest of my portfolio (which is mostly comprised of long call positions). Especially impressive has been the biotech sector, with all three of my holdings in this industry marching higher almost every day for the past week. In tech, even long suffering Finisar caught a bounce today, which I hope can be sustained over the longer term. And with April just around the corner, a new wave of earnings reports is less than a month away. So it won't be long before there is more financial data to digest, as opposed to being whipped around by geopolitics.

Volatility falls

2011-03-22T19:48:00.003-04:00

Today's action for the broader markets was a bit subdued, so I was focused on my holdings which outperformed the averages. These included Alpha Natural Resources, which is part of the active coal sector that continues to draw investor interest. Today's gains boosted my long dated call position in the name. Outperformers also included several biotech names, some of which have upcoming catalysts. In contrast, my holdings in recently suffering Finisar continued to fall, despite their announcement of a modest acquisition. Apart from these individual companies is my index ETF hedge, which will gain if the S&P 500 falls. So far that position shows a modest loss, so I'll carefully watch the broader averages for signs they may roll over (which would boost the value of the hedge accordingly).

Gauging the durability of the relief rally

2011-03-17T18:34:00.001-04:00

The broader markets rallied today, after struggling through several days of negative headlines worldwide. My small hedge correspondingly lost some value today; I will have to gauge if the rally can be sustained before removing the hedge. On the plus side, my portfolio saw nice performance today from agricultural and coal names, which held up relatively well through the selloff, and which bounced strongly today. Less impressive was technology, which seemed to struggle on continued concerns regarding disrupted component supply chains. It remains to be seen how transitory those issues may be.

Off the lows of the day

2011-03-15T17:34:00.000-04:00

The broader market averages were down today due to the continuing disaster in Japan, although they closed well off the morning lows. I had a nice gain in the hedge I applied yesterday through calls on the ProShares UltraShort S&P 500, although it had been up much higher at the open (when the averages were much lower). I'll retain that hedge to protect against further declines in the markets. Also notable today was the continuing surge in Power-One, which is starting to recover some of the ground lost in the past several months. The trading dynamics of that stock are a bit disconcerting, with wild swings on many days, on no fundamental news whatsoever. Since my calls move even faster than the underlying common stock, the value of my position has fluctuated greatly in recent weeks.

Buying time and adding a hedge

2011-03-14T12:03:00.003-04:00

I made several trades this morning to reposition my portfolio. The goal was to push call option expiration dates out later in the year, and to add a hedge. Specifically, I moved the expiration dates of my long call positions in the Financial Select Sector SPDR and Alpha Natural Resources out much later in the calendar (Dec 2011 and Jan 2012). In addition to changing expiration dates, I made some trades to adjust the strike prices in several other instances. This was true for the majority of my position in Spectrum Pharmaceuticals, where I essentially moved the strike price up and increased the number of contracts (but also reduced the dollar amount of the position). I did the opposite with Finisar, where I lowered my average strike price by adding a new long dated contract (which increased the dollar amount of the recently diminished position).

I also added a shorter term hedge by buying calls on the ProShares UltraShort S&P 500, which will increase in value if the broader markets decline in the short term. The net effect of these trades was to reduce cash levels, but cash still exceeds 10% of the portfolio.

Some biotechs shine while markets tumble

2011-03-10T18:36:00.000-05:00

The broader market averages fell sharply today, and a midday attempt at a rally failed. This was due to a host of economic and geopolitical factors, too numerous to detail here. Biotech seemed to have the majority of the scarce winners, and I was lucky enough to have two holdings that enjoyed the lift. These were Keryx Biopharmaceuticals and Spectrum Pharmaceuticals; the latter held a conference call I found to be quite positive. As such, I will simply hold my existing call positions in both names, in anticipation of future catalysts. As for the markets as a whole, I may have to initiate some hedges in coming days should the selloff persist.

Disappointment mitigated by cash management

2011-03-08T19:26:00.002-05:00

Today's earnings debacle from Finisar shows the importance of cash management. I closed half my Finisar call position last month and raised cash, as the position had grown too large at that time. Unfortunately the other half of the position I still hold will take a huge hit tomorrow, but at least it has several months to potentially recover. The same cannot be said of my position in Zhongpin, which had good earnings over the weekend, but which announced a stock offering that resulted in a selloff. My Zhongpin calls expire next week, so I will likely sell my position for minimal value soon, provided it does not continue falling in the coming days. These two disappointments highlight the potential to be blindsided in volatile markets with high expectations, which is why raising cash at times is essential.

Waiting on macro and micro reports

2011-03-03T16:16:00.001-05:00

Tomorrow we get some important macro data in the form of the monthly employment report. Recent chatter from analysts seems to indicate good expectations, but I've seen this number disappoint on the downside month after month. Hopefully this is the report that breaks the pattern and comes in as good as expectations, but I'm not counting on it. On the micro side, with respect to individual companies, I'm looking forward to earnings reports from Zhongpin and Finisar early next week. I have long call positions in both, and while Finisar is a much larger position for me, my Zhongpin calls expire much sooner (this month). So the value of the Zhongpin position will be greatly impacted by the reaction to earnings in the underlying common stock next week.

Portfolio Allocation - 2/28/11

2011-03-01T16:47:00.001-05:00

Here is my month end (2/28/11) portfolio allocation. For simplicity, unless otherwise noted, all positions are long call option positions. As I mentioned in a previous post, due to the new symbol formats for options (and extra manual work required), I will only be able to update my allocation monthly. As such, I will no longer include each position's allocation when they are mentioned in regular blog posts throughout the month.

SPPI - 16.5%
FNSR - 13.4
XLF - 9.9
ANR - 8.5
MOO - 7.3
ARIA - 5.4
HL - 4.8
KERX - 4.0
PWER - 2.7
C - 2.7
HOGS - 1.8
ETFC - 1.4
GFA - 0.1
GIGM - 0.1

Cash - 21.3

Sharp afternoon reversals

2011-02-24T17:38:00.000-05:00

High flying oil and precious metal prices reversed course in the final two hours of trading, closing in the red. Correspondingly, equity markets rallied in response to the reversal, with traders reaching for some of the higher beta names that had fallen most in the past three sessions. I have been monitoring my positions closely, and am looking forward to more earnings data in the coming weeks. Hopefully such fundamental data can shake some of my holdings loose from the macro concerns that have controlled markets this week. In addition, there are some upcoming catalysts for my biotech holdings, and their outcomes will greatly affect my portfolio composition due to the speed with which the call positions move.

Selling across the board

2011-02-22T17:26:00.002-05:00

International turmoil over the long weekend provided market participants with a good excuse for a selloff today. There was nowhere to hide, with all sectors and company sizes negatively affected. Even industries which theoretically should have been gainers were not. An example in my portfolio is Hecla, which closed in the red despite a moderately strong day for silver spot prices. When the market moves into a "risk off" mode, even equities with fundamental tailwinds get sold. If the selloff persists, I may look to index ETF puts for a hedge.

Looking for direction

2011-02-17T18:29:00.001-05:00

Today was a market session that defied characterization, with some of my holdings opening weak and closing flat or up, and others doing exactly the opposite. The only holding with a clear trend was Hecla, which is not surprising given the strength in silver spot prices throughout the day. My call position in Hecla does not expire until mid-year, so I hope the uptrend stays intact for the intermediate term. My holdings based in emerging markets continue to struggle, so I'm looking for an appropriate time to reposition that part of the portfolio, perhaps by moving expiration dates out later in 2011.

Examining what's working

2011-02-15T16:56:00.002-05:00

Today saw a mild selloff for the major averages, but I was busy monitoring the performance of my individual holdings. This included the tech selloff hitting my call position in Finisar, as well the boost to commodities which lifted my call positions in Alpha Natural Resources and Hecla. My best performer was Spectrum Pharmaceuticals, which was higher due to solid preliminary revenue guidance. More details will be available in mid-March, so I'll be interested to get the full financial picture then. Since all of my Spectrum calls are long dated, short term price action is not that critical, but obviously I hope for a good outcome. All things considered, the performance of my call positions was fairly neutral today in aggregate, which is fine considering the broader markets were down.

Strength broadens out

2011-02-11T17:05:00.000-05:00

The momentous news out of Egypt seemed to have a mildly positive effect on stock markets today, with quiet strength in the major averages. Some of my recent winners continued to advance, but strength also broadened out, encompassing some names that were previously struggling. I like to see strength in both tech and financials, which was definitely the case today. I am tempted to trim some positions but may hold off for another few weeks, since I made sales and raised cash quite recently. It is a delicate balance between prudent cash management and taking advantage of market momentum. For now, I think I will leave my remaining positions alone, in an attempt to capture some more potential upside.

Rotation continues

2011-02-10T17:18:00.001-05:00

The broader market averages were once again somewhat flat today, but there were plenty of individual losers and winners, as different sectors take turns in the lead. Today I noticed my financials were somewhat lower, while commodities generally did well. Especially strong is the tech sector, including one of my holdings, Finisar. I sold half my Finisar call position last week after a huge spike up, only to watch it climb higher still. I'm surprised by the relentless momentum in this name, and will have to decide soon whether to try to ride the momentum, or make the position more conservative (i.e. perhaps switch calls for lower risk common stock).

Correlation fades

2011-02-08T16:26:00.002-05:00

In recent weeks I've noticed that correlations in the stock markets have been breaking down. Different sectors (and companies with sectors) are no longer trading in lockstep, in the previous "risk on" or "risk off" modes. As such, the major averages push higher, but with different sectors and company sizes in favor from week to week. In addition, my particular holdings within commodities, tech, and to a lesser extent financials have seen a recent divergence in performance. This would imply that we may be entering a true "stock picker's market". While that old adage is often held as fact, it was not actually true while markets and sectors were highly correlated in the rally off the crisis lows. If it is true now, individual company analysis will be more important than ever.

Trimming a winner

2011-02-04T10:30:00.001-05:00

Today Finisar rocketed higher in concert with the rest of the optical networking space, so I sold half my call position. It seemed to be a prudent move on such a sharp move upward, and even after the sale, the company is still one of my largest positions. I resisted the urge to add to my call position in beaten down Power-One, as I'd like to wait a few weeks to see how the underlying stock behaves. In any event, today's sale pushes cash up to more than 20% of the portfolio. That liquidity will be welcome in case we get a market correction in the coming months.

Earnings in full swing

2011-02-03T17:41:00.001-05:00

Several of my portfolio companies report earnings in the next few weeks, and I am eagerly anticipating both the results and the outlooks for the first quarter. This afternoon we got numbers from Power-One, and while the results were very good, the guidance for 2011 is weaker than expected. So the stock is getting crushed in the after-hours session, which will hit my call position tomorrow. My call options are relatively long-dated, so I hope some value will be recognized later in 2011. But for now anyway, I have to adjust my expectations downward, in light of the company's projections. On the plus side, Finisar is nicely higher after-hours, in reaction to good results from a competitor. Since Finisar is one of my largest holdings, I may trim a bit into the strength at some point.

Earnings aside, the general price action in the markets as a whole is somewhat encouraging. We seem to be digesting the recent rally well, with no serious correction so far this year. Most of my call option positions are set to expire at mid-year or later, so any short term pullback would still provide time for a recovery before expiration.

Portfolio Allocation - 1/31/11

2011-02-01T17:00:00.000-05:00

Here is my month end (1/31/11) portfolio allocation. For simplicity, unless otherwise noted, all positions are long call option positions. As I mentioned in a previous post, due to the new symbol formats for options (and extra manual work required), I will only be able to update my allocation monthly. As such, I will no longer include each position's allocation when they are mentioned in regular blog posts throughout the month.

FNSR - 15.9%
SPPI - 11.1
ANR - 10.4
PWER - 10.3
XLF -9.8
ARIA - 7.3
MOO - 7.2
KERX - 4.7
C - 3.6
HL - 3.5
HOGS - 2.6
ETFC - 2.3
GFA - 0.3
GIGM - 0.1

Cash - 10.9

January ends with a merger

2011-01-31T18:03:00.001-05:00

The news of merger activity in the coal sector lifted many names in the space, but unfortunately the one that fell is the one I own. This is because Alpha Natural Resources was announced to be the acquirer of Massey, and the acquirer often falls after news of a purchase. So my Alpha call position took a hit today, but I have hopes it will perform better in the coming months. Aside from this specific merger, I was fairly pleased by the action in my tech and financial holdings today, as well as the market as a whole in the face of current geopolitical concerns.

A flight to safety

2011-01-28T17:43:00.001-05:00

Unrest in Egypt rattled world markets today, with major stock market averages down 1-2% or more. Much of my portfolio was down also, with a few exceptions. First, Hecla was much higher due to the flight to safety into precious metals. Second, the entire coal sector was very strong in the final hour of trading, lifting Alpha Natural Resources. Lastly, Finisar was modestly higher, due to good earnings from competitors in their industry. I have long call positions in all three names. As for the market as a whole, the key on Monday will be to see if the recent unrest settles down or escalates. If it persists (or even spreads to other nations), I may initiate index ETF put positions to protect against a downturn.

Crossing key levels

2011-01-26T12:42:00.001-05:00

The Dow crossed above 12,000 earlier today, before slipping back below it. The number has little significance for technical analysts, but psychologically, thousand point milestones can be powerful to the individual investor. It remains to be seen if it can retake that level and close above it, or if that will have to wait for another day. I am just trying to focus on specific companies, including E*Trade, which reports earnings today after the market close. My call position in the company is very modest, but I'll be paying attention nonetheless. Their earnings power is greatly affected not only by the core brokerage business, but also the potential improvement in loan quality. So I'll be looking to both metrics with interest.

A post-expiration earnings focus

2011-01-24T18:24:00.001-05:00

With last Friday's options expiration out of the way, I am now fully focused on earnings season. The protracted market rally has created a bit of the "sell the news" reaction to many earnings reports thus far, so I am not expecting great reactions to reports from my portfolio companies in the coming weeks. In any event, although individual companies are experiencing varied reactions to the numbers, the market as a whole is looking fairly solid. Today my tech and biotech holdings were especially strong, but other sectors also showed nice strength, including some commodity names. The big disappointment was financials, however, which I will monitor carefully. I've written many times in the past about the importance of bank participation in rallies, so hopefully they'll behave better if the rally persists.

Last expiration until quarter end

2011-01-21T19:21:00.001-05:00

I had several call option positions expire worthless today, including Noble, which I no longer hold. Those Noble calls were relatively conservative and long dated when I initiated the position. But nine long months after the spring oil rig disaster, the underlying common stock has still not recovered from the decline that the whole sector suffered. 2010 held many such unexpected outcomes, which often affected my January 2011 call positions negatively. Hopefully the coming year has it's share of positive surprises as well as negative. In any event, now my shortest duration calls don't expire until March, near the end of the first quarter. So the rest of my call positions have a good deal of time value, and in some cases several full earnings cycles to work out.

Watching to see if support holds

2011-01-20T18:45:00.002-05:00

Many market observers are watching the indexes carefully, to see if technical levels will hold, keeping the recent rally intact. I don't know if support at those levels will hold, or be breached. But even if the pessimistic scenario comes true, most of my call holdings are longer dated, providing time for recovery.

Today I noticed that the financials led the way back from the second day of selling, so perhaps that bodes well for future price action. Hit especially hard in recent days have been commodities and tech, although given their recent run up, that is perhaps unsurprising. The one area I will be monitoring most closely is the metals complex, in particular one of my holdings, Hecla. It has sold off sharply in the past two days, far more than the market as a whole, and so it merits some extra attention in the coming week.

Closing out some January calls

2011-01-18T11:38:00.002-05:00

Today I made several trades, to close some January call option positions. I completely closed my position in SandRidge Energy at a loss, but with greater value than I had anticipated just one month ago. I also closed my January call position in E*Trade, but I still hold longer dated calls in that name. Unfortunately, traders were disappointed with earnings from Citigroup, which hit the stock and associated options. My January Citigroup options are now worth so little that I will have to let that position expire worthless, instead of closing it out for minimal value. It would take a decent rally in the next two days to change that dynamic. The same is true for my January calls in Noble and Keryx Biopharmaceuticals, which will also likely expire worthless at the end of the week.

In other trades, I deployed some cash to add to my existing call position in the Financial Select Sector SPDR, as well as initiate a call position in the Market Vectors Agribusiness ETF. I also moved up the strike price of my call position in Finisar, to extract some cash from that profitable position, thereby reducing the overall dollar amount of exposure. Finally, I added a bit to my long dated Citigroup calls, to replace the ones that will expire this week. In aggregate, these moves reduce my cash position to less than 10%.

Preparing to close out January positions

2011-01-14T19:24:00.001-05:00

I have several January call positions which will likely expire worthless next week, as the underlying common stocks will probably not reach my strike prices. Several others are slightly above their strikes, and so I will just close them out for whatever modest value can be obtained. Despite the prospect of trading next week to deal with the January calls, I was paying more attention to some other movers today. Notably, Alpha Natural Resources has experienced a few days of sharp selling, likely profit taking from the recent spike higher. Since my calls don't expire until mid-year, I'll just hold this position for now and monitor it for further deterioration.

Financials lead the way

2011-01-12T20:27:00.001-05:00

Today's rally for the stock market indexes was impressive, even more so because it was lead by the financials. I am carefully watching Citigroup, as it closed above the $5 mark for the first time since last summer. My Citigroup calls are of minimal value, but will gain exponentially if the underlying stock continues to advance. Also higher today was Noble, on news it will be once again added to the S&P 500 index. This was surprising, as S&P shifted their criteria for which companies can be included in the index. I welcome the gains today, although my Noble calls will likely expire worthless next week unless the rally in the stock can be extended for a few more trading sessions. Alternatively, I may close the position soon, to recapture minimal time value in the calls if possible.

A nice recovery

2011-01-10T17:36:00.001-05:00

A shaky open for the broader stock markets turned into a deeper selloff by late morning, but the averages recovered nicely by the close. The same was true of my holdings, as most were in the red before noon, but many ended up closing with gains. Of particular interest today was solid strength in the solar sector, and I am exposed to that industry through Power-One, which had a nice gain. I'm also impressed by the persistent strength in tech names such as Finisar, which was also strong, boosting my call position. I recently moved the expiration dates of my calls in these two names to mid-year, so short term moves are not as important as the prospects for a steady advance over the course of several months. In contrast, I have several call holdings which expire in a week and a half, so I am carefully monitoring those for signs I should harvest minimal time value, or in some cases, potentially let them expire worthless.

Looking for standouts

2011-01-06T17:48:00.001-05:00

The broader markets were essentially flat today, but many of my holdings were disappointingly lower. This was offset by a few big winners, notably SandRidge Energy and Finisar. SandRidge has made moves recently to raise cash, which is clear simply by looking at several recent press releases. My SandRidge calls expire in two weeks, so I'm hopeful the recent momentum continues in the short term. In contrast, Finisar hasn't released much news recently, except for a capital raise of their own, which was well received. I have owned either common stock or calls in the company for years now, and will continue to hold my existing call position for now.

Persistent strength with a sector focus

2011-01-05T18:03:00.001-05:00

The broader stock markets are holding up nicely, as there was no continuation of recent selling pressure. In my portfolio, the two best sectors by far were financials and commodities. In the latter category, Alpha Natural Resources continued to climb higher, along with the rest of the coal space. I recently pushed the expiration date of my Alpha calls out to June, so I'll just be holding that position for now. I am also monitoring the banks, as several of my calls in that area are near or just above their strike prices. So any additional gains in the underlying common stocks should provide decent upside leverage.

Portfolio Allocation - 12/31/10

2011-01-03T17:19:00.001-05:00

Here is my month and year end (12/31/10) portfolio allocation. For simplicity, unless otherwise noted, all positions are long call option positions. As I mentioned in a previous post, due to the new symbol formats for options (and extra manual work required), I will only be able to update my allocation monthly. As such, I will no longer include each position's allocation when they are mentioned in regular blog posts throughout the month.

SPPI - 15.8%
ANR - 14.1
FNSR - 12.2
HL - 7.8
PWER - 7.2
KERX - 6.4
XLF - 5.0
ARIA - 4.3
HOGS - 3.3
ETFC - 2.9
GFA - 1.9
C - 1.8
SD - 1.1
NE - 0.2
GIGM - 0.1

Cash - 15.7

2010 fades out

2010-12-31T16:52:00.001-05:00

Today's market action was lackluster, and my portfolio holdings reflected the same sentiment. I had a few winners, notably Finisar, but also plenty of losers. A lack of buyers left most equities to drift lower today, and on relatively low volume. It has been a strange year for stocks, with several sharp selloffs throughout the year, but a positive trend overall. I hope 2011 will show gains as well, but I will be ready to initiate put positions should the recent rally falter. In the coming weeks I'll be anticipating trades to close out my January call positions, or alternatively decisions to let them expire worthless where applicable. The bulk of my holdings are already positioned for mid-2011 or later, so next month I will simply require some small adjustments. I hope everyone has a safe and fun New Year's Eve, and I will resume posting next week after the holiday.

Heading toward year end

2010-12-29T18:54:00.001-05:00

The major stock market averages slumped into the close, erasing most of the day's early gains. I had several holdings also give up their gains, but not Alpha Natural Resources, which closed with relative strength. Several of my other commodity stocks also showed strength, but I am trying to not assign meaning to these moves, in a light volume holiday week. Since I made so many options trades yesterday, I will likely not make any further moves until 2011, and will just monitor price action for the rest of the week.

Trades to reallocate and raise cash

2010-12-28T16:55:00.001-05:00

I made many trades to adjust my long call option positions today, and they are too numerous to list here. In essence, the net result was to push many positions to later expiration dates (June 2011 to January 2012), and also to raise cash. I also had to rationalize the portfolio by closing out several positions altogether. These were Huntington Bancshares, Isis Pharmaceuticals, and Vale; I no longer have positions in any of them. They are all quality companies, however, and I could easily restart a position in any of them in the coming months, should that be appropriate. Cash is now over 15% of the portfolio, which is prudent, given the nice run higher in the markets in the fourth quarter of 2010. Should the rally continue in the first quarter of 2011, I will likely raise even more cash.

Waiting to trade

2010-12-27T19:38:00.001-05:00

Trading volume was quite low today, but most price trends were intact, despite an interest rate hike in China which dealt the commodity names a setback. As challenged as that group was, other sectors fared well, including financials and areas of tech and biotech. I was watching two of my call positions today, Finisar and Spectrum Pharmaceuticals, as their recent momentum continued. It is likely that I will make a trade in one or both within the next week, to reposition the contracts with respect to expiration dates and strike prices.

Volume dries up

2010-12-22T17:29:00.001-05:00

Today's market session was somewhat subdued, with trading volume quite diminished compared to recent weeks. The main themes are still intact, however, with financials once again showing relative strength. As I wrote yesterday, if this trend stays intact for a while longer, I may look to add exposure to that sector. In other news, as the holidays approach, I will be taking a break from posting to the blog for a few days. I will resume posting next week, and hope everyone has a fun and safe holiday weekend.

The race to expiration

2010-12-21T17:23:00.001-05:00

The common stocks underlying many of my January call options have either just passed their strike prices, or are now approaching them. So I have quite a few positions that are dependent on a continued rally in the underlying stocks in the short term. If that happens, previously worthless call positions could recover decent fractions of the original purchase prices, or even produce gains. I am obviously hoping this will be the case, but if not, I am making plans to harvest minimal time value in the coming month. As for specific sectors of interest, I am watching the recent traction in previously beaten down financials. I already have exposure to financials through various call positions, but will look to add more if the rally proves durable.

An active start to the pre-holiday week

2010-12-20T17:17:00.002-05:00

Although the broader market averages were essentially flat today, my portfolio had a lot of price action. There were a fair number of modest losers, but also a few big winners. In the latter category were Huntington Bancshares, and some of my biotechs, notably Ariad Pharmaceuticals, which was very strong. Also higher was Finisar, although it is giving up those gains in the after-hours session on news of a stock offering. With the common stock at the highest levels in recent history, it is not surprising to see the company take advantage of the strength to raise capital. In any event, the moves higher in all three of these names boosted my call positions during the regular session. My wait-and-see stance still applies, with respect to any future trades to reallocate.

A session repeated

2010-12-16T17:53:00.001-05:00

Although there were some minor differences in the relative performances of my various holdings, today's session was essentially a repeat of yesterday's main themes. Tech and biotech once again outperformed, with the same individual winners as well. As this outperformance boosts these sectors' allocation in my portfolio, I am considering some trades to rebalance. Areas of interest for adding exposure include energy and financials, although I likely won't add to these sectors until early next year. In the meantime, I am considering if and when to trim some of my tech winners, simply for shorter term positioning.

Tech and biotech shine

2010-12-15T17:48:00.001-05:00

Many of my commodity plays lost strength as the afternoon progressed, but my tech and biotech holdings held up very well today. Notably, my call positions in Finisar and Spectrum Pharmaceuticals were boosted by solid moves higher in the underlying common stocks. I am considering making some moves soon in positions such as these; perhaps reducing the overall dollar amount of exposure, or moving expiration dates out later in the calendar. But for now I am just watching them carefully for signs momentum may be waning.

Rate pause rallies commodities

2010-12-13T16:45:00.004-05:00

Although they closed well off the highs of the day, many commodity stocks rallied today. This was partly due to news that China did not hike interest rates, contrary to what many had been anticipating. I have several commodity holdings, which generally outperformed. I also found the action in my financial holdings interesting, as they showed some relative strength compared to the sector itself, which declined. The exception was my biggest financial decliner, Huntington Bancshares, but even it managed to erase most of the morning's losses by the close. News of their capital raise to pay back TARP funds was initially met with selling, but then buyers stepped in during the afternoon and stabilized the price action. I have a call position in Huntington which expires next month, so I'd like to see some continued strength in the coming weeks.

Final hour strength

2010-12-10T17:04:00.001-05:00

The broader market averages perked up in the final hour of trading, closing at the highs of the day. Interestingly, most of my holdings which had been solid all day actually pulled back a bit in that final hour. In any case, I saw some nice strength across various sectors, including financials and tech. On the economic front, market watchers are looking to China in the coming days, to see if they will raise interest rates or simply continue to hike reserve requirements. Their choice will almost certainly affect commodity stocks early next week, which often key off the prospects for sustained growth in Asia.

Recent uptrends resumed

2010-12-09T17:26:00.001-05:00

Earlier this week I wrote that I was watching some reversals in previously solid stocks, and monitoring the selloff to see if it would be protracted. Today's action alleviated some of those concerns, with a resumption of positive price action in many of the previous winners. Today this included the regional banks, as well as two techs I hold, Power-One and Finisar. The spike higher in these two names boosted my corresponding call positions. As we draw closer to January, I am calculating the probability that some names have further to run, and in some cases, if a potential run will be extensive enough to exceed my strike prices next month. For now the conclusion is simply to hold existing positions. But with rapid price moves occurring frequently, this stance could change at any time, causing me to cut losses or take gains before the year is out.

Watching the reversal

2010-12-07T17:55:00.001-05:00

Today's market action was a bit disconcerting, with early gains reversed, producing losses by the close. Many of my commodity names were down in concert, although there were a few bright spots in other sectors. Best among them was Citigroup, which rose nicely on news of Treasury's exit of their stake in the common stock. This move higher boosted my calls, although I need the underlying stock to continue to rise for my position value to be meaningful in the coming weeks. I am watching carefully to try to determine which holdings are simply taking a rest on the way to higher levels, and which may be headed for a more protracted selloff.

Recent trends extended

2010-12-06T16:13:00.001-05:00

Commodities have been solid for months, and this week is starting off with continued strength. In my portfolio, beneficiaries include Hecla, as silver hits multi-decade highs. I will be watching my call position carefully in the coming days and weeks for signs it is time to trim it back. Another sector of note today is biotech, and I am noticing positive price action in some my portfolio's biotech laggards. This is gratifying, but it remains to be seen if an uptrend is firmly in place. Obviously, clinical data and product news are much more important to individual biotechs than macro concerns, but they may also be benefiting from investors' increased risk appetite in recent weeks.

Rally before the jobs report

2010-12-02T17:57:00.002-05:00

Today's rally for the broad market averages was a nice extension of yesterday's gains, but the monthly employment report looms large. It will be released tomorrow morning, and since I have no idea what type of jobs number to expect, I am just focusing on individual companies in my portfolio. Along those lines, my call position in Keryx Biopharmaceuticals continues to suffer, while my Finisar call position launched higher after solid earnings. Also higher were most of my commodity and financial names, as general market strength lifted most sectors in the broad based rally. I am not ready to trim those positions just yet, as I had raised cash when I last adjusted my allocation.

Portfolio Allocation - 11/30/10

2010-12-01T19:57:00.000-05:00

Here is my month end (11/30/10) portfolio allocation. For simplicity, unless otherwise noted, all positions are long call option positions. As I mentioned in a previous post, due to the new symbol formats for options (and extra manual work required), I will only be able to update my allocation monthly. As such, I will no longer include each position's allocation when they are mentioned in regular blog posts throughout the month.

ANR - 13.9%
HL - 11.3
FNSR - 9.5
KERX - 8.6
PWER - 6.6
ARIA - 5.2
XLF - 4.8
VALE - 4.6
HOGS - 4.5
GFA - 3.5
ISIS - 3.5
HBAN - 3.2
ETFC - 1.2
SPPI - 1.1
C - 1.0
NE - 0.9
SD - 0.3
GIGM - 0.2

Cash - 16.2

Another late recovery to end the month

2010-11-30T19:03:00.001-05:00

November ended with a session that mirrored yesterday's action. Major market averages struggled all day after morning weakness, but managed to erase much of the losses by the close. I saw a few of my holdings follow suit with decent rallies, namely Hecla, which boosted my call position. I was less enthused by the action in Keryx Biopharmaceuticals, which released good clinical data in the morning, but which closed the day barely in positive territory. My Keryx calls expire in less than two months, so I'd like to see some price strength develop in the coming month to maximize the value. With such an anemic reaction to the recent catalyst, that cannot be assured.

Some late day strength

2010-11-29T16:31:00.002-05:00

After opening lower and remaining weak all day, the major stock market averages rebounded in the final two hours and erased most of the earlier losses. My portfolio behaved in a similar fashion, and while many holdings closed in the red, quite a few managed decent gains. It was also nice to see my three largest gainers come from completely different sectors. These included biotech Keryx Biopharmaceuticals, silver miner Hecla, and regional bank Huntington Bancshares. The gains boosted my call positions in each nicely, although one day gains have not been sustained as of late. So I'll be looking for continued gains in the coming days to build some confidence in a year-end rally. I'll also be looking for catalysts that can provide a sustained boost, although in some cases patience may be required. Such is the case with another of my biotech holdings, Spectrum Pharmaceuticals, which provided a clinical update that detailed an April 2011 PDUFA action date.

Short week ends on a down note

2010-11-26T16:32:00.001-05:00

The major stock market averages closed down today, in a holiday shortened trading session. Most of my holdings were also lower, with the only gainers being those that were snapping back from multi-day selloffs. None of my gainers of the past week have managed to sustain uptrends; they all seem like single day trading bounces with no actionable price movement. Next week should have more normalized trading volume, as well as more significant economic data releases. That may be overshadowed by macro concerns, however, if European debt concerns are not alleviated over the weekend. For now I'm just holding my positions, considering if and when index ETF puts will be appropriate for downside protection.

Geopolitical issues rule the holiday week

2010-11-23T19:50:00.002-05:00

The holiday shortened trading week has been buffeted by geopolitical issues, from European debt to conflict in Korea. As such, the risk trade was "off" today, and most sectors and individual stocks were battered. This was true in my portfolio as well, although two notable winners were Ariad Pharmaceuticals and Power-One. Volume was just average, but both spiked higher late in the afternoon. I have no idea if this is just a single day of outperformance, or the beginning of something bigger. In any event, I'll be watching these two closely for the rest of the week, hoping for continued gains in my call positions.

Strength across sectors, but not financials

2010-11-22T20:05:00.001-05:00

Financials were weak today, and my holdings in that area were down accordingly. The whole sector was much weaker than the broad market averages, which were mixed, but which closed well off the worst levels of the day. I had much better performance in various other sectors, including commodities, tech, and biotech. As such, it was a fairly decent day for my portfolio. Last week I wrote that we might see some volatility in this holiday week, but today's action did not really bear that out. As Thanksgiving approaches and volume dries up, perhaps the daily price swings will become more pronounced.

Coal heats up

2010-11-19T17:15:00.001-05:00

Continued takeover chatter in the coal space helped several companies today, notably one of my holdings, Alpha Natural Resources. The stock has somewhat lagged other coal names in recent weeks, so I'm glad to see it play some catch-up today. The move in the underlying stock boosted my call position significantly in percentage terms, which is helpful. Next week will be very interesting, since it will be shortened by the Thanksgiving holiday. So the next few sessions will allow traders to square away their positions before the early December economic releases. This may result in some high volatility, especially if there is continued merger activity early in the week.

IPO mania dominates headlines

2010-11-17T18:31:00.002-05:00

Overall stock market action played second stage to the main story of the day, which is the IPO of General Motors. This will likely continue through tomorrow, as the deal is priced and the stock begins to trade. The hype is totally understandable, given GM's bailout and subsequent turnaround. But I find it less than relevant to my portfolio holdings, which had a mixed performance today. Gafisa released earnings but was almost totally flat, which resulted in little movement in my call position. Better action was seen in Hecla, as the recent slide in silver prices turned into a modest rally. I recently pushed expiration dates for various call positions (including Hecla) into mid-2011, so those positions now have more time to work out.

No place to hide

2010-11-16T18:01:00.001-05:00

European debt concerns made markets nervous today, and the selloff for the broad market averages left few sectors and stocks unscathed. My portfolio suffered similarly, with almost every holding down. As always, it is tough to gauge whether this will be a multi-day (or longer) decline, or if it is a blip on the way to higher levels. If the former case is true, buying index ETF puts would make sense. If the latter case, it would make more sense to do nothing and wait for a rebound. The next couple days will be key in deciding which is appropriate.

Merger Monday falls flat

2010-11-15T17:35:00.001-05:00

The markets opened to news of mergers this morning, notably the purchase of Bucyrus by Caterpillar. I don't own either name, but both did well today. While various mergers generated excitement all morning, the broader indexes closed flat, which is somewhat disappointing for the bulls. In my portfolio, metals and mining were relatively weak, while I had some better performance in biotech. It was interesting to see Isis Pharmaceuticals briefly touch the $10 mark once again, before slipping back into the high single digits. I have a modest call position in Isis, and so would obviously welcome any further moves higher for the underlying stock.

Tech suffers while coal soars

2010-11-11T17:47:00.002-05:00

Takeover chatter in the coal industry had many companies in the sector moving higher today. I have a call position in Alpha Natural Resources, which was boosted by a nice move higher in the underlying stock. These gains were in contrast to losses in my tech holdings, which were down today as expected, and which I wrote about yesterday. Luckily, one of my few tech holdings is Finisar, which is up strongly in after hours trading due to a positive earnings pre-announcement. With their newly projected EPS figures, the name now looks cheap on a forward P/E basis for 2011. Hopefully the company and stock get more positive attention in the coming months, which would help my call position greatly.

Earnings disappointment in tech

2010-11-10T19:46:00.001-05:00

The broader averages were modestly higher today, but my portfolio had a fair number of bigger winners, up several percent or more. These were seen across a variety of sectors, including financials and commodities. Unfortunately, tepid guidance from Cisco after the close has taken the steam out of the market, and it appears we will open lower tomorrow morning. I hold no position in Cisco, but since it is a tech icon, their disappointment can move markets lower. I'll have to decide if a decline is to be bought, or if a potential multi-day downtrend may warrant some index ETF put purchases.

A late day reversal

2010-11-09T16:07:00.001-05:00

The afternoon reversal in commodities (closing lower) and the U.S. Dollar (closing higher) was fairly sharp, erasing the morning trend. Some of the recent high fliers in my portfolio sold off, but luckily I had trimmed some of those positions just yesterday. In recent months, such reversals have only lasted a couple days, and then were followed by a resumption of the longer term trend. I'll be watching carefully this week to see if that is still the case, or if this is the beginning of a new trend.

Closing out December calls

2010-11-08T14:14:00.002-05:00

I made a few trades today to take profits in recent gainers, as well as to close out my December call options. Specifically, I reduced my position sizes in Hecla and the Financial Select Sector SPDR, and pushed the expiration dates from December into early/mid 2011. I also pushed out the expiration date on my call position in Alpha Natural Resources, and reduced the position size. In the process, I raised some cash, although my cash position is a smaller percentage than at the end of October, due to transferring cash out of the account altogether. As such, cash is now approximately 15% of the portfolio.

Hectic week draws to a close

2010-11-05T16:50:00.001-04:00

With the midterm elections, Federal Reserve decision, and many earnings reports complete, this has been a very hectic week. Although some quarterly results (and corresponding stock reactions) were disappointing, I found some encouraging trends in my portfolio. Chief among these was the recent boost for financials, which are finally participating, after sitting out much of the recent rally for the broader averages. I am exposed to financials through calls on various ETFs and banks, but today the best performance was seen in Citigroup. My calls on Citigroup are of minimal value now, but could be worth significantly more if the rally can continue through the end of the year.

A rush of earnings

2010-11-04T18:11:00.001-04:00

About a half dozen of my current and former holdings released earnings today, and they are too numerous to detail here. But in general those earnings were less important to performance than the macro environment, which pushed most stocks sharply higher today. My best performer was Hecla, which makes sense considering that silver had an enormous spot price gain. This boosted my call position, which does not expire until next month. The problem with benefiting from a rising tide is that it is difficult to predict when the momentum will run out. As such, I'm watching my positions carefully for signs it is time to trim exposure.

No calm after the election

2010-11-03T16:42:00.001-04:00

Yesterday's midterm elections will have significant effects on the economic and investment landscape in the intermediate term, although the implications are not immediately clear. The big election event has passed, but significant news is still forthcoming. This was seen after today's Federal Reserve decision, which moved markets significantly intraday. The broader market averages calmed down by the final hour of trading, however, and closed with modest gains. Some of my holdings did not fare as well, such as Alpha Natural Resources, which reported earnings and was down. Better performance was seen in names such as Zhongpin, although I'm also wary of holding that name into earnings next week, since lately even good earnings have not been rewarded in my portfolio. In any event, with several more portfolio companies reporting within the next week, there will be plenty of holdings which require my attention. These individual performances are all somewhat beholden to the macro environment, which luckily has been fairly solid lately.

Portfolio Allocation - 10/31/10

2010-11-01T00:02:00.001-04:00

Here is my month end (10/31/10) portfolio allocation. For simplicity, unless otherwise noted, all positions are long call option positions. As I mentioned in a previous post, due to the new symbol formats for options (and extra manual work required), I will only be able to update my allocation monthly. As such, I will no longer include each position's allocation when they are mentioned in regular blog posts throughout the month.

PWER - 11.3%
ANR - 10.1
KERX - 9.9
GFA - 6.9
HL - 4.4
VALE - 4.4
HOGS - 4.3
FNSR - 4.0
XLF - 3.4
ARIA - 3.0
ISIS - 2.4
HBAN - 2.3
NE - 1.3
SPPI - 1.3
C - 1.0
SD - 0.9
ETFC - 0.8
GIGM -0.2

Cash - 27.9

Disappointing price action

2010-10-29T16:48:00.001-04:00

My portfolio was mixed today, with a fair number of both winners and losers. Most disappointing was Power-One, which blew away earnings estimates last night, but which actually closed negatively after an initial pop. With a projected 2011 P/E ratio in the single digits, their potential growth is being highly discounted. Fundamentals aside, there is no disputing that the price action was terrible today. And with so many shares short, I'll simply watch the stock to see if it behaves better in the coming weeks.

On the political front, Monday is the last day of trading before election day. When coupled with the fact that it is the first trading day of the month, we could get some interesting action to start next week. This is all the more true considering this afternoon's news stories regarding potential terror threats; with so many crosscurrents it is impossible to predict how markets will react.

Tech prospects diverge

2010-10-28T16:47:00.002-04:00

One of my call holdings, Finisar, was slammed today off lowered guidance from competitor Oclaro. It recovered most of the losses by the close, approaching $17 after briefly falling below $15 earlier in the day. Oclaro itself did not fare as well, because while it also closed off the worst levels of the day, the closing percentage loss was still massive for a single trading session. It remains to be seen whether Finisar will give similarly cautious guidance next month, or perhaps before then. In better news, Power-One appears to have crushed earnings estimates, and also provided better than expected guidance. I'll be very interested to get details on the conference call, as well as to see how it behaves in tomorrow's trading session. At least for now, the earnings release itself was very impressive, which I hope boosts the stock and therefore my call position tomorrow.