Weekly Options Recap

Market Beating Foresight: Market Hits Fresh New Highs

Volatility returned as the Stock Market hits fresh new highs for 2009. For the week the broad market (S&P) ended 2.2% higher, a strong turnaround from earlier in the week. For the most part economic data was poor with jobless claims rising more than expected and housing data failing to meet consensus estimates. The stock market was able to shrug off the bad news and rise further. By the end of the week, better than expected home sales were released which helped the market realize a weekly gain. A lot more economic data is due for release next week, which we expect will confirm an economy that is slowly beginning to stabilize. Most key measures are still declining, but the pace of decline has certainly slowed. We think the worst is over, but acknowledge that the recovery will likely be weak and slow. We just do not see a quick return to the high flying days of the past few years. The de-leveraging underway amongst consumers and businesses will temper spending and economic growth. That said, we think the stock market is still an excellent place to invest. We are very optimistic that our stock selection strategy and portfolio management approach will significantly outperform the market indexes in this environment. Frankly, we would welcome a stock market with lower volatility, even if that means somewhat slower market appreciation. We know our strategy can far exceed market returns in just such an environment.

Market Beating Options: Looking for more Call Options

Our Aggressive Portfolio (Options)is up a whopping 283% just since January 2007 versus a -28% market loss (S&P) over that same period. That is truly a tremendous difference in performance in what has been the worst recessionary period since the great Depression. We continue to trade short spread positions on the Volatility Index (VIX) as that generates income for the portfolio. However, our trading of call options has had the biggest postive impact on our returns over time. At this time we are aggressively searching for more opportunities to buy call options. Our strategy is to buy six month "at the money call options" based on stocks that we find through our Momentum and Value stock screen. This has been a proven and lucrative strategy for us over time. We keep subscribers fully informed with all transactions that we make and maintain a buy list of stocks directly on our website. Many of the stocks on our buy list also trade options. Those are the options that we consider, particularly if option premiums are reasonably priced.

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