Market Beating Options YTD Return Three Times Better Than Market!

Our Aggressive portfolio fell last week, but its YTD return remains three times better than the market performance. The return on this portfolio does fluctuate due to the speculative nature of these investments. We expect volatility to rise slightly until the market consolidates. In this context, we expect to lose some ground on portfolio performance over the near term. However, we like how this portfolio is positioned for the rest of this year and expect to have another market beating year! We purchased a new call spread position on Aeropostale last week at an excellent price. We purchased the Oct $29 call and sold the Oct $35 call for a net debit spread of $1.95. The position could yield up to a 200% return and there is plenty of time to run given 8 months until expiration. We really like the risk return tradeoff on the Aeropostale position as our loss is limited to $1.95 or 7% of the current stock price. We also bought the Sep $20 call on Hanger Orthopedic Group. On Hanger, we are taking some risk buying in front of the Healthcare decision, but thought the position was worth the risk given the small premium cost. We were able to purchase this call at an exercise price and premium that is less than 15% above the current price. That will give us an excellent chance to get in the money prior to expiration in September. We do have cash to invest and will continue to look for other buying opportunities. This remains a good time to buy options, as low volatility encourages attractive premium prices.