Weekend Review – 3/9/2014

The front page of Barron’s addresses one of the ‘hot’ areas of the market, 3-D printing.  It is noted that the stocks in this space have been stellar performers, but may be ahead of the fundamentals.  Specific stocks discussed include 3D Systems (DDD – 67.31), Stratasys (SSYS – 114.50), ExOne (XONE – 44.92), and Voxeljet (VJET – 34.19).

The Striking Price column notes that as money center banks seem to be back on track the next step could be increased dividend payouts.  Bank of America (BAC – 17.33) and Citigroup (C – 49.62) are discussed along with the Select Sector Financial SPDR (XLF – 22.37) as potential trading vehicles around this development.

Options Action –

The discussion started out noting that the S&P 500 is making all-time highs and debating whether being in the S&P 500 is a global safety trade.  One counter argument was that the CBOE Volatility Index (VIX – 14.11) was down on 0.10 as the S&P 500 made new highs.  Not noted on the show, but being pointed out by me is that VIX is over 2 points above the post-2008 lows.

The first trade was a bit based on an event and a bit based on a stock being ahead of itself in the form of buying a short dated put on JP Morgan (JPM – 59.40).  The specific option is the JPM Apr 11th 59 Put which could be purchased on Friday for 1.45.   April 11th is a non-standard option expiration date and also the day JPM reports their earnings.  It was also mentioned that a second short JPM put leg may be worked into if the stock has any significant weakness before then.

The next trade was on the Ford (F – 15.62) and based on possible slowing of demand due to rising interest rates.  Like the JPM trade it is a pretty direct one purchasing a put.  However, the time frame is a bit longer and the trade involves buying the F Jun 15 Put for 0.50.