U.S. stocks climbed to multi-year highs Friday as investors responded positively to upbeat Labor Department data. The employment report showed that 262,000 jobs were created in February, far more than consensus expectations, in a wide variety of industries. Economists who were worried about inflation and higher interest rates also reacted favorably, noting the small rise in unemployment and stable hourly earnings. In the end, all of the major market averages closed the week higher but the bullish activity was most prominent in the broad S&P 500 index, which broke out of a near-term trading range as it moved to heights not seen since 2001.
Obviously, the OW Portfolio benefits from bullish activity and the current (February) positions are expected to expire at maximum profit. However, the problem with the recent rally is how to find viable positions with the market at such lofty levels. While the technical indications suggest additional upside potential, the "premiums" in put options decline with strong advances and that typically results in new candidates with lower returns and/or higher risk. In any case, we will scour the ever-growing list of optionable stocks and attempt to uncover the most favorable positions for our dedicated subscribers. Be sure to check the OW website (or your E-mail inbox) before Monday morning for potential trading opportunities.