As we shared in yesterday’s issue of Tematica Investing, our offices will be closed next week from December 26 to December 30th, which means we’ll be taking a break from publishing for the week. That break will allow us to not only recharge, but to get our thoughts together as we close the books on 2016 and head into 2017. Rest assured if there is any breaking news that we need to respond to, we won’t leave you hanging until after Baby New Year arrives.

Before we get underway, we have a quick housekeeping item. Late last week we were stopped out of the remaining Utilities Select Sector SPDR ETF (XLU) January $50 calls (XLU170120C00050000) position at 0.22. We did manage to scored a return of 57 percent, given our 0.14 buy-in on Nov. 22. With temperatures still freezing, the XLU January $50 calls have traded higher this week, and we’ll keep tabs on them with the goal of revisiting a position in them come January as we move deeper into the winter season.

It’s always nice to close the year on a strong note and this latest win with XLU is the latest in a growing list. We’ll continue to favor our option trading strategy that uses the intersection of thematic tailwinds and out of the money call options to ferret out potential plays. With the market at lofty levels and stretched valuations, we’ll be sure to eye potential short positions and put plays as well.

Now let’s put that returned capital and profits to work…

In yesterday’s issue of Tematica Investing, we shared several positive data points concerning Connected Society investment theme company Amazon (AMZN). Those data points certainly add to our bullishness on the shares, but it was the report by comScore (SCOR) that online desktop shares have accelerated even further as we entered the home stretch for holiday shopping that caught our eye. As such, we are stepping things up and adding:

• The Amazon February 2017 $800 calls (AMZN170217C00800000) that closed last night at $23.75 to our holdings. 
• We’d be comfortable adding the calls up to $28.50. 

The timing associated with that call option will allow us to not only capture the full impact of the holiday shopping season, meaning pre-holiday shopping as well as post-holiday returns and sales, but also Amazon’s December quarter earnings. Historically that report has been the company’s seasonally strongest and with the acceleration in digital shopping, odds are it will be once again.

• As we add the AMZN February 2017 $800 calls, we’ll set a protective stop loss at $15.50 and look to raise it as the calls trend higher.

Longtime subscribers will recall our thought that as great as digital shopping is, the products you order still need to get to you. With that in mind, the accelerating trend in digital shopping that led us to recommend the above Amazon calls, also has us adding:

• The United Parcel Service (UPS) February 2017 $120 calls (UPS170217C00120000) that closed last night at 1.56 to the Tematica Pro Select List. 

Over the last few days, these underlying UPS shares have come off their highs, due in part to FedEx’s (FDX) recent earnings miss.

• We’d be buyers of the UPS calls up to $1.85, and we’ll set a protective stop at $1.10 to limit our downside.  

At the risk of being redundant, we talked about this yesterday as part of our Amazon comments, but in case you missed it, the FedEx miss was due to issues at FedEx Freight and investments needed to catch up its residential e-commerce efforts compared to UPS. That led to a 23 percent drop in the UPS February 2017 $120 calls yesterday, which to us spells opportunity. We’d be buyers of the UPS calls up to $1.85, and we’ll set a protective stop at $1.10 to limit our downside.

Finally, as we get ready to wrap presents and see both family and friends, we’d remind you that at current levels both Alphabet (GOOGL) January $800 calls (GOOGL170120C00800000) and Facebook (FB) February $120 calls (FB170217C00120000) remain buys.

From all of us here at Tematica Research, thanks for making 2016 a great year! Happy holidays, Merry Christmas and all the best for the New Year!

Give the gift of Cocktail Investing

With only a few days to go until Christmas morning, last minute gift giving can be a bit of a bear. We’d like to suggest that either for yourself, someone you love or someone you know that needs to improve their investing acumen that you give them a copy of Cocktail Investing: Distilling Everyday Noise into Clear Investment Signals for Better Returns by Tematica’s Chief Investment Officer Chris Versace and Chief Macro Strategist Lenore Hawkins.

Not only does it cover the 12 questions you need to answer before you buy any stock, but it also shows how to read the economy like a pro and provides a soup to notes resource guide for all the key data one needs to track as well as where to find it.