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BookingAlpha Option Trading Advisory

Saturday, December 24, 2011

Weekend Thoughts (12-23-2011)

Not too much to talk about this week. Very low levels of activity and the markets moving up little by little. The 100 SMA served as support to the S&P500 and the VIX broke support on its way down, signaling lack of panic.

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SPX is now right there in front of important layers of resistance that will be faced this week. Also Stochastics are in overbought territory, but RSI is not quite there yet. MACD showing a bullish crossover. So, in the one hand you have a rosy bullish picture but on the other hand some signs of overbought market coupled with important walls of resistance above. Obviously, I ain't no wizard and anything can happen.

And bellow, the VIX keeps trending down.
(Click on Image to enlarge)
If the markets keep moving up this week, it would be interesting to analyze some Bear Call Spreads, as calls will get more juicy. If there is a retracement I don't see anything interesting to do. Chances are, this week no new position will be open.

This week, the January QQQ Bull Put Spread was closed. Clearly miss-timing the market and respecting it too much at this time of the year. But anyways, I played safe, left with a tiny winner and left the portfolio now looking really comfortable towards expiration in 27 days.

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Two positions remain open: The January QQQ 52/50 Bear Call Spread and the January IWM 65/63 Bull Put Spread. Beta-weighting the portfolio towards SPX, we have a profitable portfolio as long as SPX remains between 1104.92 and 1377.12 which looks really comfortable to me.

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