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BookingAlpha Option Trading Advisory

Sunday, March 18, 2012

Weekend Portfolio Analysis (03-18-2012)

As expected in last weekend's analysis the markets moved up during the week (plus 2%). The SPY 141/143 Bear Call spread had to be closed on Tuesday (I don't feel bad for that) although I could have closed it for full profit on Friday. March expiration cycle was a tough one where out of the four trades played, only one could be taken to expiration for full profit.

This occurrence is normal for this type of strategy. Being a strategy where you expect the market to stop going in the same direction, a strategy where you are usually betting on reversal of current trends, it is understandable that the strategy has lower chances of performing as good as when the market is in range-bound conditions.

The IWM 88/90 Credit Call Spread expired for full profit this week and the March portfolio ended up with three winners, one loser, 4.08% performance before commissions, and 1.56% performance after commissions. Despite the market being in full uptrend mode during the first three months of the year, the portfolio has managed to achieved returns of 6.42%, 2.84% and 1.56%. Not bad for this strategy.

Two positions remain open in the April expiration cycle:

- IWM 72/70 Bull Put Spread. With IWM sitting at 83 this one looks really nice. It would be nice to open a Call side to this position, creating an Iron Condor. The 88/90 or the 89/91 strikes could be a good plan. I just need IWM to join the party and move up as the other indexes so that call premiums get more juice.

- SPY 145/147 Bear Call Spread. Although comfortable by now, it is within reach in the up trend channel, so If the market keeps moving up I will probably have to close this one for a small profit and redeploy another credit spread at higher strikes.

(Click on image to enlarge)
146 Looks within reach if the current uptrend were to keep the same speed. Although, obviously this uptrend won't last forever. Oscillators are looking overbought but only 64% of stocks are above their 20 SMA so there is room for more upside. I expect a small retracement this week or the same slow, almost painful upside moves.

Happy trading this!

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