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BookingAlpha Option Trading Advisory

Thursday, July 12, 2012

Down to the US for a week

Folks, I'm flying to the US tomorrow and will be off the entire next week. That being said there won't be a "Weekend Portfolio Analysis" article this weekend. I'll be back on Canadian soil on Sunday 22. But, before leaving, just a quick wrap up on how the portfolio is doing, and plans moving forward with the already open trades.

 Let's start off by saying that the July expiration cycle is shaping up to be the best month so far in terms of absolute returns for the portfolio. Although only two trades were open, I timed the markets almost perfectly, getting to receive good credit for both positions, and facing almost no problems or threats at all, as the markets reversed almost right after the trades were open.

The SPX 1415/1420 Bear Call Spread is looking very comfortable with SPX hovering around 1330 today. The plan is to let it expire worthless for full profit next week.

As for the SPY 118/116 Bull Call Spread is looking very healthy and far away from the market in spite of the recent correction. Same plan here, let it expire worthless next week for full profit.

The July portfolio beta-weighted looks really comfortable
(Click on image to enlarge)

 98.32% probability of full profit on July 20.
If both trades expire for full profit as expected, the balance would improve to 21 winners and 3 losers. The absolute return after commissions for the month of July would be $957. Which represents a 7.64% performance after commissions, the best month so far. The new balance of the portfolio would be $13478 which represents a +34.78% performance in 8 months of activity. Clearly very encouraging results.

The other position currently open belongs to the August portfolio, and it is the RUT 860/870 Bear Call Spread. With RUT around 785 , this one is starting to look comfortable and I don't expect having to close it next week.

I would have liked to open a RUT Bull Put spread, to complete the Iron Condor, but the market is not at the oversold levels that I like to see. I would be happy if I could sell the 700 strike Puts, and buy the 690, doing it all for a credit of at least $1.20. That would be an excellent position to be in, and equivalent to SPX going down to about 1220 by August expiration. But I'm not going to force an entry. If the markets don't keep on selling off, I just won't enter the position.

I stopped trading during my trip to Cuba back in May. But conditions are very different down there with very limited internet connectivity, in fact non-existent for me. This time, I will be vacationing, but the internet is always there for me to take a look at the positions once a day and make sure everything's fine.

Trade well, and stay profitable my friends! See you in a few days.

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