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BookingAlpha Option Trading Advisory

Saturday, April 13, 2013

Weekend Portfolio Analysis (04-13-2013)

The markets (SPX) went from 1553.26 to 1588.85 this week for a solid +2.29%. We're back around the top of the range, and the market is still defying skeptics. Me among them, although I stopped selling close to at the money Bear Call Spreads back in February for good.

The uptrend channel is still in play

(Click on image to enlarge)
Stochastics at 91 (overbought)
McClellan at +5 (neutral)
53.94% of stocks are above their 20 SMA (neutral)
59.62% of stocks are above their 50 SMA (neutral)

The CBOE Index Put/Call ratio at 1.14 and the Equity Put/Call ratio at 0.70 are not at the bullish extreme you would expect. So, traders are somewhat hedged. That doesn't support the notion of a hard sell off.

There is plenty of upside room. We're not at an extreme and there is room for breadth in my opinion. Obviously, trading at the upper end of the channel, or close to it, the upside speed tends to be slow.

April Positions

This is going to be expiration week, and it could be pretty challenging for my positions.

SPX 1445/1450/1610/1615 Iron Condor
(Click on image to enlarge)
 Probability of success down to 80% from 91% last week. I thought the 1610 short call was pretty safe last week, and now I don't think so anymore. This position might need special attention this week. Sadly expiration week. Yes, I know, should have closed this spread earlier, but, I'm trying to let it all expire worthless due to the abusive commissions that us Canadian folks have to endure.

If the 1610 strike is threatened this week, let's say if the market hits 1605 or something like that, I will roll it up and out to May. That means I will close 1610/1615 and open another Bear Call Spread in May, probably selling the 1645/1650 spread and at the same time I will sell a May Bull Put spread, probably in the 1520 area. If the 1610 short strike is not challenged, I will let the whole position expire.

SPX 1440/1445 Bull Put spread

This one's looking pretty good. There's no need to show the Position's profit curve. Something terrible would need to happen in order for SPX to go from where it is down to 1445 in just 5 days. I'll let it expire worthless.

May Positions

RUT 850/855/1000/1005 Iron Condor
(Click on image to enlarge)
 Beauty all over the place. Look at that, it couldn't get any better. No plans with this position for the week.

Action Plan for the week

It'll all be based on managing the SPX 1445/1450/1610/1615 Iron Condor. That's pretty much it. As for new May positions, I would like to sell a Bear Call Spread possibly in the SPX 1640's but I would like 70% of stocks to go above their 20 SMA for that. So, chances are I may not open any new positions this week.

Economic Calendar

Tuesday - CPI and Industrial Production
Thursday - Initial Jobless claims

Good luck this week folks!

Check out Track record for 2013

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