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BookingAlpha Option Trading Advisory

Wednesday, June 5, 2013

June RUT 1025/1030 Bear Call spread closed. New July Bull Put spread sold

Today, Wednesday June 5 the market started to look unusually oversold with the McClelan Oscillator hovering -300, and close to only 30% of the stocks above their 20 day moving Average, so I decided to do two things:

First, I closed the RUT 1025/1030 June Bear Call spread for 0.35 debit. This position had been entered for 0.50 credit so the final result is a small 0.15 profit ($60 in 4 contracts).

Then I sold a Credit Put spread in July also betting on a rebound of the markets at this point.
I sold the 890/895 Put credit spread for 0.70 credit (4 contracts per leg) for  maximum credit of $280.

After these actions there are two positions in June:
SPX 1540/1545/1715/1720 Iron Condor ($350 credit)
RUT 905/910 Bull Put spread ($200 credit)

and two positions in July
SPX  1505/1510 Bull Put spread ($160 credit)
RUT 890/895 Bull Put spread ($280 credit)

Related Articles:
Weekend Portfolio Analysis (June 8, 2013)
Weekend Portfolio Analysis (June 14, 2013)
Weekend Portfolio Analysis (June 21, 2013)

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  1. Great job! Rally should continue.

  2. Well my friend, that's what I'm hoping now!

  3. LT: New to your forum. Thanks for the great insights! My big concern now is that even when the Fed hints that they'll scale back on bond buys (QE), the market panics. When they announce that they actually are tapering QE or stopping altogether, the overheated market may well drop 10%. One writer says the target at which QE stops is 6.5% unemployment. We're at 7.5% now so we'll see. I'm definitely adding more cushion to my put spreads :)

  4. Hey Glenn,
    Well, you will notice I never try to analyze fundamentals at all. I believe they are totally unpredictable and even if you predict them correctly, you still have no guarantees about their repercussions in the market. how many times has the market rallied on bad news? How many times has it fallen on good news? So, I dont really care too much about the news. Here's an article I wrote a while back on the subject

  5. I think we see a trip on the RUT to 952 in the days to come.