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Saturday, October 5, 2013

Weekend Portfolio Analysis (October 5, 2013)

SPX from 1687.26 to 1690.50 this week, for a +0.19% gain. The rhetoric in Washington keeps everybody nervous and the VIX almost hit 19 this week. Most sources out there seem to agree that the market will rally once all these budget talks and debt ceiling negotiations are over. The problem is, you don't know how much heat you have to suffer as a bull from here to that moment. Or if the negotiations will ever be effective. In any case, nobody, NOBODY can predict the future. And even if the negotiations are a success you could also see the market tank haha. I believe markets have a funny way to make fun of everybody, regardless of economy, political stability etc. And that's why I never try to predict any market move based on fundamental factors. Anyways, let's see what we've got this week.

Market conditions
A chart of the SPX index below. The horizontal yellow lines are prices where I have short option positions.
(Click on image to enlarge)
Stochastics: 44 (neutral)
McClellan: -23 (neutral)
55.13% of stocks are above their 20SMA (neutral)
61.94% of stocks are above their 50SMA (neutral)

You know my verdict already. Absolute no man's land! There is plenty of room to move in either direction before we see an extremely oversold or overbought market. Be prudent at this point and go far out of the money when selling options.

October positions
SPX 1615/1620/1780/1785 Iron Condor. Looking good. 85% probability of success and 13 days to expiration. A 90 point rally or a 70 point fall would be needed to touch any of the short strikes. Although possible, I like my odds here.
(Click on image to enlarge)

RUT 1120/1125 Bear Call Spread. RUT almost didn't move this week, and with the pass of 7 days, the probability of success has increased in this position to the point where I am starting to feel more comfortable. 84% probability of success with 13 days to go. RUT at 1078 would need to rally +42 points up to 1120 in the next two weeks.
(Click on image to enlarge)


November positions
SPX 1565/1570/1800/1805 Iron Condor
Right in the middle, same as last week with a 77% probability of success.
(Click on image to enlarge)

 SPX 1520/1525 Bull Put Spread Opened yesterday. Nothing to talk about here. Obviously looking safe right now and with a probability of success higher than 90%.


Action plan for the week
I'm not concerned at all with November positions. The battleground is in October right now. A massive rally could threaten the RUT 1120/1125 Credit Call spread. At around 1115 I would roll up and out. At the same time a market sell off could threaten the 1620 short Put of the SPX Iron Condor. At around 1630 I would roll down and out as an adjustment.
New positions this week? No, thank you. Too much exposure already. It will all be based on possible adjustments if necessary. That's it.

Economic Calendar
Thursday: Initial and Continuing jobless claims 
Friday: Core Retail sales, NonFarm Payrolls, PPI

Good luck this week folks!

Check out Track Record for 2013



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