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Monday, December 23, 2013

Second $SPX Bear Call Spread of the January 2014 expiration cycle

I opened an SPX 1880/1885 Bear Call spread today for 0.50 credit

Sell 4 SPX 1880 Call @2.20
Buy 4 SPX 1885 Call @1.70
Credit: 0.50 ($200 in for contracts per leg)
Max Risk: 4.50 ($1800)
Days to expiration: 24

I'm not too happy with the entry. I mentioned in the weekend analysis that I would wait until 1830 - 1835 and a completely overbought market.

A little after the entry I realized all of the parameters I usually follow were not signaling an overbought market. Yes, 71% of stocks were above their 20 SMA (check). Stochastics above 80 (check). But McClellan oscillator was only +135 (I like it above +150). I thought I had seen an overbought reading there as well.

That's what happens when you're not trading full time but from the office at work, with limited privacy. Remotely connected to your computer at home, and minimizing - maximizing windows like a cowboy in the wild west. Then trying to tweet as soon as possible while people still walk around you. Damn it!

I had removed the McClellan oscillator from the charts during the weekend, looking at some other studies, and when I added it back I forgot to change the default boundaries of +100 and -100. Obviously McClellan was clearly above the boundary today. Plus the little window displayed when connected to my computer at home via TeamViewer is visualized in a much smaller font size (something I do on purpose to mitigate the risk of somebody finding out what the hell I'm doing)

Anyways, the entry was early, but it's in play now, so I'm going to start looking at it as a hawk and defend it as usual.

These are the three positions right now
SPX 1645/1650 Bull Put Spread $80 credit
RUT 990/995 Bull Put Spread $120 credit
SPX 1880/1885 Bear Call Spread $200 credit

Finally a chart of SPX after market close today for future reference
(Click on image to enlarge)

Related Articles:
Weekend Portfolio Analysis (December 28, 2013)


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