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Saturday, January 18, 2014

Weekend Portfolio Analysis (January 18, 2014)

SPX went from 1841.26 to 1838.70, just a -0.14% decline in the end. Monday and Tuesday were pretty exciting,....the rest of the week, ahhhh, not so much. The market didn't reach a short term overbought extreme and therefore I didn't do anything. I haven't entered new positions since December 27. This is probably my longest hiatus, but with this dull, boring and so low volatility environment I just haven't seen the clear opportunities that I like.

January monthly expiration was yesterday and as expected, the SPX 1645/1650 Bull Put Spread
and RUT 990/995 Bull Put Spread expired worthless for full profit. January resulted in a +3.72% portfolio growth. Solid start.

Market conditions
(Click on image to enlarge)
Stochastics: 81 (overbought)
McClellan: +52 (neutral)
58% of stocks are above their 20 Simple Day Moving Average (neutral)

This is no man's land here and I won't enter February credit spreads until we reach an extreme. I will however enter a March Iron Condor any time now as Time premium allows me to go so much further out that I feel safer. The market is still moving inside the uptrend channel that started on November 16, 2012, and it looks like it will stay there for a while. The lower boundary of the channel is far from current price, and the upper boundary looks solid as rock. I believe we will stay inside the channel for a while.

February positions
RUT 1040/1045 Bull Put Spread RUT's trading at 1168, the 1045 short Put looks more and more comfortable. This is the only position currently in the portfolio.

Action plan for the week
I don't need to do anything with the existing RUT Bull Put Spread position. It's safe. I would still like to enter the Bear Call Spread side to complete an Iron Condor, but I would like an overbought market for that. I don't want to risk entering the Call side at this point where time premium has decreased in the February options and I would have to be aggressive in order to get a decent credit. So, nothing in February unless we shoot up to overbought territory.

As for March, I will enter an Iron Condor this week. The SPX 1665/1670/1930/1935 Iron Condor is my candidate right now, obviously strike prices may change as we get into the week but I think that's a position I can manage successfully with so much time premium in there and fairly decent distance to manage.

Economic Calendar
Sunday - China GDP and Industrial Production
Monday - US Markets will be closed
Wednesday - Chinese HSBC Manufacturing PMI
Thursday - German & French PMI, US Home Sales

Good luck this week my friends!

Check out 2014 Track Record

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  1. Very good plan. So you are gonna do a March IC on SPX because we are neither in overbought nor oversold and there is still a lot of time premium to go further out? Is that your rationale or do you have some more reasons to do this?

  2. That's exactly right Jonathan/ No other reason behind the decision.