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McClellan -94 (neutral)
48% of stocks trading above their 20 Day Moving Average (neutral)
Obviously, not overbought nor oversold which are the extremes I am waiting for at this point. I wouldn't sell close to at the money options under these circumstances. With the spike in VIX, almost at 18 right now it is a good time to sell Iron Condors, and also out of the money Puts since you can position them far out of the money with good probabilities of success. For example the 1670 April Put has a 90% probability of success and it is 9% below current prices with just 33 days to expiration. Pretty good odds.
RUT 940/950 Bull Put Spread with RUT trading at 1181 these options will expire worthless for full profit this week.
SPY 159/161 Bull Put Spread SPY is trading at 184.66, so this position looks very safe as well. Nothing to do here.
RUT 1240/1250 Bear Call Spread 88% probability of success with just 6 days to expiration. RUT would have to go up 59 points this week. That is, more than 5%, an unlikely event in my opinion.
So, all the March positions look very safe and stress free. They should all yield full profit this week. I will finish off the March monthly expiration cycle with a positive +1% portfolio growth after commissions despite suffering two losses in what has been the most challenging month so far this year. I haven't been stellar, but not bad either. I'll close the first quarter of 2014 with an almost 6% portfolio growth, which is a very decent 24% annualized.
RUT 1080/1090/1280/1290 This one's looking pretty good, right around the middle of the Iron Condor, so no concerns here. I need to let time do its work.
Action plan for the week
There's an interesting play right now in March with the SPY 174/176 Credit Put spread, yielding 0.13 credit. With SPY at 184.66 this trade is offering decent odds below the uptrend channel. I usually don't sell credit spreads one week to expiration because of the low premiums, because adjustments become hard and you have to end up rolling out to the next month. But in this case, with a VIX that has expanded nicely, you can set this position far enough and still get something for it. I'm still not sure whether I will open this trade, but if markets wake up weak on Monday it will be more tempting and almost for sure I will pull the trigger.
If we see the market weakness later in the week, then I will sell a credit Put spread in SPX but using April options. Hopefully below 1670 for a 0.40 credit or better. I think those are great odds.
I won't touch the existing March positions this week. It will all expire worthless. The April RUT Iron Condor, nothing to do there either.
Finally I won't enter new trades if we stay sideways, or go up from here, except if we go up really hard challenging the 1880 price level on SPX, which I think is unlikely. If that were to happen, then selling SPX Calls above 1950 would be my play.
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Monday: Europe CPI
Tuesday: US CPI, Housing Starts
Thursday: Existing Home Sales, Philadelphia Fed Manufacturing Index
Good luck this week folks!
Check out 2014 Track Record