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Friday, March 21, 2014

Weekend Portfolio Analysis (March 21, 2014)

Ok, so March expiration is a thing of the past now. It was not a great month for me. Great is a higher than +3% return for the month. But I feel good about having a positive return despite suffering two losses. In the end it was a +0.99% portfolio growth after commissions for the March expiration cycle and the summary of all the trades can be seen here. Up to now, the model portfolio is up +5.88% year to date, and while I'm not totally satisfied with that number, I don't feel bad either as it represents +23.52% annualized. The S&P is now up only +0.9% for the year so, all is good.

Market conditions
SPX from 1842.81 to 1866.52 this week for a +1.29% gain.

(Click on image to enlarge)
Stochastics: 62 (neutral)
McClellan: -40 (neutral)
53% of stocks trading above their 20 Day Moving Average (neutral)

This is no man's land and I won't open new positions until price reaches an extreme.

April Positions
RUT 1080/1090/1280/1290 Iron Condor With RUT currently at 1193, price is right in the middle of this Iron Condor. Couldn't ask for more. I'm not concerned with this position. 88% probability of success now for the whole position with 28 days to go.

May Positions
SPX 1695/1700/1960/1965 Iron Condor The trade entered yesterday. As a very young position there's nothing new to talk about here. SPX at 1866, so no immediate threats.

Action plan for the week
I won't touch the existing positions. There's no need to, unless something very extreme happens that suddenly threatens my break even points.

As for new trades, I would like to add another trade in the April expiration cycle. But I will just enter one when/if we reach a price extreme. With a 2% push higher on SPX we will be close to 1900. At that point I would be very interested in selling April Calls above SPX 1950. Maybe I don't need to wait until SPX 1900, maybe 1890 would do it for me. The point is, I need a more short term overbought market than what we have now. Same thing for selling Puts. Going down to 1830 will probably make me interested in selling April Puts below 1700. If we don't reach overbought or oversold levels, I'll simply stay put. Sometimes the best trade is the one you never get to make.

Economic Calendar
Monday: European Manufacturing and Services PMI
Tuesday: US Consumer confidence and New Home Sales
Wednesday: Durable Goods
Thursday: GDP, Pending Home Sales

Good luck next week folks!

Check out 2014 Track Record

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  1. Great analysis and very wise conclusion.

    You have a minor mistake in this sentence: SPX from 1842.81 to 1866.52 this week for a +1.29 gain.

    For April, I have SPY 192/194 and 175/173. I also have April IWM 127/125 and 108/106.

    I put on my first May IC today. I got the 198/200 and 170/168 for .19 credit.

    I am totally with you with selling some April spreads if we get a short-term overbought or oversold at those levels you mentioned 1890 and 1830. Although my rule will say to wait until 1825 or 3% lower from the 10-day high of the SPX. But we are only talking about a 5-point difference so it really doesn't matter at the end of the day.

    I am so inspired by Karen's trading story. We are the tortoise selling conservative spreads. We will eventually win the race with our steady, consistent and safe income producing trades. We have the probabilities behind us. We wait for market extremes to sell when possible otherwise we do an iron condor when we are in no man's land. We have a plan when something goes wrong. We never over-trade. We wait patiently for the right opportunity. We have discipline. We have rules that we trade by. We can still win when the market goes up, down or sideways.

  2. Thanks for the correction Jonathan. I added the % symbol to +1.29.
    For April, your IWM Call spread looks good, in the case of SPY 192/194 I would probably be tempted to take my winner earlier.

    Wow, you went extra conservative with your SPY May Iron Condor. I think you have pretty good chances there of staying out of trouble.

    Good luck this week!

  3. Henrik,

    You can never be too safe. I am following Adam and Karen who are extremely conservative when compared to me. I will put on my May RUT or IWM position next week.