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Saturday, April 12, 2014

Weekend Portfolio Analysis (April 12, 2014)

SPX from 1863.92 to 1815.69 for a 2.59% loss this week. That's a more serious number. SPX is now down -1.6% for the year, Dow Jones is down -3.2% for the year and Russell -4.6%.

This was a tough week for me, where I adjusted my RUT 1080/1090 Credit Put spread down to 1055/1060 guaranteeing a negative result for April and I also entered a brand new position: a June RUT 920/930 Credit Put Spread. 

Market conditions
Below is a chart of the SPX index. Still in a long term uptrend, but certainly approaching the lower end of the channel. That's pretty much as far as I go with technical analysis. The 100 DMA has been a nice buy opportunity the last two years. It was penetrated on Friday, let's see if the party continues. Yellow lines represent the short strikes of my SPX Iron Condor (1695/1700/1960/1965)
 (Click on Image to enlarge)
Stochastics: 20.98 (very close to oversold)
McClellan: -149.83 (very close to oversold)
Only 21% of stocks are trading above their 20 Day Moving Average (oversold)

We're very close to an oversold extreme in the short term  and due for a rebound any time now. Adding to that the fact that the VIX is above 17, it is a good time in my opinion for selling Credit Put spreads. If you are an Options seller and you haven't sold Puts already, you are a Communist, and you deserve to live in Cuba with a typical Cuban salary.


April positions
RUT 1055/1060/1280/1290 Iron Condor 6 days to expiration. 92% probability of success. RUT's currently trading at 1111, that is 4.59% above my short strike price (1060). That would be a pretty serious correction for one week. I think this will all expire worthless and I will forget about this bad girlfriend. An April expiration cycle to forget.


May Positions
SPX 1695/1700/1960/1965 Iron Condor 80% probability of success, 34 days to go. No problems here right now.

RUT 1000/1010 Bull Put Spread Out of trouble. 90% probability of success.


June Positions
RUT 920/930 Bull Put Spread two young a position to have anything to talk about. Entered yesterday.


Action plan for the week
Let the April RUT 1055/1060/1280/1290 Iron Condor expire worthless.

Close the June 920/930 Credit Put spread if the market rebounds and I get a quick 75% of max profit in this position.

Close the SPX 1695/1700/1960/1965 Iron Condor if I can get $300 for it (Max profit potential is $320). $300 would make me happy 5 weeks before expiration.

As for opening new trades, I think I won't this week. The opportunity is clearly selling Put spreads at this point and I have already done too much of that lately. Let's see if I can clean the house a little bit this week and start with an almost clean slate and take stress levels down to historical lows.


Economic Calendar
Monday: US Retail Sales
Tuesday: US CPI, Chinese Industrial Production and GDP
Wednesday: US Building Permits and Housing Starts
Thursday: Philly Fed Manufacturing Index

On a non-trading related note. This blog is now consistently getting 1000 page views per day, or 30 000 per month. The good part of that is, it increases my advertisement revenue, which keeps me motivated to keep blogging. The not so good part is, I receive more emails from readers. My apologies for not replying to each one of your emails on time. Right now, I am behind and still need to reply to like 20 of them. It eats part of my day, and I have a job (a very busy one), plus a girlfriend, plus friends and to make matters worse baseball season just began. Remember folks, I am a one man shop, so be merciful. My petition is: if you have questions that you feel others may have please add it in the comments section, so we can all participate. Plus our ideas would remain there, visible to everyone forever, which will potentially reduce the number of emails of readers asking the same question that I answered on an individual level before to somebody via a personal email. Also for basic questions,....like what is an Iron Condor or a Bull Put spread,............man, I don't want to be an ass but you can Google that and get your answer in 10 seconds. I love the communication, the feedback. I love having an increasing number of readers. But help me keep my mind sane so that at the end of the year, come December, the solid returns are there, which in the end is what we're here for.

Take it easy, but take it anyways.
Good luck this week my friends!

Check out 2014 Track Record


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4 comments:

  1. You said, "We're very close to an oversold extreme in the short term  and due for a rebound any time now. Adding to that the fact that the VIX is above 17, it is a good time in my opinion for selling Credit Put spreads."

    Agreed 100%. Yesterday would have been a perfect day to sell credit spreads on RUT/IWM if you haven't done it already. I also see an oppty in NDX/QQQ since it is 5% below its 10-day high. I am saving my bullets in case this market decides to fall more next week which I am not anticipating. I would like to keep at least 50% in cash.

    You said, "If you are an Options seller and you haven't sold Puts already, you are a Communist, and you deserve to live in Cuba with a typical Cuban salary."

    This is the funniest line I have read all week. Too bad I can retweet it. I take it you don't like the Communist regime in Cuba.

    You said, "RUT 1055/1060/1280/1290 Iron Condor 6 days to expiration."

    How much did it cost you to make this adjustment? You never mentioned it in your blog.

    You said, "This blog is now consistently getting 1000 page views per day, or 30 000 per month. The good part of that is, it increases my advertisement revenue, which keeps me motivated to keep blogging."

    Congrats Henrik. This is quite an achievement. You started with a humble blog and now it is turning into a little cash cow for you. While the money you make from blogging does not equate to the amount of time spent on the website, I believe you get to learn and interact with some nice and smart people who visit your blog. Keep up the great work.

    May I suggest you change your logo and redesign your website? I think it is time for an upgrade this year.

    Good luck and good trading.

    ReplyDelete
  2. Haha, yep, I hate the Cuban regime with all my heart.

    The Costs of the RUT adjustment, here's the article http://www.the-lazy-trader.com/2014/04/april-rut-iron-condor-second-adjustment.html

    A new site design. I've been thinking about that for a while. There's too much garbage here. Certainly the advertisements create more clutter, it would look cleaner without them.

    The redesign will be mandatory as this blog is hosted by blogger, and I have a limit of 500 articles. A limit I thought I would never hit, but, reality is different and I'm getting close to 400 already. The main problem Jonathan, as usual, my lack of time. Man, I would really love to just blog and trade full time someday.

    Definitely the best part of blogging is knowing so many people and learning so much from others. And this feeling of camaraderie that is spontaneously created among traders.

    Thanks for the comments pal.
    LT

    ReplyDelete
  3. "If you are an Options seller and you haven't sold Puts already, you are a Communist, and you deserve to live in Cuba with a typical Cuban salary." you made me lough today sir, Keep blogging you are an inspiration for me, after years of trading forex while having a full time job the Iron strategies and selling spread looks more convinience to me and I'm learning with you. Thanks for your dedication. Cheers from Madrid, Spain

    ReplyDelete
  4. Thanks for your comment Hector.
    Forex is pretty challenging my friend as you have probably proved already. I have stop writing about it, but plan to do it in the near future. Don;t really want to get away from Forex but yes, it's definitely tough.
    I think options selling can be more consistent.
    Glad to have you over here.
    I went to your blogs by the way. Nice work man.

    Regards,
    LT

    ReplyDelete