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Friday, August 22, 2014

Weekend Portfolio Analysis (August 22, 2014)

I'm going to be away this weekend so this is the right time for the Portfolio Analysis. It's now or never.

SPX went from 1958.36 up to 1988.40 this week for a solid +1.53% gain. I didn't manage any existing position and I opened the first one of the October expiration cycle: A RUT 1020/1030/1230/1240 Iron Condor that looks promising. There is nothing being threatened in the portfolio, and it's a time of joy at the Lazy Trader's home.

Market conditions
Below is a chart of the SPX index. This time I projected the uptrend channel until the end of this year (2014). I rarely ever do something like this as my trading is independent from my ability to forecast future market moves. This was more out of curiosity than anything, seeing how not even August (one of the historically weakest months of the year) can't seem to take this market down. It occurred to me, "hey, where could the market end this year if the uptrend channel is not broken to the downside?"

(Click on image to enlarge)
There is the projection: lower end of the channel at 2030, upper end at 2130. The 2030 level would represent a +9.8% return for the year for the index, whereas 2130 would mean a +15.3% return for the year. That would be a nice return on top of the spectacular 2013.

But this is not "LT's market predictions?". This is not the site of a Guru pretending to know where the market is headed. That's not why you come here! So, let's get back to business.

Stochastics: 94 (overbought)
McClellan: +95 (neutral)
69% of stocks are trading above their 20 Day Moving Average (neutral)

If you are in pain shorting this market, getting burned on some options close to the money, I hate to say there's more upside room. I don't know if this thing will keep going up. Nobody knows. But I do know that two crucial indicators are not showing extreme readings yet. So, this thing still has room to go before a pull back takes place. At this point I wouldn't sell Calls, nor Puts either. Reason why, in all likelihood, I will do nothing in the next few days.


September Positions
RUT 980/990 Bull Put Spread. "Oh the Lazy Trader is lying! He's full of crap! How come he always has this super easy to ride positions taking no heat at all ??!! wa-wah-waah".

SPX 1815/1820/2065/2070 Iron Condor. "No seriously. This can't be possible. Look at those strike prices". Ok, I better stop being cocky. 88% probability of success on this Iron Condor and no heat in the horizon. 


October Positions
RUT 1020/1030/1230/1240 Iron Condor This is the position entered on Tuesday. RUT moved sideways this week so there's nothing interesting to say about this position. 


Action plan for the week
Current positions are looking great and won't need my attention.

I'll be waiting like a sniper for the perfect opportunity. I would like to sell an October Bear Call spread on SPX above 2080, with 90% probability of success and at least 0.50 credit. For that to happen, I would need the index to move about 20 - 25 points up. That's not impossible. That's barely a 1% - 1.2% move up, less than what took place this week.

Now, on the way down, I will be hesitant to sell Puts. I need a 3 percent fall or something like that.

If none of the two scenarios described above take place, I'll be happy doing nothing. That would mean the market hasn't made significant moves and therefore I'd be making money on theta decay with the existing positions. No need to rush trades that are less than ideal at this moment. 


Forex
The LT Trend Sniper System it's still killing it. Still riding the short EUR/USD position initiated on July 17. This is the kind of monster moves for which I designed this robot. I want to start using it with real money in 2015.

The trade is showing a +10.04% gain (that's a +10.04% growth for the whole portfolio in a position where max risk was only 3%)
(Click on image to enlarge) 

If you're interested in the progress of this trade, you can follow it live at http://www.myfxbook.com/members/thelazytrader/lt-trend-sniper/929036. Scroll down to the Open Trades tab. 


Economic Calendar
Monday: New Home Sales
Tuesday: Durable Goods Orders, CB Consumer Confidence.
Thursday: GDP, Pending Home Sales
Friday: Europe CPI, USA Chicago PMI

Good luck this week folks!

Check out 2014 Track Record


Go to the bottom of this page in order to see the Legal Stuff

3 comments:

  1. "Current positions are looking great and won't need my attention."

    I really like your positions. They are as safe as mine. We trade in a similar fashion. This is a testament to our conservative trading style that our positions are safe even with SPX trading at record highs. We exercise patience and discipline. We follow our rules and have strict risk management. Our goal is to make consistent profits month after month.

    "At this point I wouldn't sell Calls, nor Puts either. Reason why, in all likelihood, I will do nothing in the next few days."

    I think we are pretty close to an overbought condition. I project 2020 as the point where we are overbought on SPX. The big question is if SPX can get pass 2000 next week.

    Nic has already sold an October SPX credit call spread position. I was very tempted to take the same position as I feel it would be a high probability trade. I think I am going to sell the Oct 2075/2080 credit call spread next week to iron condor with my Oct SPX 1725/1720 credit put spread if we can get to 1995. Otherwise, I will wait for 2020 in the first week of September. If that does not happen, I will probably sit on my hands. I got burned a few times trying to sell bear call spreads too soon.

    "I need a 3 percent fall or something like that."

    That sounds exactly what I would do too. My strategy is to wait for SPX to fall at least 3% from its 10-day high to sell credit put spreads assuming VIX is still under 20. That is what I did earlier this month. I waited for a 3% drop from an intra-day high of 1991 to 1930 before I sold the Oct 1725/1720 credit put spread.

    "No need to rush trades that are less than ideal at this moment."

    I love the following quote from Mark Weinstein

    "Although the cheetah is the fastest animal in the world and can catch any animal on the plains, it will wait until it is absolutely sure it can catch its prey. It may hide in the bush for a week, waiting for just the right moment. It will wait for a baby antelope, and not just any baby antelope, but preferably one that is also sick or lame; only then, when there is no chance it can lose its prey, does it attack. That, to me, is the epitome of professional trading."

    Current positions:

    Aug 29th IWM 104/102 credit put spread (will let it expire next Friday)
    Sept IWM 103/101 credit put spread
    Sept IWM 98/96 credit put spread
    Oct IWM 95/93 credit put spread
    Oct RUT 1030/1020 & 1230/1240 iron condor (got in this position with Lazy Trader)
    Sept SPX 1825/1820 credit put spread
    Oct SPX 1725/1720 credit put spread (looking to iron condor with 2075/2080 or higher next week)

    You can follow me on Twitter @lienjonathan where I tweet my 90% probability credit spread trades in real-time for free.

    ReplyDelete
  2. Thanks for your comments Jonathan. You've been on a roll lately with your trades and I hope you have a good return come year end. You current positions look great in my opinion.

    I would like to sell a Bear caLl spread on SPX but seriously I have no intentions to rush it.
    Of course we're getting close to a short term overbought extreme. I just meant that there is still a little upside room in the oscillators.

    Great quote by Mark Weinstein! I had already read it a few years ago. Thanks for sharing.
    Hey aren't your tweets private any more?

    Cheers,
    LT

    ReplyDelete
  3. "You've been on a roll lately with your trades and I hope you have a good return come year end. You current positions look great in my opinion."

    My goal is to make 1% to 3% per month when I have a good month. I should have 10 out of 12 good months each year.

    "I would like to sell a Bear call spread on SPX but seriously I have no intentions to rush it.
    Of course we're getting close to a short term overbought extreme. I just meant that there is still a little upside room in the oscillators."

    Based on my rules, SPX needs to go up 6% or more from its recent low assuming VIX is under 20 for me to sell a bear call spread. SPX fell down to 1905 on August 7th. SPX needs to climb to 2023 (which is 6%) for me to sell a bear call spread. The big question is if 2000 is acting as a wall of resistance or would it slice through it next week or next month.

    That is why I am willing to sell a bear call spread earlier than my rules dictate because of this 2000 wall. My position will be small relative to my account size so it will not be a big deal if it continues to blast pass 2000.

    "Hey aren't your tweets private any more?"

    I recently made my tweets public again so that I can share my thoughts and trades on the market.

    You can follow me on Twitter @lienjonathan where I tweet my 90% probability credit spread trades in real-time for free.

    ReplyDelete