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BookingAlpha Option Trading Advisory

Saturday, January 10, 2015

Weekend Portfolio Analysis (January 10, 2015)

Pretty exciting week in the markets with violent moves in both directions. In the end the SPX index opened at 2054.44 and closed the week at 2044.81 for a 0.47% loss.

There was a good opportunity on Tuesday to sell Puts, which I couldn't take advantage of while being caught up in meetings all day. My frustration was clear on Twitter. Of course, in retrospective now anybody can say how great an opportunity it was for selling Puts after seeing the rebound, but that's not my point. I mentioned last week the levels at which I would be interested in selling Puts. Definitely with the SPX below 2000 selling Puts in the mid 1700's was a very attractive opportunity. I simply missed it, and after that I wasn't going to be happy trading at inferior strike prices. That's how my mind works. So I said..."The F with it". I'm not trading it unless we fall to similar levels.

That said, and frustrations with the missed opportunities apart, I have to say that if I'm able to have one single position every month, only one, and it turns out to be profitable I'm a happy camper. 12 trades a year, one per month, each one giving me 2% - 3% portfolio growth are enough to keep me satisfied. Because I already have a position in February which is doing quite good, I can digest the frustration better. Enough with the crying!

Market conditions
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Stochastics: 52 (neutral)
McClellan Oscillator: +2 (neutral)
Stocks above their 20 Day Moving Average: 49% (neutral)

Absolute no man's land. I avoid selling individual credit spreads at this point. I will consider Iron Condors under these circumstances though, especially with an attractive VIX at 17.55, but March expiration is still too far for my liking. However, if you don't mind the long time to expiration the March 1750/1755/2165/2170 Iron Condor for 0.80 credit or better looks like a decent opportunity (0.30 credit from the Put side, 0.50 or better from the Call side). I would sell fewer Calls than Puts though, as the 2165 short strike is not clearly above the projected upper end of the uptrend channel. So it would be an unbalanced Iron Condor.

Selling February Credit Put spreads is still a decent option if you haven't done so. The 1830/1835 Credit Put spread for 0.30 credit or better would be my play with 90% probability of success. I won't do it as I expect clearly oversold conditions.

Selling Credit Call spreads on the other hand, at this point is more dangerous and a no-no for me.

January positions
SPX 1820/1825 Credit Put Spread
This one will expire for max profit this Friday. It's my only January position. Decent start to the year.

February positions
SPX 1875/1880/2190/2195 Iron Condor
$320 credit. 40 days to expiration and 80% probability of success, up from 73% last week. Here's how it's looking.

(Click on image to enlarge)
Nice and sweet. No concerns with this Iron Condor at the moment.

Action plan for the week
Another fall to 1990-2000 and I will be interested in selling Credit Put spreads still using February options.

If we go up we have to hit SPX 2100 to get me interested in selling Out of the Money Credit Call spreads. I would also be interested in selling the RUT 1300/1310 Credit Call spread for 1.00 credit or better if that ever happens. Kind of unlikely this week as RUT would need to rally about 40 points from its current level, which is a significant move for just a week.

If the market moves sideways your pal The Lazy Trader will continue honoring its name.

The LT Trend Sniper system as you know has been on a short EURUSD position since December 21, 2014. The position made some more progress this week and the trade is a sure winner at this point.

(Click on image to enlarge)
The Forex portfolio is now up +5.62% year to date. Of course this is not a locked in gain until the position is finally closed.

(Click on image to enlarge)

The sniper will continue to be short EURUSD this entire week.

For more information about this strategy, visit the LT Trend Sniper's page

Economic Calendar
Pretty quiet on the news front
Wednesday: US Retail Sales
Thursday: PPI, Core PPI, Philly Fed.
Friday: European CPI, US Core CPI, Michigan Consumer Sentiment.

Good luck this week folks!

Check out 2015 Track record

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  1. You are showing a lot of patience and discipline on when to sell spreads. I admire and respect that a lot.

    According to my indicators, SPX was oversold last Monday and RUT became oversold last Tuesday. Just because SPX was oversold on Monday doesn't mean it can't go lower. On Tuesday, SPX continued to decline but then stopped when buyers stepped in. Now we are in no man's land. That means selling individual spreads here is not a high probability trade. We will have to wait for either an overbought or an oversold signal to sell credit put spreads or credit call spreads.

    What I did last week:

    1. On Monday, I sold the March SPX 1720/1710 credit put spread for .60 credit
    2. On Tuesday, I sold the March 31st RUT 1000/990 credit put spread for 1.00 credit

    What I plan to do next week:

    Let the Jan IWM iron condor expire for max profits.

    Current positions:

    Jan IWM 105/103 cps
    Jan IWM 125/127 ccs
    Feb RUT 1000/990 cps
    Feb RUT 1800/1795 cps
    March SPX 1720/1710 cps
    March 31st RUT 1000/990

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

    My Facebook page:

    Here is a link to all my trades and results:

    1. Thanks for sharing your Facebook page! I'm already a follower. I've always considered you have a very interesting strategy. Many different individuals can be option premium sellers yet there are so many different approaches on how to do it!

      You have some solid positions there. You're killing it. Thanks for sharing them and thanks for dropping by,

    2. Thanks for the kind words. As you know, I have been a long time follower of your website and strategy. I have learned a lot from you on how to trade more conservatively. You have also inspired me to create an online presence to document my trades and results. All my trades are tweeted out for free in real-time for those who are interested in following along. This year I have created a Facebook page.

      I have been burned so many times by so many gurus by following their trades and strategies. I hope that more people will discover our strategies so they can see how a conservative approach to trading is better in the long run. We are the tortoise. While it seems like we are going slower than the hare, we will eventually win the race. Trading iron condor is a strategy where patience and consistency are valuable virtues.

      Trading is about stamina and consistency, not about how many home runs you can hit. The more you try to swing for the fences, the more you will strike out, except in trading a strike out means wiping out your account.

      There always is a strategy that brings in more reward but always brings in more risk. Credit spreads never have favorable risk/reward ratios on paper. It is putting the odds in your favor that makes the trade more worthwhile. Put odds and probability on your side, do it consistently over the long run, and let profit come through the passage of time.