(Click on image to enlarge)
McClellan: -60 (neutral)
Stocks above their 20 Day Moving Average: 43% (neutral)
The short term oversold conditions were slightly relieved, however the market is still close to a short term extreme which could be achieved with a fall down to 2020-2030. McClellan is the one showing plenty of downside room, more so than the 43% of stocks above their 20 DMA. There are a couple of good things for those that sold Puts this week. First, there doesn't seem to be much panic out there, or else Friday's bar would have been an elephant bar (personal term I use to describe larger bars that are more than 90% body and close near their lows). Second, we have the FOMC minutes on Wednesday, and lately Mondays and Tuesdays have had a tendency to be slow (little activity) prior to a Federal Reserve meeting. This may provide some more time decay to finally be able to close any ill timed Credit Put spread. I tried to close mine for 0.05 debit on Friday morning but the market makers didn't want to bite,....and I didn't want to pay 0.10. Then the market started to fall and I simply couldn't close my spread.
SPX 1845/1850/2170/2175 unbalanced Iron Condor
Nice trade. Will expire worthless for max profit this week.
SPX 1965/1970 Credit Put Spread
Showing a 97% probability of success. There really is no reason to panic here, particularly early in the week. I would like to close it early for 0.05 debit, but if the market rallies early in the week, I'll have no issue going into the FOMC meeting with this position on and then I may hold it all the way through. We'll see. The position really is not looking bad and it will expire in a week.
SPX 1855/1860/2200/2205 unbalanced Iron Condor
5 weeks to expiration and 89% probability of success. This one's looking great like the wife I never had. No complaints.
Action plan for the week
The unbalanced Iron Condors will not need adjustments. The March one will expire for max profit.
I'd like to close SPX 1965/1970 Credit Put spread for 0.05 debit early in the week. If I see the market rallying hard on Monday or Tuesday, I won't do it and will hold to expiration. If this spread is a winner, alone with the March Iron Condor the performance of the portfolio will go up to +7.36% by the end of the week once those positions expire. If on the other hand the Credit Put spread needs an adjustment, which I believe is unlikely, I will end up the month of March flat, without a negative balance thanks to my strict risk management plan of never allowing price penetrate the short strike prices of my positions in order to contain the damages early. In this case, the YTD performance of the portfolio would remain around the same 4.16%. How do I know I would end the month flat? Well, the 1965/1970 put spread would need 1.10 debit to close when it reaches 30% probability of in the money. That'd be $440 in the model portfolio. But, I would deploy capital farther out for 0.30 credit (5 contracts per leg). As a result I would have obtained the following credits in the month $220 for unbalanced Iron Condor + $120 for the Credit Put spread + $150 for new hypothetically deployed Credit Put spread after the adjustment. That's a total of $490 credit received in the month for the model portfolio, against a $440 debit for defending my threatened credit put spread. So, it's all good.
Finally, on Friday we will be 8 weeks away from the May expiration cycle. Time to start looking at possible candidates. As things are looking right now I wouldn't go with an Iron Condor because the Call side would be dangerous. Right now the SPX 1805/1810 Credit Put spread for 0.30 credit looks like a decent proposition. But for some reason I have a feeling that come Friday things will be a lot different this time and I may end up doing something totally different. I would like an Iron Condor, but I need a little rally for that. I would also consider a RUT 1080/1090/1330/1340 Iron Condor or similar. But preferably with the Call side not below 1330.
Note: Hey, if you enjoy this style of Options Trading, you may also enjoy the insight of three other trading comrades that I have found over time on the cyber space and make my life less lonely:
Site: Create Monthly Income Fund
Clever trader. Conservative. Years of experience with Credit Spreads and Iron Condors. His trading is pretty much mechanical based on entry rules he has back-tested to 1990.
Site: Trade with Aram
Options premium seller. He is more active and doesn't limit his activity to only Indexes. He's kicking our butts with his performance so far this year. Good luck to him.
Site: Trade for a Living
We don't know why the hell he blogs about the markets in Spanish. But that's his right, what are you gonna do. As a native Spanish speaker I find his posts useful and also very entertaining. On Twitter, he combines both English and Spanish.
All these folks share their trades. They are relatively new in the blog-sphere and I don't want them to disappear. I have seen so many trading blogs vanish over time. Blogging is very discouraging at the beginning with little traffic, barely any comments on the articles etc. So, I want to do everything in my hands to motivate them.
The LT Trend Sniper continues to have a spectacular year in the back of a solid +22% in 2014. This time the second position of the year has not disappointed. The Sniper went short EURUSD on February 27 at 1.11972 and the Euro has already fallen below 1.0500 for almost 700 pips of profit.
(Click on image to enlarge)
(Click on image to enlarge)
For live progress updates of this position you can always visit
If you are interested in acquiring the LT Trend Sniper system, visit LT Trend Sniper - a forex strategy that works.
I've seen a lot of people on the Internet losing money against this trend or that of the Sterling Pound (GBPUSD) and complaining on Twitter. That didn't need to happen. People tend to over complicate things and it's pretty simple actually, which took me years to understand. On the spot Forex, there is no implied volatility edge, or time decay factor. All the money is made purely from market direction. So, you truly have to apply the old adage of cut losses and let winners run. Here's what you do, for all Fibonacci, Elliott Waves terrorists scalpers of the Euro out there. You simply stop trying to look too smart being a contrarian. You close all the 5 minute charts, the 15 minute charts and all that crap. You remove all the indicators, all of them and you open a chart on the daily timeframe, and you observe: "has price been going down in the last month?" then you short. "Is price going up?" then you buy. That's all! It really is that simple in Forex. Especially on the daily timeframe you have to be very unlucky to buy at the exact top or sell at the exact bottom, and if you do you send me an email at email@example.com and I'll send you a gift as a prize for your uniqueness. It will be an honor to meet such a unique individual. If you are looking for 10 - 20 pips profits, as most Forex retail traders out there seem to be, this basic, absurd approach will give you those 10 pips without problem.
Tuesday: European CPI, German Economic Sentiment, US Building Permits and Housing Starts
Wednesday: Chinese Industrial Production.
Thursday: Philly Fed Manufacturing Index
Good luck this week folks!
Check out 2015 Track record