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Saturday, March 7, 2015

Weekend Portfolio Analysis (March 7, 2015)

We started the week at SPX 2105.23 and closed it at 2071.26. The index is now up only 0.60% year to date, which makes most traders in the universe negative for the year. I continue to be pretty passive with my options plays and didn't do anything as anticipated in the previous portfolio analysis.

Market conditions
Horizontal yellow lines represent the boundaries of the March and April Iron Condors. Those are the points I don't want the market to reach.
(Click on image to enlarge)
Stochastics: 28 (neutral)
McClellan: -152 (oversold)
Stocks above their 20 Day Moving Average: 40% (neutral)

We're quickly reaching a short term oversold condition. Every time this happens you will be afraid. Every single time you will think it is different and the market crash is truly coming. Just remember that selling Puts is much better than selling Calls. You can go so much farther out. Be a little brave. True market crashes will only take place 2 or 3 times in your lifetime although you fear them every single day. I'm not selling Puts just yet. But if the market reaches an extreme this week I won't hesitate. That may happen with SPX around 2030-2040.

March positions
SPX 1845/1850/2170/2175 unbalanced Iron Condor
2 weeks to expiration and 94% probability of success. This fight seems to be won. No concerns.

April positions
SPX 1855/1860/2200/2205 unbalanced Iron Condor
6 weeks to expiration and 85% probability of success. Looking great. No concerns.

Action plan for the week
Existing positions will not need an adjustment this week.

I'm willing to sell March SPX 1945/1950 Credit Put spread for 0.30 credit or March RUT 1130/1140 Credit Put spread for 0.60 or better. There is always a chance that I'll chicken out with those strike prices in which case I will use April options. That will allow me to sell much farther out.

I believe we need a 1.5% - 2% fall from current levels to reach the oversold extreme I'm looking for. If the market trades sideways or goes up, I'll sit on my hands. I'm fine holding my two Iron Condors.

The short EURUSD position initiated on February 27 at 1.11972 made more progress this week. We are now seeing prices that hadn't been seen since 2003 and with the elephant bar of Friday it is hard to think that there isn't more downside left. The green line below represents the entry level of the LT Trend Sniper robot. Red line is the stop loss.

(Click on image to enlarge)
If price breaks support at 1.08, the next support area is around 1.0680, then 1.05 and after that it will be off to the races with the next support level below the 1.0000 parity level. If it goes there, which is anyone's guess, this would be a monster trade.

As it is right now, the portfolio is up +6.22% with this second trade of the year and +17.85% year to date. Of course this second gain will only be materialized once the trade is finally closed.

(Click on image to enlarge)
For live progress updates of this position you can always visit

Economic Calendar
Sunday: Chinese CPI
Wednesday: Chinese Industrial Production.
Thursday: US Retail Sales
Friday: US PPI & Michigan Consumer Sentiment

Good luck this week folks!

Check out 2015 Track record

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


  1. I agreed with you that people get nervous when market is going down. They are reluctant to sell credit put spreads because they think the market is going to crash. This rarely happens in my opinion. These are the same people who will sell credit call spreads too quickly when the market is going up. It is better to do the opposite. Be quicker to sell cps but be slower to sell ccs. Market tends to go down harder but usually ends quickly. Market tends to go up slower but longer.

    My preference is to sell cps because you can get so much further away. Also if your cps position gets in trouble, it will be easier to adjust due to the increased VIX.

    What I did last week:

    On Monday March 2nd, I sold the June 30th SPX 1750/1725 & 2275/2300 iron condor for $2.90 credit.

    Plans for this week:

    If we have an oversold condition on SPX and/or RUT, I will sell May credit put spreads.

    Current Position:

    Both iron condors are currently profitable despite the ugly day on Friday.

    June 30th RUT 1000/990 & 1380/1390 iron condor
    June 30th SPX 1750/1725 & 2275/2300 iron condor

    You can follow me on Twitter @lienjonathan where I tweet my high probability credit spread trades in real-time for free. You can like my Facebook page and see all my open and closed trades and track record below.

  2. “We're quickly reaching a short term oversold condition. Every time this happens you will be afraid. Every single time you will think it is different and the market crash is truly coming. Just remember that selling Puts is much better than selling Calls.”

    I could not have said it clearer. I got same plan for the week , selling puts April expiry and if we get another big drop I will add May options as well.
    I added RUY puts April 1100/1110 completing IC
    My positions:
    March IC 1300/1310/980/970 @ 0.9
    April IC 1330/1340/1100/1000 @ 0.92

    Thanks Lazy Trader for all your educational feed


  3. Folks,

    I love this little group we have created over here. It's good to agree, based on experience and not on guts, ego or emotions. Profitable trading is uncomfortable, profitable trading is counter-intuitive. That's why it will always be mentally hard to execute.

    Here's to a good week in the markets.

  4. Last week
    I bought RUT Apr/May 1230 call calendar (40 days until April expiration; RVX in a lower part of its range).

    Open positions
    IC SPX Apr 1850/1870/2200/2220
    IC RUT Apr 1050/1070/1320/1340
    CAL RUT Apr/May 1230 call

    This week
    Both iron condors look healthy at the moment. I may need to adjust the calendar, if RUT goes under 1200.