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Saturday, April 18, 2015

Weekend Portfolio Analysis (April 18, 2015)

Good morning folks!
It's going to be a busy weekend between finding a place to rent and buying a car. I said to myself, if you don't write that article right now, you may not have a chance. So, here I am, getting it out, squeezing my neurons to the beat of Guns N' Roses in the background while I endlessly hit my keyboard. Let's get started.

April expiration is in the books my friends. It was a quiet cycle for me with only one trade: the SPX 1855/1860/2200/2205 unbalanced Iron Condor. That kid expired for max profit and the performance for the portfolio was +2.05% before commissions, +1.94% net after trading costs. Not spectacular, but decent. Not awesome, just nice. Better than nothing. The portfolio is now up +9.44% year to date. I have only made 5 trades in 2015 and I'm-not-mad-about-that. This is life! I'm on pace to a +28.32% annualized return and only 15 trades for the year. That would be my definition of paradise.

Market conditions
The SPX went from 2102.03 to 2081.18 for a 1% decline. The index is now up +1.08% year to date.

(Click on image to enlarge)
Stochastics: 64 (neutral)
McClellan: -64 (neutral)
Stocks above their 20 Day Moving Average:  46% (neutral)

No man's land again and we're still in the middle of the long term uptrend channel. This consistent "no man's landliness" has been the responsible for my passivity this year. This is why I have played so few positions. Again, no individual credit spreads under these circumstances.

May positions
RUT 1100/1110/1330/1340 unbalanced Iron Condor
4 weeks to expiration, 91% probability of success. Starting to look really good. No sweat.
These is the only position in the portfolio, and it is very healthy. Trading stress levels back to almost all time lows.

Action plan for the week
The market had been struggling to reach an overbought condition and never really made it. Now we'll have to see if a short term oversold extreme is reached. If SPX falls about 2% during the week, I feel the indicators I follow will be lined up telling me it is time to sell Puts. So, SPX between 2030-2040 will get me interested. If it happens, I will be selling SPX Puts around 1900-1920. I will use May options for that.

By Friday we will be 8 weeks away from June expiration and I will start considering possible candidates. Right now, in this no man's land condition I am considering a 1090/1100/1330/1340 RUT Iron Condor. Now, I'm not too comfortable selling that 1330 Call in June and for that reason I would play it unbalanced. Half the size on the Calls. Of course prices will move from what I am seeing today and by Friday I may end up doing something totally different. In my ideal world we correct 2% early in the week so that I can comfortably sell SPX May Puts. Then we strongly rebound so that by Friday I can comfortably sell a RUT Iron Condor with a Call side hopefully above 1330. Time will tell.

Economic Calendar
Sunday: China's Trade Balance
Tuesday: German Economic Sentiment.
Wednesday: US Existing Home Sales. Crude Oil Inventories. China's Manufacturing PMI.
Thursday: German Manufacturing PMI, US New Home Sales
Friday: German Business Climate Index, US Durable and Core Durable Goods.

À bientôt!

Check out 2015 Track record

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  1. It has been too easy lately. I am getting a bit nervous that the market will pull the rug from under us soon. In the meantime, let's enjoy this ideal market environment for us conservative spread traders. If last Friday was the beginning of a bigger correction, I will sell credit put spreads on SPX if it goes below 2050 and RUT goes below 1225. I am interested in selling July SPX 1750/1740 cps and June RUT 1050/1040 cps.

    What I did last week:

    Last Tuesday (April 14th), I sold August 31st SPX 1750/1725 & 2275/2300 iron condor for $3.15 credit. I sold this iron condor because we are in no man's land. I like the strikes and think it will be safe. I hope to exit this iron condor in 2 or 3 months.

    My plan for next week:

    If we get an oversold signal, I will be selling some June or July credit put spreads

    Current position:

    SPX May 31st 1775/1765 cps - I hope to close this position next week
    RUT June 30th 1000/990 & 1380/1390 iron condor - I hope to close this iron condor in May
    SPX June 30th 1750/1725 cps - I hope to close this position by the end of the month
    SPX August 31st 1750/1725 & 2275/2300 iron condor

    1. Jonathan like your SPX August 31st 1750/1725 & 2275/2300 iron condor hope you can close it as you did on the June 30th SPX 2275/2300 ccs

  2. Last week:
    IC SPX May 1860/1880/2190/2210 hit my profit target. The position was closed for profit +$781 (+11.3% on $6940 margin).
    IC RUT May 1070/1090/1330/1350 also reached my profit target. I closed the position for profit +$745 (+10.6% on $7000 margin).

    Open positions:

    Next week:
    I would like to open two new positions in June expiration cycle next week (one on Monday in RUT and the other on Thursday/Friday in SPX to diversify across instruments and time). With the last Friday down day, the price of RUT is now back in the price range of last couple of weeks and is sitting near the center of Bollinger Bands. The Friday selloff also helped to pump up the option volatiliy (RVX) so we could get a better price for our credit spreads on Monday. Unless the price of RUT gaps up or down on Monday morning, I will be interested in selling IC RUT June 1090/1110/1340/1360 which was trading at around 2.80 on Friday.

  3. Hello chaps
    My March cycle ended up with adding 2.333% to my portfolio before costs. So 5.16% YTD.
    On May only have a PS SPX 1840/1850 @ 0.7
    Looking to add an IC on the June cycle either SPX or RUY if I see grab a good oportunity in the wek.

    1. Keep up the good work Bellini Markets!

  4. Folks,
    Thank you all for dropping by and leaving your views and positions. I was extremely busy this weekend and couldn't individually reply to each one of you.
    Thanks again for sharing your valuable feedback.
    Talk to you soon.