The fact that the S&P closed the week barely unchanged is not the issue, after all it could have done it with huge swings both ways. The issue is that it oscillated between 2120 and 2134 all week. Unbelievable. But, as I have said before: "Embrace boredom". As an options seller, it is not so good to open trades when the markets are boring, right before the storm. You would rather open your positions in tumultuous times. But, once your positions have been established, boredom in the markets is the best thing that can happen to you, so you fully burn all that Theta while you sleep well at night and happily dream about little angels.
(Click on image to enlarge)
McClellan: -28 (neutral)
Number of stocks above their 20 Day Moving Average: 53%
Price is far from the boundaries of the long term up trend channel. The VIX is sitting at just 12.13. Selling individual credit spreads right now does not offer a good risk/reward potential. For example the June 2185/2190 Credit Call spread has 10% probability of expiring in the money. 2185 might look far to you, but it is only about 3% away, plus, if you adjust your positions early, as I do, then you would be adjusting this one at around SPX 2160 - 2165. Is that reachable for this market? Hell yes. That's less than 2% above current price. It could even be reached in a single session, especially in a market with room to move. If you go beyond 2185/2190 the credits are just too small, and it just stops making sense. In the case of Credit Put spreads, the problem is that with a small market fall of barely 2% - 3%, you could quickly be threatened with a 30% probability of being in the money in your positions. (Wah-wah-wwaah!! selling options sucks!! you liar! you have gotten me into this stupid business of selling options where I don't get to have fun on a daily basis and brag about my victories in front of my friends).
RUT 1130/1140/1340/1350 unbalanced Iron Condor
4 weeks to expiration. 92.80% probability of success....sigh....a very desirable woman.
SPX 1935/1940/2220/2225 unbalanced Iron Condor
79% probability of success with 8 weeks to expiration. This was the position that I started on Tuesday, just 4 days ago. Lots of baby-sitting ahead, no dangers in the horizon for now.
Action plan for the week
I'm still in offensive mode and my candidates, should the market reach a short term extreme, are still June options. I'd go with SPX preferably. I would love to sell the June 2230/2235 for 0.50 credit or better, but for that I need the index to hit 2180 and that looks unlikely for just a week.
On the Put side, I would love to sell the June 1925/1920 Credit Put spread for 0.30 credit or better. For that I need SPX to go down to about 2060. That could happen in a week, but with the small ranges we are seeing, it also looks unlikely.
Like I said on Twitter the other day, the markets have a tendency to be slow during the summer. Trading volumes go down and prices tend to move a lot less compared to other seasons of the year. It's not the summer yet, but we're getting closer and closer. So, there is a good chance that I will continue making just one trade per cycle, quite possibly Iron Condors only. I'm really hoping I get opportunities to make 2 or 3 trades per cycle, like in the old days, but I won't force myself into bad trades.
The LT Trend Sniper suffered its first loss of the year. Betting on a break out to the upside it went long the Euro on Sunday. It was a pretty bad trade I have to say as the position never got to be in profit. It hit stop loss 48 hours after the entry.
+13.45%. There should be 2 or 3 more trades left in the year.
Tuesday: Core Durable Goods Orders, Consumer Confidence, New Home Sales
Wednesday: Pending Home Sales, Crude Oil Inventories
Friday: China's Manufacturing and Non-Manufacturing PMI
Good luck this week my friends!
Check out 2015 Track record