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Sunday, June 7, 2015

Weekend Portfolio Analysis (June 7, 2015)

The SPX index went from 2108.64 down to 2092.83 this week for a 0.75% loss. People have gotten so used to this bull market, that a mundane 2% fall from the recent swing high provokes panics and extreme pessimism in market participants very quickly. The SPX is now up only 1.65% year to date, almost half way through the year. I think it is clear by now, that this is not the super strong 2013 - 2014 market anymore. But, we're still in a long term uptrend, and as long as that continues to be the case, I will be adjusting my trading style accordingly.

Market conditions
(Click on image to enlarge)
Stochastics: 23 (neutral)
McClellan: -123 (neutral)
Number of Stocks above their 20 Day Moving Average: 48% (neutral)

We are at a neutral stage once again. Obviously closer to short term extreme pessimism, which we almost had this Friday. At this point, if you are not as metaphysical as I am, if you are more bohemian, selling Puts is acceptable, for example the 1930/1925 July SPX Bull Put spread with 10% probability of expiring in the money. Personally, I will wait for the extreme reading I always expect.

As for selling Calls. Erase that thought from your naughty and dirty mind. You could be creating an urban legend, a mystery that will amuse and inspire poets and philosophers of the future, who will try to unravel your behavior decades and centuries later wondering what the hell you were thinking.

June positions
RUT 1130/1140/1340/1350 unbalanced Iron Condor
2 weeks to expiration and 98% probability of success. This one will go all the way to expiration. No concerns.

July positions
SPX 1935/1940/2220/2225 unbalanced Iron Condor
Looking good 82% probability of success, 6 weeks to expiration. Theta decay starts to pick up from now on. I'm liking this position. SPX is sitting at 2092.83 so this position feels very comfortable.

Action plan for the week
Nothing to do to the existing positions. They are safe and won't need adjustments during the week.

As for new positions, it's becoming late for June options so if we reach an extreme, I will probably go with July options. Because I already have an SPX position in July, I would normally default to a RUT credit spread. We're closer to extreme pessimism than optimism, so selling out of the money Puts could be my play, but I need at least a 1% fall from here. Also, RUT doesn't look as oversold as SPX, so, even though I have a July SPX position, I may sell an SPX Credit Put spread as the index looks more attractive for Put selling than the RUT at the moment. With SPX falling to around 2070, I would gladly sell the 1900/1895 Credit Put spread for 0.30 credit or better.

Economic Calendar
Monday: China's CPI and PPI
Tuesday: Europe's GDP
Wednesday: US Crude Oil inventories
Thursday: China's Industrial Production. US Retail Sales
Friday: US PPI, Michigan Consumer Sentiment

Good luck this week folks!

Check out 2015 Track record

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  1. It was another boring and profitable week. I did not make any new trades last week. Unless we have an overbought or oversold signal on SPX or RUT, I am not planning to make any new trades next week. Here are the current positions:

    RUT July 17th 1050/1040 cps – currently profitable; looking to close in early June

    IWM August 21st 105/103 cps – currently profitable; looking to iron condor with credit call spread if IWM becomes overbought

    SPX August 31st 1750/1725 & 2275/2300 iron condor – currently profitable

    RUT September 30th 1000/990 & 1380/1390 iron condor - cps is profitable but ccs is showing tiny loss

    SPX September 30th 1725/1700 & 2275/2300 iron condor - currently profitable

  2. Last week:
    I didn't make any trades last week. None of my open positions hit the profit target. As for new positions, the market didn't get stretched either way and there is still some time left before I will start selling balanced iron condors with August expiration.

    Open positions:
    5x IC SPX July 1880/1900/2225/2245
    5x IC RUT July 1100/1120/1320/1340

    Next week:
    I will continue monitoring my open credit spreads in case I need to make an adjustment.

    Good trading,

  3. Last week I opened a trade on the Aug15 cycle, this time on the Call side. RUY is not in oversold or near as SPX could be.

    RUT June 19th 1050/1060 cps @ 0.35
    SPX July 17th 1850/1860 cps @ 0.70
    RUT July 17th 1010/20 cps @ 0.35
    RUT August 21st 1360/70 ccs @ 0.52

    I'm only thinking on adding a PS on the SPX on August cycle.