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Saturday, July 18, 2015

Weekend Portfolio Analysis (July 18, 2015)

The S&P500 went from 2080.03 to 2126.64 for a 2.24% gain. Very strong week. I didn't trade, as anticipated in my previous analysis and just kept baby-sitting my positions. July expiration is in the books and the SPX 1935/1940/2220/2225 unbalanced Iron Condor finally expired, improving the performance of the portfolio to +15.90% YTD. Five more months ahead folks. I'm really excited about the rest of the year. I will try my best to close the year up +30% and have my first full year without a draw-down, but we all know things in the markets cannot be forced. I will continue to open my trades and manage them as usual without forcing anything for the sake of an arbitrary number in the end. We'll see how the rest of the year unfolds.

Market Conditions
(Click on image to enlarge)
Stochastics: 96 (overbought)
McClellan: +85 (neutral)
Number of Stocks above their 20 Day Moving Average: 49% (neutral)

The bullish divergence mentioned last weekend played out beautifully. The market was strong this week perhaps going a little too far too fast. We are not overbought here, but we got close to an overbought extreme during Thursday's session, except for the number of stocks above their 20 DMA which keeps hovering around the 50% mark. The VIX went down precipitously in one of the fastest declines I've seen, closing the week at only 11.95. Selling options now is unattractive, so play it light and be careful out there. No man's land and good room for both up and downward moves, although we're close to all-time highs again and if the next move is up it should be in slow motion.

August positions
RUT 1150/1160/1350/1360 unbalanced Iron Condor
90% probability of success with 5 weeks to expiration. Starting to look great. With RUT at 1267 I'm sleeping like a baby with this position.

SPX 1815/1825 Credit Put spread
ThinkOrSwim says, this is funny, that I have a 100.00% probability of success in this position. Enough said.

Action Plan for the week
Both August positions look very comfortable at the moment. The RUT iron condor will need adjustments if RUT hits 1330 or falls down to 1205. With RUT currently priced at 1267 those moves are very unlikely for just a week of price action as they represent a 5% rally or 5% sell off. And as for the SPX 1815/1825 Credit Put spread, there really is no concern here as the market would have to correct more than 10% in a week.

By Friday we will be exactly 8 weeks away from September expiration so I will start considering new positions throughout the week. My candidate right now is the September RUT 1120/1130/1340/1350 unbalanced Iron Condor trying to obtain 0.60 credit on the Puts and 1.00 or better on the Calls. I'm also considering an SPX 1920/1925/2215/2220 unbalanced Iron Condor. Only one of these two positions will be played, not both. I will probably end up doing something slightly different as the markets will have moved by the time I pull the trigger, but this is roughly the plan to start attacking the September cycle.

The Euro had a few consecutive sessions of weakness closing the week at 1.0827 and it is now breaking support.

The LT Trend Sniper robot will go short Euro tomorrow (Sunday, July 18) betting on a continuation of this sell off. There is some decent room until the next major support in the low 1.05's, so this could be a nice trade. This will be the fourth trade of the year for the Sniper which is up +15.89% in 2015. Although, as a reminder, I'm playing with very conservative settings that project a long term +9% average annual return with max draw-down below 10%. Meaning that 2015 has been a positive nice surprise above my expectations.

Economic Calendar
Wednesday: US Existing Home Sales and Crude Oil Inventories.
Thursday: China's Manufacturing PMI
Friday: Germany's PMI and US New Home Sales

Good luck this week folks!

Check out 2015 Track record

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  1. Henrik, you are doing great this year! What is amazing is that you have achieved such a fantastic return with so few trades. The lazy method really does work!!! With regards to your short Euro trade, how will you set the trade up? Do you use options, futures, or just sell the currency in an FX account? I am thinking about going short Euro as well, but am not set up for FX, so I will probably trade it using futures or futures options.

    1. Thanks for the kind words Aram. The Lazy Mantra is a whole way of life based on low stress, low commissions and acceptable returns. As for the short EUR trade I do it on the spot Forex with an FX account with OANDA. So, I'm playing the currency directly instead of via derivatives.

  2. Nice work Henrik. This is the only website I recommend for people to learn how to trade credit spreads. You are very transparent, honest and professional in all my years of interacting with you.

    What happen last week:

    On Wednesday I closed SPX Aug 31st 1750/1725 cps for $0.25 debit. I opened this position on Apr 14th for $1.65 credit.

    Also on Wednesday, I sold SPX Nov 30th 1750/1725 & 2275/2300 iron condor for $3.30 credit.

    On Thursday I closed IWM Aug 21st 105/103 cps for $0.02 debit. I opened this position on Apr 27th for $0.13 credit.

    Current positions:

    RUT September 30th 1000/990 & 1380/1390 iron condor - currently profitable

    RUT September 30th 1050/1040 cps - currently profitable

    SPX September 30th 1725/1700 cps - currently profitable; will close for $0.25 debit

    SPX September 30th 1800/1790 cps - currently profitable

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

    SPX November 30th 1750/1725 & 2275/2300 iron condor - ccs position shows a tiny loss

    1. Thanks Jonathan. Your opinion means a lot because you have been studying and trading credit spreads and Iron Condors for several years now and from many different sources. You truly know your stuff. So, I'm glad you have this opinion about the work I do here on the site. I must also say thank you for our communication all these years. I have learned a lot from you and all the information you have freely shared with me.

      And as for your positions, they all look very safe to me, you must be sleeping like a baby these days.


  3. Last week:
    On Monday, I opened a new position in SPX with September expiration. SPX (2100) was in the middle of Bollinger Bands and the most recent price swing (2045;2130). I sold a slightly unbalanced iron condor: 6x SPX Sep 1850/1870 cps @1.25 + 5x SPX Sep 2210/2230 ccs @1.35; received total credit $1425.

    Open positions:
    5x SPX Aug 1830/1850 cps + 4x SPX Aug 2200/2220 ccs + 1x SPX Aug 2180/2200 dcs
    5x RUT Aug 1140/1160/1360/1380 ics + 1x RUT Aug 1160/1190 dps
    6x SPX Sep 1850/1870 cps + 5x SPX Sep 2210/2230 ccs

    Next week:
    Both August positions are close to my profit target and they no longer make enough money through theta decay worth keep them open. I will close them next week.
    I am planning to open a new position in RUT with September expiration to replace the August positions. With Friday close, I am thinking about a balanced iron condor: 6x RUT Sep 1120/1140/1350/1370 ics for 2.75.
    I will watch the September SPX credit spreads where the adjustment points are around 2000 and 2140.

    Good trading,