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BookingAlpha Option Trading Advisory

Saturday, September 5, 2015

Weekend Portfolio Analysis (September 5, 2015)

♪♪ New York, concrete jungle where dreams are made of
There's nothin' you can't do
Now you're in New York
These streets will make you feel brand new
The lights will inspire you
Let's hear it for New York, New York,
New York ♪♪♪

Today I'm writing to you from the historic, majestic and ultra-expensive New York City. As for using a piece of that song here (Copyright material), don't worry. It'll all be OK. The unstoppable cash flow provided by this site allows me to buy the rights for that song or any other for that matter.

I truly hope nobody gets mad at me for posting a picture of New York here (somebody got mad last time when I posted a picture of Orlando, questioning why I was doing that if I wasn't from Orlando). Cruel logic that some humans live by. Man, some people are mean on the Interwebs.

But this is not American Idol! This is not The Voice! You certainly didn't come here looking for singing tips, or traveling adventures! So let's get down to it shall we?

Market Conditions
(Click on image to enlarge)
Stochastics: 57 (neutral)
McClellan: -0.6 (neutral)
Number of Stocks above their 20 Day Moving Average: 23% (oversold)

No man's land here, same as last week. I won't sell individual credit spreads on either side of the market here until conditions become more extreme. I mentioned that I wanted to sell a September Credit Call spread above 2130 if we saw 2040. Well unfortunately that didn't happen and it probably won't happen either this week. Important levels:

Support: 1820
Resistance: 1990, 2040, 2135.

The market is down 6.69% for the year and everybody you talk to seems to be bearish out there. I personally think a bottom is close. Low 1800's perhaps? So I'm trading accordingly and staying very far out with my positions.

September positions
RUT 900/910/1330/1340 unbalanced Iron Condor
The Russell Index is currently trading at 1136, far from my strike prices. I have a 26% cushion to the downside, and almost 15% room on the way up. Those are extremely good odds for a position that is expiring in barely two weeks. So, I'll ride it all the way.

SPX 1650/1675 credit Put spread
SPX is currently trading at 1921. I think this position in the 1600's is as safe as it gets. I will also take this one to expiration. The only way it fails is through another flash crash situation.

Assuming these two September positions expire without problems and that no new trades are made with September options, the cycle will end up with about a 6% draw-down. Not bad at all compared to a 12% market correction that took place in the blink of an eye. I happily digest a 6% portfolio draw-down in times like this. The portfolio is still out performing the SPX Index by 18%.

October positions
SPX 1700/1710/2195/2200 unbalanced Iron Condor
79% probability of success. The Put side is still the concerning piece of the puzzle. If we fall to around 1830 this week I will have to swallow and adjustment here. It is a 4.7% fall from current SPX price so I'm going to say that weekly 4.7% market declines are not common, but it is certainly a possibility in times like this one.

Action Plan for the week
My plan is to defend the 1700/1710 Put side of the October SPX Iron Condor if necessary. The adjustment would be down in the 1500's and that should be the end of the story.

Other than that I'm looking for a short term overbought condition to deploy a Credit Call spread. If it happens this week I will still use September options. That is a remote possibility though, looking at how far we are from 2040. It seems that I will have another week of inactivity in the end. But that's fine by me. My priority now is to Put the September cycle behind and play my best for the rest of the year.

Economic Calendar
Monday: North American markets closed
Tuesday: China's Exports and Imports, Trade Balance
Wednesday: Europe's GDP, China's CPI and PPI
Thursday: US Crude Oil Inventories
Friday: US PPI, Michigan Consumer Sentiment, Federal Budget Balance.

Good luck this week folks!

Check out 2015 Track Record

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  1. I hope you are enjoying NYC. Almost everyone thinks we are going to go lower in the short-term. That suits me just fine as I want to sell some more credit put spreads. If we do get a bounce and we become overbought, I want to sell some credit call spreads.

    Trades for the week:

    I sold SPX Dec 31st 1500/1475 cps for $1.70 credit

    Current Positions:

    RUT September 30th 1000/990 cps - currently profitable
    SPX October 30th 1650/1640 cps - showing a small loss
    SPX November 30th 1550/1525 cps - currently profitable
    SPX December 31st 1600/1575/2275/2300 iron condor - ccs is profitable but cps is showing a small loss
    SPX December 31st 1500/1475 cps - new position
    RUT September 30th 1070/1060 debit put spread
    SPX September 30th 1850/1840 debit put spread

    None of my open positions got into trouble last week. There was no opening or adjustment trade.

    9x SPX Oct 1580/1600 cps + 5x SPX Oct 2200/2220 ccs
    6x SPX Oct 1530/1550 cps
    9x RUT Oct 920/940 cps + 4x RUT Oct 1250/1270 ccs
    7x RUT Oct 910/930 cps

    I will watch the open credit speads. SPX credit speads will be OK with SPX between 1770 and 2130. RUT credit spreads will be safe with RUT between 1040 and 1180.

    Good trading,

  3. Hello lasds, hope you LT had a lovely time at NYC. I just returned for a long weekend by the beach in Andalucia, bit cold for this time of the year tho.

    I have not add any new trade to my portfolio, was looking to add Call Spreads on an overbought condition but did not happen.

    Ten days for my Sep15 trades come to an end;

    SPX PS Sep 1790/1800 @ 0.48
    SPX PS Sep 1745/1755 @ 0.55
    RUY PS Sep 990/1000 @ 0.65
    SPX PS Oct 1775/1785 @ 0.5
    RUY PS Dec 930/940 @ 0.80

  4. Folks,
    I always enjoy your position details and your comments. Keep'em coming!
    I think you're all good to navigate this week without major problems.