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BookingAlpha Option Trading Advisory

Saturday, October 3, 2015

Weekend Portfolio Analysis (October 3, 2015)

Friday was a phenomenal day. The S&P moved up +3% measured from the low of the day. At that rate the index will more than double in just the next 24 trading sessions. Do you think that will happen?

So, what follows after this?
Obviously a horde of "analysts" turning bullish little by little, hoping everyone forgets they were bearish just a week ago. Same story over and over again in this joke of an industry folks. Nothing new. Respect price action, and if the entire world expects something, then do the opposite. It usually works. Be aware that it is uncomfortable as hell though. Trading well hurts.

So anyways, Mr. Market now down 5.22% for the year and legions of investors using their underwear backwards across the globe.

Market conditions
(Click on image to enlarge)
Stochastics: 67 (neutral)
McClellan: +70 (neutral)
Number of stocks above their 20 Day Moving Average: 36% (neutral)

Back to a neutral stage. You know the drill. No individual credit spread at this point.
It is a good opportunity for Iron Condors though. Neutral stage combined with an elevated VIX still above 20. Unfortunately I already have 3 positions on and won't add, but for the uninitiated there are a couple interesting candidates promising to keep your virginity intact. For example the December SPX 1630/1640/2110/2120 Iron Condor for 1.70 credit or better. Also November RUT 970/980/1210/1220 looks very interesting for 1.60 credit (trying to get 0.80 from each side). Of course this is if you are not part of the group who believes the market will double in 24 sessions.

October positions
SPX 1700/1710/2195/2200 unbalanced Iron Condor
I practically forgot this position even existed. But yes, it is still there. Very, very comfortable. Should expire for max profit in two weeks without hassle.

October RUT 980/970 Credit Put Spread
We briefly reached a short term pessimistic extreme this week and I took advantage of it by selling a comfortable RUT 970/980 Credit Put spread with just two weeks of life left. With the market rebound that ensued, this position looks very comfortable to ride now with a greater than 95% probability of success. Should be an easy, quick win when all is said and done. My goal is to take it all the way to expiration.

November positions
SPX 1630/1640/2100/2110 Iron Condor
Very healthy, very safe. No concerns. Looking great now with an 83% probability of success and seven weeks left. All is good for now.

Action Plan for the week
None of the existing positions are likely to be threatened as they are all comfortably far from current market prices.

With 3 positions already working I tend to get shy. Right now I have 3 credit Put spreads and 2 Credit Call spreads in total. I can still add one more Call spread without consuming portfolio margin. But I need a good market rally for that. Up 4% or so this week on the Russell would get me interested but that's an unlikely number for just a week of market action.

Other than that, either sideways or down, or even slightly up and I won't do anything. It will be another heavenly boring week for your pal LT.

Economic Calendar
A very light week ahead on the news front
Monday: Services PMI, ISM Non Manufacturing PMI
Wednesday: US Crude Oil Inventories

Good luck this week my friends!

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