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BookingAlpha Option Trading Advisory

Saturday, November 28, 2015

Weekend Portfolio Analysis (November 28, 2015)

I had the enormous pleasure of not opening my trading platform at all during the entire week. Once or twice a day I would visit directly from my phone to see how the markets were moving and that would be enough. The markets barely moved at all so I spent the week focused on my Software Engineering gig, which was insane with a code release due this weekend. Yes, despite the immense and unstoppable cash flow generated by this site; despite the hefty fees you pay in order to have access to these articles; despite my efforts replying to emails and providing high quality sexual counseling to traders and investors; it is the IT job the one that pays the bills for your pal LT. So, I have to really optimize my time. Sometimes I wish the days had 28 or 30 hours instead of 24. Not opening my trading platform this week saved me a lot of time, and I don't remember the last time I spent so many days in a row without doing it.

Market Conditions
SPX from 2089.41 to 2090.11 for a 0.70 point gain or +0.03%. If you were constantly looking at your screen or if you spent the week constantly making trades following lunatics on StockTwits, yeah, you probably wasted your time and a lot of Dead Presidents in commissions. Such is life.

(Click on image to enlarge)
Stochastics: 88
McClellan: +83
Number of Stocks above their 20 DMA: 62%

No man's land. Good time only for long term Iron Condors. No credit spread selling here as there is plenty of room for the market to move in either direction in the short term.

December positions
SPX 1880/1885/2190/2195 Iron Condor
Looking good here with SPX at 2090. No threats at the moment. 89% probability of success.

RUT 1010/1015 Credit Put spread
This used to be an Iron Condor whose Call side I closed a few days ago for a small profit. The Put side, still in play, looks great here with RUT priced at 1202. No concerns.

January positions
SPX 1865/1875/2200/2210 unbalanced Iron Condor
7 weeks to expiration. 81% probability of success. Looking great with no threats on the horizon for now.

Action Plan for the Week
None of the existing positions will need to be defended. All my pre-determined adjustment points are very far away from current market prices. This is good. This is what a Credit spreads seller always wants.

As for new trades, RUT has been looking particularly strong in the last few days. Unlike SPX, it actually did move:
(Click on image to enlarge)
On a rally above 1220, we may reach a short term overbought extreme. Selling December Calls above 1250 or January Calls above 1280 will be an interesting proposition. Let's not forget we would be playing against strong seasonality in favor of upside moves so, we'll have to manage this very conservatively. Perhaps waiting for a rally past 1230 instead of 1220, or simply playing a smaller position size than usual so that if an adjustment becomes necessary we can play with full size then an overcome the adjustment's temporary loss. Just a thought. It is certainly not the most attractive opportunity in the world or anything. If you are uncomfortable taking it, just skip it. No big deal. RUT is still trading below its 200 DMA, so this beast can be unleashed at any moment. I would prefer to see it clearly above all major averaging before selling out of the money Calls.

The LT Trend Sniper robot is still short EUR/USD. The position, initiated 23 days ago, continued making progress this week as the currency pair fell bellow 1.06, closing the week at 1.0588

(Click on image to enlarge)
Entry price level in green, Stop Loss line in red 194 pips higher.
275 pips in profit at the moment which represents a +4.25% gain for the account with this position alone and a +13% return for the year as of today.

This hasn't been the clearest trend in the world. There's been a lot of back and forth but the weakness in the Euro is evident and the rules of the robot have kept him in.

Possible exits this week:
- Monday or Tuesday if the Euro closes above 1.0732
- Wednesday to Friday if the Euro closes above 1.0641

For more information on the Sniper, my trend following Forex robot, read LT Trend Sniper - A Forex strategy that works

Economic Calendar
Jobs numbers this week. Expect more activity in the markets.

Monday: China Manufacturing PMI, US Pending Home Sales and Chicago PMI
Tuesday: Europe PMI and Unemployment Rate. US PMI
Wednesday: ADP Non-Farm Employment change, Crude Oil Inventories
Thursday: ISM Non-Manufacturing PMI
Friday: Europe GDP. US Non-Farm Payrolls and Unemployment Rate

Good luck this week folks!


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