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Sunday, March 13, 2016

Weekend Portfolio Analysis (March 13, 2016)

There are good days in the software developer's life (pay-day), and there are awfully terrible and stressful days (the rest of the time). Well, I'm in that "rest of the time" part right now. It's been an insane couple of weeks with a very tight deadline and infinite amounts of work. Your pal LT has been away from Twitter and has also been taking longer than usual to reply to emails and live a decent, normal human life. He is also working this entire weekend. It's called modern slavery. I thought it wouldn't be possible to write an article this time, but here me be. A quick one, just for my own relaxation purposes, for the sake of doing something different.

Recent Trading Activity

- Closed May31 SPX 1475/1500 Credit Put spread for a $1,240 gain on Friday

Market Conditions
(Click on image to enlarge)  
Stochastics: 82 (overbought) 
McClellan: +225 (overbought)
Stocks above their 20 DMA: 84% (overbought)  

A short-term overbought extreme. 
The index is higher than last week, yet all three statistics I follow have gone down. Not significantly, but they have gone down. A small incipient divergence. Last week I mentioned, that if this rebound was going to be like the previous one, then the end would be around 2,055 and it would be this week. Of course trying to predict future prices is a futile exercise, but somehow you just want to have a metric, a measure of how bad things can get for your positions. I've also drawn two descending lines on the chart that could act as resistance in the near future: one connecting the November 3 high with the December 29 high, and it points to a high of 2,037 this week. The second descending resistance line joins the same November 3 high with the December 1 high. This one points to a 2,060 - 2,065 high for the week. As traders, the only thing we can control is our risk, not future prices, but it is good to be prepared for what may be coming. 

We have triple-witching this week and also the Fed meeting, so I'm not exactly expecting an immediate decline. More of a sideways to slightly up week. The number of stocks above their 200 DMA is still a historically low 39%. So, although my believe is, we won't sky rocket from these levels, it is also a good idea to be conservative with those short Calls at the moment.

Current Portfolio

March IWM 112/112/120 Synthetic Stock Hedged
Will be closed this week for a loss. Didn't work. Time to move on. Small bet anyways.

May31 SPX 2125/2150 Credit Call Spread
Taking some heat with those 18 deltas at the moment. Adjustment point is now around 2,060. I think it won't happen, but if it does, I will deploy a 2200/2225 with full position size to compensate for the loss. Good thing this is an unbalanced Iron Condor.

June30 SPX 1500/1525/2150/2175 Unbalanced Iron Condor
4 deltas on the Put side at the moment and 18 on the Calls. Adjustment point for the week estimated at around 2,070. I believe we won't see this number, but if we do, I will deploy a new 2225/2250 using full size. Glad this is also an unbalanced Iron Condor.

Action Plan for the Week
- Close the IWM Synthetic stock hedged position for a loss.

- Adjust May and June unbalanced Iron Condors if SPX reaches 2,060 and 2,070 respectively.

- Close the Put side of the June Iron Condor for 0.40 debit or better given the opportunity.

- If the market declines by 50 points or so, consider closing the Call side of the May Iron Condor for break-even or just slightly better than that.

- Consider buying cheap portfolio insurance for future Credit Put spread positions. July 165 strike SPY Puts for example.

- Initiate the first July position on Friday. The way things are looking right now, it would be a 2225/2250 Credit Call spread. On a small decline, it would be a 1575/1600/2200/2225 unbalanced Iron Condor. These numbers may slightly change depending on market moves throughout the week.

Economic Calendar
Tuesday: US Retail Sales
Wednesday: Building Permits, Core CPI, Crude Oil Inventories, FOMC meeting at 2pm (ET), Yellen speaks at 2:30pm (ET)
Thursday: Europe CPI, US Philly Fed
Friday: a couple of FOMC members will speak.

Options Trading results - With closed positions and trading costs included, we are down 1.05% for 2016 while the market is down 1.06%. The portfolio is currently 29% at risk, 71% in cash.

Forex Trading results - Up +4.36% for the year. Long Gold at the moment.

Take it easy, but take it anyways!

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Check out 2016 Track Record

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