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BookingAlpha Option Trading Advisory

Saturday, May 21, 2016

Weekend Portfolio Analysis (May 21, 2016)

The S&P was up a little this week, putting an end to the streak of three consecutive weeks lower. The index is now up 0.41% for the year.

In order to make better trades, let's now deeply analyze what the Fed plans to do in 2016 and how their actions will impact the markets. Let's not stop there, let's analyze how the Chinese Economy will behave, and also how the Saudi's will save the Oil markets going forward...............

I truly expect you knew deep inside I was absolutely not going to get into any of that nonsensical gibberish.

Market Conditions
(Click on image to enlarge)
Stochastics: 32 (neutral)
McClellan: -93 (neutral)
Stocks above their 20 DMA: 40% (neutral)

No man's land. With the VIX above 15 it is a decent environment for Iron Condors.
Yellow lines, as usual, representing my positions: where I don't want the market to go.

I'm not as bearish anymore as I was last month. With the recent extreme oversold condition briefly reached on Thursday, my bias automatically changes. Back to no man's land, I'd just go with an Iron Condor, unbalanced of course, as Allah prescribes it. I have no position in the July cycle and may attack there.

Current Portfolio

July SPY Long 169 Puts
Portfolio Insurance.

August SPX 1750/1760 Credit Put spread
The remainder of the August Unbalanced Iron Condor. Currently 9 deltas. No concerns for now.

September 1825/1800 Debit Put Spread + 1625/1600 Credit Put Spread
Portfolio Insurance

June 1875/1865 Credit Put Spread
Less than 4 weeks to expiration and only 5 deltas. Looking very healthy.

Action Plan for the Week

- I'm willing to close the August CPS for 0.15 debit on a market rally. It would have to be a strong rally for that 0.15 debit to be possible. So, that's the plan, but I'm aware it is unlikely to become reality in the next few days.

- I'd like to initiate an SPX July Iron Condor given that I don't have any capital deployed in that cycle. Not too concerned on the downside, selling 1850 is fine by me, but as for the upside I would like to at least be able to sell 2175. I need about a 10 point rally for that. We'll see. In any case, it will be an Unbalanced Iron Condor. 3:2 ratio if the market rallies a bit before I open the position, otherwise just a 2:1 Puts to Calls ratio.

- If the market decides to fall, but seriously fall, I mean 50 points or more, I would be delighted to sell a 10 point wide July Credit Put spread in the high 1,700's for 1.00 Credit or better. In that case, I would forget about the Condor play.

Economic Calendar

Monday: US Manufacturing PMI
Tuesday: Europe's GDP, Services PMI, Manufacturing PMI. US New Home Sales
Wednesday: US Crude Oil Inventories
Thursday: Core Durable Goods, Pending Home Sales
Friday: US GDP

Options Trading results: Up +0.89% YTD vs S&P up +0.41%. Portfolio 43% invested, 57% cash.
Forex Trading results: Down 0.01% for the year. No position at the moment.

Good luck this week my friends!

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