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BookingAlpha Option Trading Advisory

Saturday, June 11, 2016

Weekend Portfolio Analysis (June 11, 2016)

Interesting week where an overbought condition was briefly reached but I couldn't get my trades filled, as reflected on the following tweets.

I left my order open, went to the gym and never got my fill. The market retraced a bit by noon, and by the time it came back up, one of my indicators was not in overbought condition.

Eventually all the starts were aligned again and so I tried the following with no luck:
It was one of the rare instances where an overbought extreme was reflected just for a few minutes, never again to be seen. In recent memory, perhaps the last 2-3 years, overbought conditions have persisted for much longer, so there has never been any rush to enter Credit Call spread positions. Well, it seems this week was the exception. I was not willing to chase the price down and once the market started to retrace and abandon the extreme greed zone, I just forgot about the idea of the CCS play. No need to force anything. We tried, we didn't get our fills, conditions are not favorable now, we move on.

Recent Trading Activity

- Nothing. Just working my butt off while watching super traders get busted by regulators.
It's been a while since my last trade by the way, which usually means my positions are in great shape and some good profits are therefore coming my way soon. It's called the Lazy Mantra.

Market Conditions
(Click on image to enlarge)
Stochastics: 70 (neutral)
McClellan: -42 (neutral)
Stocks above their 20 DMA: 61% (neutral)

No man's land.
The environment for an Iron Condor (unbalanced as Allah prescribed it). For example and August 1830/1835/2215/2220 doesn't seem like a bad idea. August expiration is still 68 days away and I have 3 different positions on. So, in my case I'll pass this time, until I get rid of some inventory first.

As usual, yellow lines on the chart depict my positions. And that pink one on the top right zone, that would be the position I tried to enter this week in the 2,230 region, regular August expiration. Looking at the chart, ....yeah, it looked like a tall order for this market as it got close to 3% above its own 50 day average. Too bad I never got filled.

Current Portfolio

July SPY Long 169 Puts
Portfolio Insurance.

August SPX 1750/1760 Credit Put spread
Looking good at just 6 deltas. My order to close it for 0.15 debit was never filled, but it's a GTC and I'll just leave it there.

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

June SPX 1875/1865 Credit Put Spread
This one will expire this upcoming Friday. It will be a sweet +$1,200 gain.

July SPX 1890/1900/2175/2185 unbalanced Iron Condor
5 weeks to expiration now and time decay really starting to accelerate. 8 deltas on the Put side, 11 deltas on the Call side, so not too bad. Comfortable to ride at the moment.

Action Plan for the Week

- Close the August 1760/1750 Credit Put Spread for 0.15 debit on a strong market rally. GTC Order already in place.

- If we reach an overbought condition again, sell the SPX 2225/2230 or 2230/2240 Credit Call spread for 0.50 credit or 1.00 credit respectively. Regular August expiration. SPX needs to go back up to 2,120 for this.

- If the market reaches an oversold condition (perhaps 2% - 3% lower from here), I'll consider selling a Credit Put Spread. Yes, I have 3 already on, but one of them (June) will be expiring this Friday and it is looking very safe. Let's say RUT falls 3% and we reach an overly pessimistic extreme reading. In this case, it should be possible to sell a 10-point wide, regular July expiration RUT Credit Put spread below 1,000 for 0.60 credit or better. That would be my play.

- If the market moves sideways, I won't enter new positions.

- Adjustment points for the July 1890/1900/2175/2185 Iron Condor this week are:
1,975 for the Put side  (new spread would be in the 1,700's)
2,140 for the Call side (new spread would be around 2,220)

These adjustment points (1,975 & 2,140) will vary on a weekly basis, generally getting wider and wider.

Economic Calendar

Sunday: China's Industrial Production
Tuesday: US Retail Sales
Wednesday: US PPI,  Crude Oil Inventories, FOMC
Thursday: Core CPI, Philly Fed Index
Friday: US Building Permits & Housing Starts

Options Trading results: Up +0.89% YTD vs S&P up +2.55%. Portfolio 60% invested, 40% cash.
Forex Trading results: Down 0.01% for the year. No position at the moment.

Have a nice week folks!

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