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Saturday, June 18, 2016

Weekend Portfolio Analysis (June 18, 2016)

Interesting how volatility went up by more than 30%, in really, just 2 or 3 days where the S&P Index didn't even lose 3% of its value. Perhaps concerns over the 'Brexit' vote? People need to take it easy and watch 'Keeping up with the Kardashians' more frequently. More on Brexit later.

The index moved from 2091.75 down to 2071.22 for a small 0.98% loss. Year to Date, the market is now up +1.33% and it is trading at the same levels of November 2014. Cruel, despicable world.

Recent Trading Activity

- June SPX 1875/1865 Credit Put Spread expired on Friday. $1,200 profit.

Market Conditions
(Click on image to enlarge)
Stochastics: 27 (neutral)
McClellan: -87 (neutral)
Stocks above their 20 DMA: 40% (neutral)

No man's land. 1.5% or so away from a short term oversold condition.
Typical environment for unbalanced Iron Condors in my system. But, no rush. My plan is to initiate one by the very end of the week as opposed to early in the week. An oversold condition is clearly closer than an overbought one. So, if it is reached, I will attack via just a Credit Put spread, preferably RUT at this point.

This past week the market almost, I mean almost, hit an oversold condition according to my rules. So, I almost, almost sold a Credit Put spread. I kept waiting Thursday and Friday to no avail. So, if you think I skipped signal, I didn't. It just wasn't meant to be and didn't totally materialize. I had a RUT July 1000/990 Credit Put spread lined up for 0.60 in anticipation of the moment. It never even reached 0.55.

Current Portfolio

July SPY Long 169 Puts
Portfolio Insurance.

August SPX 1750/1760 Credit Put spread
Looking good at just 7 deltas. GTC Order in place to close for 0.15 debit.

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

July SPX 1890/1900/2175/2185 unbalanced Iron Condor
4 weeks to expiration. 10 deltas on the Put side, 4 deltas on the Call side. Not bad. Easy to keep riding.

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 rally hard before Friday, reaching an overbought condition, I will try to sell a RUT July Credit Call spread. 10-point wide at or above 1,250, for 1.00 credit or close.

- If we reach the overbought condition, not before Friday, but exactly on Friday, then I will try to sell an SPX August Credit Call spread at or above 2,225.

- If on Friday the market is in no man's land, I will try an August SPX Unbalanced Iron Condor. Hopefully 1840/1850/2210/2220 or something similar. It will vary depending on market moves until that day.

- On an oversold condition scenario, I will sell a RUT July Credit Put spread if this condition takes place before Friday. I'd like to be able to sell 1000/990 for 0.60 credit or better. If the oversold condition takes place exactly on Friday and not before, I will then sell August RUT 950/940 or 940/930. Again depends on how far the market has gone on the way down and how much fear (VIX) has increased.

- Adjustment points for the existing 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 2,210)

- Adjustment point for the existing August SPX 1750/1760 is around 1,860 this week. New spread would be deployed in the mid to low 1700's, August expiration cycle.

This week is the 'Brexit' vote. Big deal for many, it seems. My personal take on it and its repercussions for traders? Irrelevant,  but you come here for a reason. So, here it goes.

I think there is potential for a good move that day, nothing too crazy, just potential for a decent 2% move. Potential. However, I absolutely think, in the long run, Brexit is irrelevant for the American Markets and traders are spending way too much energy on it. By the end of the year, NOBODY will say "Jeezzz look at that, the markets were down for the year due to those goddamn Britons." Won't happen. And in 3 to 5 years, nobody, nobody will say "man, those Britishers and their groundbreaking ideas plunged the capitalist system into a world depression". So, get over it. Another distraction in your trading, brought to you by the Financial Media in their constant mission to get more clicks. Currencies? maybe a different story. I think the relationship between the Euro and the Sterling Pound could suffer more lasting effects if Great Britain leaves the union, but, most readers come to this article for Options Trading in the American markets, not Forex Black Magic.

Speaking of Forex, the LT Trend Sniper system will buy spot Gold (XAUUSD) when the futures markets open on Sunday. I'm not a big fan of going long here given the recent rally, which I think is a little over-extended. But, the Sniper says so, and the Sniper is my Bible. Sorry, my Quran.

This will be the seventh position of the year (fourth position in Gold). Overall, the FX Portfolio is almost flat this year (down 0.01%) as no lasting long-term trend has developed. Let's see if we finally get one.

Economic Calendar

Wednesday: Existing Home Sales,  Crude Oil Inventories
Thursday: German PMI, US New Home Sales, BREXIT
Friday: US Core Durable Goods Orders.

Options Trading results: Up +2.05% YTD vs S&P up +1.33%. Portfolio 41% invested, 59% cash.
Forex Trading results: Down 0.01% for the year. Going long Spot Gold (XAUUSD) on Sunday open.

This was article number 600 on this site. My little milestone in this corner of the world. Thanks for your support and thanks for being part of the journey.

Have a nice week,

If you are interested in a responsible and sustainable way of trading options for consistent income with solid risk management, consider acquiring LTOptions, my options trading system to the last detail.

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