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BookingAlpha Option Trading Advisory

Saturday, September 24, 2016

Weekend Portfolio Analysis (September 24, 2016)

To my long term investments, the mantra is "why isn't every day 'Fed day'?". For the 43248th time, stocks rally on Fed day. So, yeah, markets are perfectly random (mischievous face). The markets closed the week up 5.91% for the year and we are almost done with the two worst historical months now (Aug, Sep).

Recent Trading Activity

- Closed Put side of October Lazy Elephant for a $342 gain on Thursday.

- Initiated November RUT Iron Condor position on Friday.

Market Conditions 

(Click on image to enlarge)
Stochastics: 88 (overbought)
McClellan: 41 (neutral)
Stocks above their 20 DMA: 58% (neutral)

No man's land.

The uptrend wedge is still in play, which can be seen as an uptrend channel if you ignore the Brexit Shenanigans. Regardless, both patterns point to a 2180-2270 range by November expiration, which, of course, as good gamblers we don't want. We always want it to crash and burn. Just to look, you know, less idiotic about our life choices. Although I personally think, the elections will keep the markets dry until November, decreasing chances of a runaway orgy until then. But that's just personal pollution.

We didn't get the oversold condition that would have put us in the religious dilemma that I mentioned last week. C'est la vie. But, better safe than sorry. With two Iron Condors deployed now, one in October, one in November, there is no rush to deploy anything. It's an internal peace knowing that your money is working. Enough of it to make it worth it. Not as much so as to be risking our souls.

Current Portfolio

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

OCT RUT 1100/1110/1320/1330 Unbalanced Iron Condor
$2,200 credit. 4 weeks to expiration and a comfortable 87% probability of success now. 4 deltas on both ends.

NOV RUT 1110/1120/1340/1350 Unbalanced Iron Condor
$2,440 credit. 8 weeks to expiration. Tis the new position entered yesterday. Lots of baby-sitting ahead. Nothing new to say.

Action Plan for the Week

- On an overbought environment (+2% from here), I will sell Out of the money Credit Call spreads. November RUT Options, strike price at 1,360.

- On an oversold environment (-2% from here), I will be selling Out of the money Credit Put spreads. November SPX Options, strike price around 1,900.

- If we stay in no man's land territory, I'll just stay put, collecting Theta.

- If the VIX goes really down, like to the mid-low 11's, I will buy a long SPY Put contract with December (post election) expiration. Speculative bet that fear in the markets is not likely to stay that low with elections looming. Trying to make money, if not due to price, at least due to increased fear/uncertainty, which should elevate options premiums. The goal would be to exit right before election day.

Economic Calendar

Monday: New Home Sales
Tuesday: Services PMI, Consumer Confidence
Wednesday: Core Durable Goods Order, Crude Oil Inventories
Thursday: Pending Home Sales, GDP
Friday: Europe CPI, China's PMI

Options Trading results: Up +4.78% YTD vs S&P up +5.91%. Portfolio 39% invested, 61% cash at the moment.

Take it easy, but take it anyways!

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Check out 2016 Track Record

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