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Sunday, October 2, 2016

Weekend Portfolio Analysis (October 2, 2016)

It was a quiet week for you pal LT where the S&P went from 2158.54 to 2168.27 for a +0.45% gain. The index is now up +6.08% for the year, which is pretty decent with all that was thrown at it during the first three quarters.

Recent Trading Activity

- Closed October Unbalanced Iron Condor for a $1,850 gain on Friday. Details and rationale here.

Market Conditions 

(Click on image to enlarge)
Stochastics: 60 (neutral)
McClellan: +12 (neutral)
Stocks above their 20 DMA: 58% (neutral)

No man's land and same pattern still in play. Not a good time for neither individual Credit Call spreads nor Credit Put spreads.

And here's the Russell, in which I have one income position:
(Click on image to enlarge)

Current Portfolio

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

NOV RUT 1110/1120/1340/1350 Unbalanced Iron Condor
$2,440 credit. 7 weeks to expiration. The position looks safe with an 82% probability of success. 7 deltas on the Call side, 11 deltas on that Put side. There is still more baby-sitting ahead to really start seeing the benefits of time decay. For now $310 bucks of open profits and Theta at 52.71. The goal, as I've said before: to close the whole thing before election day (November 8). A $2,000 gain would keep me satisfied about my somewhat controversial life choices.

That's all the exposure at the moment. Trading concerns near historical lows.

Action Plan for the Week

Ok, here's the game plan for the week:

- For a good while I have been waiting for an extreme condition, which according to my rules hasn't materialized. Now, having plenty of capital available, it is time to do something with it. Naturally I will go with an SPX Lazy Elephant. The chicks dig it. The current idea is to use November options, strike prices 1965/1975/2255/2265.  Number of contracts: 10/10/10/12 respectively. I'm not sure about using the long SPY Put hedge this time around because the goal is to close this prior to election day and I'm a little biased towards "nothingness" nowadays: not real hard rally, but also no calamity until elections.

- In addition to the Elephant, 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%-3% from here), I will be selling Out of the money Credit Put spreads. I will already have two November positions, so I will use December, even though its farther in time than I prefer. But again the goal would be to close it all before the elections. We cannot let oversold environments pass us by without taking advantage of them.

- Also, this idea from last week is still part of the game plan: "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
The always interesting first week of the month.

Monday: German Manufacturing PMI, US ISM Manufacturing PMI
Wednesday: ADP Non-Farm Employment Change, Crude Oil Inventories
Friday: Non-Farm Payrolls. Unemployment Rate change. 4 FOMC Members speak throughout the day.

Options Trading results: Up +6.51% YTD vs S&P up +6.08%. Portfolio 21% invested, 79% cash at the moment.

Trade with confidence folks!

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.

Check out 2016 Track Record

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