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BookingAlpha Option Trading Advisory

Friday, October 7, 2016

Weekend Portfolio Analysis (October 7, 2016)

According to @ExtraDividends:

"He who do push ups, stronger than hurricane"
- Bufficus

Your pal LT has been doing a lot of push ups lately, while also suffering mandatory cloistering time thanks to hurricane Matthew. But, worry not. The necessary precautions were taken to preserve LT's life, as it would undoubtedly be a bitter world without his physical presence to dispel the fears and shed light on the sometimes vilified and always misunderstood world of Condors, Elephants and Vertical Spreads.

Recent Trading Activity

- Initiated a November SPX Lazy Elephant on Tuesday

Nothing else. Too much focus on surviving meteorological phenomenons.

Market Conditions 

(Click on image to enlarge)
Stochastics: 47 (neutral)
McClellan: -124 (neutral)
Stocks above their 20 DMA: 50% (neutral)

No man's land. Same pattern still in play.

We are getting close to a short-term oversold environment and I can just wait for it as I waited for Susana (Susana was a girl I had a date with at age 15 or 16 that never showed up. Just like that, I never saw her again. She said she loved me though. Go figure. Don't worry, my "game" has been vastly improved since then). So, if the market doesn't give me what I want; if it doesn't come to me giving me what I need, no problem at all with staying put. This is perhaps one of the toughest parts of trading for new traders, and sometimes not so new ones. "Patience" is a crucial part of trading, and it is a skill to be learned: To not force trades when the odds, or set ups are not there. The Lazy mantra is very easy to follow if you have a full time job. It's way more challenging however, if you are looking at the charts all day and suffering trading hornyness every 5 minutes. The need to pull the trigger. The need to avoid the feeling that you are not trying hard enough. You must learn to block all those futile impulses. Most are usually not born with that skill.

The only new position I am willing to initiate before elections is a December credit Put spread, and that will only happen if we get into oversold territory. Otherwise I am absolutely fine doing nothing.

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. 6 weeks to expiration. Comfortable at the moment with 12 deltas on the Put side vs only 4 on the Call side. No problems in the near term. Open profits of 500 something bucks.

NOV SPX 1970/1980/2250/2260 Lazy Elephant
$1,280 credit. 6 weeks to expiration. 78% probability of success and pretty safe at the moment.

Action Plan for the Week

- On an oversold environment (-2% from here), I will be selling Out of the money December Credit Put spreads around the 1875 strike price neighborhood.

- Close call side of SPX Elephant if it reaches a $400 profit.

- Adjust Put side of RUT Iron Condor if RUT reaches 1,175 or so. A 5% decline. Therefore unlikely.

- Adjust Put side of SPX Elephant if SPX reaches 2,060 or so. A 4%+ decline from here. Also unlikely for a week.

- The idea of going long some Puts if the VIX went back to sub 12 territory looks like a stretch now. I don't think VIX will go that low with the uncertainty of elections that are much closer now. BUT, if it happens, if we get a VIX below 12, yes, I will buy long SPY Puts which I will sell the day of the elections before market close, or days before that if a decent profit level is achieved.

It's been a while since I last talked about the Euro and Gold. The reason is simple: The LT Trend Sniper has not been triggering signals and the conditions for them have looked pretty remote for a while. I wanted to keep these articles simple and save your precious time. After all, is addictive enough as is.

Well, Gold made an interesting move this week:
(Click on image to enlarge)

The Sniper would go short Gold on a closing price below May 30's    $1,204.69.
It's been a while since the last position and the Sniper is down 4.26% for the year (Gold + Euro only)

Economic Calendar

Wednesday: FOMC Minutes.
Thursday: US Crude Oil Inventories. Federal Budget Balance. China's CPI and PPI.
Friday: US Core Retail Sales, PPI, Business Inventories, Michigan Consumer Sentiment.

Options Trading results: Up +6.51% YTD vs S&P up +5.37%. Portfolio 30% invested, 70% cash at the moment.

Y'all have a nice weekend!

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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