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BookingAlpha Option Trading Advisory

Sunday, December 18, 2016

Weekend Portfolio Analysis (December 18, 2016)

Folks, sometimes software development sucks. The last quarter of the year in my case has been that to me. What a brutal quarter. I have stopped tweeting. I've been losing my macho stamina with all the stress. I have been forced to reduce the frequency of the posts on this beloved site.  But, the sky is clearing up. Soon, it will be like the old days, where we make fun of each other and use sexist analogies applied to this questionable life choice that is called trading.

Recent Trading Activity

- Closed DEC30 SPX 2305/2315 Credit Call spread for a $2,100 loss on Tuesday. Immediately deployed a JAN SPX 2370/2375 Credit Call spread for $1,600 credit.

- Closed DEC30 RUT 1170/1180 Credit Put spread for a $1,200 gain on Tuesday.

Market Conditions 
(Click on image to enlarge)
Stochastics: 48 (neutral)
McClellan: +11 (neutral)
Stocks above their 20 DMA: 60% (neutral)

No man's land here.
Elephants and Unbalanced ICs are fine here, always being aware that the indexes are still a bit too far above their own averages. So, the Elephant for example, I would trade it hedged (long IWM or SPY Puts at 16 deltas). In my case, I am going to stay Put. January expiration is just 35 days away and I would just add a Credit Put spread if the market becomes oversold.

(Click on image to enlarge)

Current Portfolio

DEC30 SPX 2140/2150 Credit Put Spread
$660 credit. 5 deltas and just 2 weeks to expiration.

JAN RUT 1480/1490 Credit Call Spread
$1,200 credit. 5 weeks to expiration and only 4 deltas. No concerns.

JAN SPX 1370/1375 Credit Call Spread
$1,600 credit. 5 weeks to expiration. 5 deltas. No concerns.

Action Plan for the Week

Once again, the plan is to really do nothing with existing positions unless forced to act. I'll gladly initiate a Credit Put spread position with January options if we reach an oversold condition given the small downside exposure I currently own. Both indexes still look a bit too far from its moving averages so, there is a decent chance to get that opportunity. Certainly I don't feel comfortable selling Puts right here without the markets retracing a bit first. And I'm talking about a 3% decline or so.

Also, by Friday I would like to initiate either an SPX or RUT Unbalanced Iron Condor using February options. SPX my most likely choice at this point. As usual, selecting around the10 delta levels both to the up and downside.

The LT Trend Sniper system is still short Gold via XAU/USD (since November 14 midnight GMT+2 server time). More than a month riding this trend:

The Stop Loss (red line) is now at the 1,168.91 level guaranteeing almost 56 Gold points in profits from the 1224.18 short entry.

The robot has until Thursday's close to see a closing price lower than this past Thursday's close. If we don't see that lower closing price in the next 4 sessions, the position will be closed. If a lower closing price takes place any day of the week, then the short bet will stay alive until next week, where the robot will re-assess.

And surprisingly, the Euro continued on its way to Peso. The Sniper opened a short bet there on Wednesday (5pm Eastern time GMT-5) at 1.05292. The EURUSD pair is now trading at 1.0446 so there are a few pips in profits there. The Stop Loss has been moved twice and it is now half the original risk:

After a rough 2016, the current short Gold trend will put the Sniper not only in positive territory for the year, but also easily above the Barclay's Currency Traders Index benchmark. The short Euro trade may bump the results a little more, but because there is still some risk in it, it can realistically still become a losing trade. It would not be a significant loss at this point given the quick progress made on the trade (the Euro went to the 1.03's on Thursday) that triggered the tightening of the Stop Loss.

Economic Calendar

Wednesday: Existing Home Sales. Crude Oil Inventories.
Thursday: Core Durable Goods. GDP.
Friday: New Home Sales. Michigan Consumer Sentiment.

Options Trading results: +4.52% for the year (S&P benchmark: +10.48%)
                                         Portfolio 42% invested, 58% cash.

Take it easy, but take it anyways.

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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