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Saturday, December 31, 2016

Weekend Portfolio Analysis (December 31, 2016)

Well, the year is over. SPX up 9.535%, and SPY (with dividends) up 11.997% (of course minus your trading commissions, minus the management fee of the ETF). What started off as the worst year ever (down 11.2% in the first 12 sessions) ended up being a good year for the markets with above historical average returns.

It is unbelievable to think that the market was up only 2.18% for the year on November the 3rd. November 3! That's like "yesterday". I was at that point handily beating it with my flamboyant +9%. But, we all saw how quickly things changed.

Options trading wise it was a mediocre year for me, but I excelled in the other areas:

Options Trading+5.17%under-performing the SPX
Forex Trading +5.77%beating the Barclay Currency Traders Index
Investing +24.52%easily crushing the TSX Index

I'll be offering more details about these numbers in a future post, but for now let's get to the meat of the Weekend Portfolio Analysis.

Recent Trading Activity

- DEC30 SPX 2140/2150 Credit Put Spread expired on Friday. A $660 gain.

Market Conditions 
(Click on image to enlarge)
Stochastics: 11 (oversold)
McClellan: -30 (neutral)
Stocks above their 20 DMA: 45% (neutral)

No man's land but an oversold condition is suddenly within reach. SPX in the 2200 - 2210 zone would get us there. VIX at 14 making us happy. We're not used to VIX 14 anymore after pathetic readings for so long and now it feels like we need to throw a party. How low we've fallen.

(Click on image to enlarge)

Current Portfolio

JAN RUT 1480/1490 Credit Call Spread
$1,200 credit. 3 weeks to expiration and only 1 delta. No concerns.

JAN SPX 2370/2375 Credit Call Spread
$1,600 credit. 3 weeks to expiration. 2 deltas. No concerns.

FEB RUT 1200/1210/1470/1480 Unbalanced Iron Condor hedged with IWM 126 Puts
$1,874 credit (when subtracting the debit invested in the IWM Puts). 7 weeks to expiration. 7 Deltas on the Call side and 10 on the Put side. No concerns. Life is good.

Action Plan for the Week

- If we reach an oversold environment before Friday, I will sell SPX Credit Put spreads using January options. If we reach the oversold condition exactly on Friday, then I will sell the spreads using February options instead.

- If the 1470/1480 Credit Call spread of the Feb RUT Iron Condor reaches 2 or 3 deltas, I will be taking those gains off the table. This requires a somewhat significant decline of around 3% in the Russell.

- Other than this, if we don't get an oversold condition, I will simply initiate an Unbalanced Elephant position on the SPX Index using February options.

The LT Trend Sniper system closed its short Euro position by applying the price reversal rule. It ended up being a 74.9 pip winner held for 13 days that brought a +1.01% gain to the portfolio. This  was the last trade of the year for the Sniper, which ended up easily beating the Barclay Currency Traders Index benchmark in 2016 (more details about my FX activity and thoughts in a future post).

The Sniper trade by trade, it is all here. Just scroll-down to the very bottom of the page.

Economic Calendar

Monday: Europe Manufacturing PMI. China's Manufacturing PMI. American Markets closed.
Tuesday: ISM Manufacturing PMI and ISM Manufacturing Unemployment.
Wednesday: Europe CPI. ADP Non-Farm Employment Change.
Thursday: ISM Non-Manufacturing PMI. Crude Oil Inventories
Friday: Non-Farm Payrolls. Unemployment Rate.

Another year where, regardless of specific areas of under-performance or out-performance, capital kept growing at a steady and smooth pace with minimal draw-downs and risk well under control. Give me that any year of my life and I'll gladly take it.

Before I go, I would like to say thank you for your support throughout the year. Thank you for taking the time to read this little corner of the Internet. I am really excited about 2017 and confident that we can achieve much better results with solid risk management techniques and a Lazy, Low-Stress approach to investing and trading. Here's to a great 2017 folks! Happy New Year!


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

Go to the bottom of this page in order to see the Legal Stuff

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