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Saturday, April 1, 2017

Weekend Portfolio Analysis (April 1, 2017)

This week's analysis has been published at LTOptions.com

Download Weekend Portfolio Analysis (2017-04-01).pdf

If the above link doesn't work for you, simply log in to LTOptions.com, navigate to the "Weekly Analysis" tab and download the document from there.

The Weekend Portfolio Analysis will be available on this site next week for historical reference.

All currently open positions can be seen on the Track Record page


Last Weekend Analysis now available: Weekend Portfolio Analysis (March 25, 2017) 
Recent Trading Activity

- Initiated a May SPX Unbalanced Elephant on Monday. Net credit $1,529. All the details here.

Market Conditions
(Click on image to enlarge)
Stochastics: 75 (neutral)
McClellan: +107 (neutral)
Stocks above their 20 DMA: 63% (neutral)

No man's land. Quite a change in all the indicators since last week, where all three were near oversold conditions. Sticking to the system's rules, no individual Credit Put spreads were sold. In retrospective, one may regret not having sold the CPS, but it could have been a different story had the market corrected more drastically. In large accounts, it is not a bad idea to deploy little by little (Even in small accounts too, with favorable commission plans). For instance, to have sold a few Put spreads, even with the market not being totally oversold, and then a few more spreads later if the market kept going down. Doing it like that on this site would simply over complicate the track record and I prefer to keep it simple.

We're now closer to overbought territory but still some decent room to get there and price currently not too far from its 50-day average. A revisit to 2,400 could be in the cards but having Call exposure only via Elephants I'm not concerned about market rallies.

And here's the Russell 2000, where there is still an April Unbalanced Elephant:
(Click on image to enlarge)


Current Portfolio

APR SPX 2175/2180 Credit Put spread
Used to be an Iron Condor until the 2455/2460 was taken off the table. $960 credit on the remaining Credit Put spreads. 3 weeks to expiration. Very comfortable at the 3-delta mark. No concerns.


APR RUT/IWM 1260/1270/1450/1460/129/146 Unbalanced Elephant
$1,396 net credit, 3 weeks to expiration. Looking great at this point. Almost $800 in open profits half way through its 6 weeks of life. More than 50% of the max gain, while only 50% of the time has passed. Conservative traders may want to take it off the table at this point. Personally, I'll keep riding it for a little longer as I want to maximize some winners, being fully aware that the "waiting" can back fire here and there.


Defense lines set around $1,310 to the downside (adjust Credit Put spread) and $1,430 to the upside (close Call side for small loss and ride the Put side to expiration to obtain an overall net gain despite the Call loss).


MAY SPX/SPY 2150/2160/2440/2450/221/245 Unbalanced Elephant
$1,529 net credit, 7 weeks to expiration.The new position added this past Monday. I decided to go with the Lazy Elephant rather than the Unbalanced Iron Condor, since we were close to oversold and I feared a market rally would quickly hurt the Call side of an Unbalanced IC, whereas with the Unbalanced Lazy Elephant the damage would be much smaller. Seeing the market price action after entry, it looks like it was the right decision to start off the May cycle with the Elephant alternative.

Defense line is $2,235 to the downside (adjust Credit Put spread) and $2,390 to the upside (close Call side for small loss and ride the Put side to expiration to obtain an overall net gain despite the Call loss). 2,390 is pretty achievable this week, and if it happens, there will be no reason to feel frustrated. This is precisely why we started off the May cycle with the Unbalanced Lazy Elephant.



Action Plan for the Week

- Adjust RUT Elephant's Put side if RUT falls to 1,310. Close the Call options is RUT reaches 1,430. This includes the 1450/1460 RUT Credit Call spreads and the IWM Long 146 Calls. Closing it all for a combined loss of $700 would allow us to make money through the Put side and its $1,200 credit, eventually resulting in a net $500 gain. If neither of the levels just mentioned is reached, do nothing.

- Regarding the young May SPX Unbalanced Lazy Elephant, I'll close the Call side if SPX reaches 2,390. This action would include the 2440/2450 SPX Credit Call spreads and the SPY Long 245 Call contracts. Closing it all for a combined loss of $800 would allow us to make money through the Put side and its $1,300 credit, eventually resulting in a net $500 gain.

- I'll be adding the second position of the regular May expiration cycle by Thursday/Friday. For now, it looks like it will be a RUT Unbalanced Iron Condor. Short Put around 1,260 and Short Call strike price around 1,480. Of course, those numbers may change according to how drastically market moves during the first half of the week. If we get an oversold condition, heresy these days, then I will simply go with a May RUT Credit Put spread instead of the Unbalanced Iron Condor.



Forex
The LT Trend Sniper finally made its first play of the year. It was quite a break that it took until entry conditions materialized.

This time it went long EURUSD.
The position made some progress initially to the point that Stop Loss was cut in half. Unfortunately, a reversal Stopped the Sniper out of the trade. The loss for the portfolio was 1.5% (half the 3% risk being used thanks to Stop Loss being cut in half). Not a good start to the year, but we know how long term trend followers work, where one single position can overcome many losses and define the year.

Forex results tracked live here.
No position at the moment.


Economic Calendar

Monday: Europe Unemployment. US Manufacturing PMI.
Wednesday: ADP Non-farm Employment Change. ISM Non-Manufacturing PMI. Crude Oil Inventories. FOMC Meeting Minutes.
Friday: US Non-farm Payrolls and Unemployment Rate.

Trade with confidence folks,
LT


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 2017 Track Record


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