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BookingAlpha Option Trading Advisory

Saturday, April 22, 2017

Weekend Portfolio Anaysis (April 22, 2017)

This week's analysis has been published at

Download Weekend Portfolio Analysis (2017-04-22).pdf

If the above link doesn't work for you, simply log in to, 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The Weekend Portfolio Analysis will be available on this site next week for historical reference.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 (April 15, 2017) 
Recent Trading Activity

- April SPX Credit Put spread expires for max gain of $960. This was part of an Iron Condor whose Call side had been closed a while ago. The entire history of the Iron Condor position is here.

- April RUT Unbalanced Lazy Elephant expires for max profit of $1,396. We never had any trouble with this position.

- Initiated a June RUT Unbalanced Lazy Elephant. As explained in the previous Weekend Analysis, I would go with Elephant instead of Condor if the indexes were not more than 1% higher than their 50-day average.
Market Conditions
(Click on image to enlarge)
Stochastics: 52 (Neutral. Up from 19 last week)
McClellan: +19 (Neutral. Up from -50 last week)
Stocks above their 20 DMA: 59% (Neutral. Up from 38% last week)

No man's land and it now looks like short term direction is back to the upside.

Once again, the oversold correction was not reached. No reason to be frustrated though: the markets have been relatively sideways for a few weeks and we have been making money without too much stress.

Decent VIX above 14 (how times change), and as a neutral market I would not sell individual Credit Calls spreads or Credit Put spreads here.

SPX still has to break that descending triangle to the upside. RUT already did and so I just drew a horizontal level at 1,393 this time. Yellow lines as usual representing the short strike prices of my positions in the symbol. Both happen to be Unbalanced Lazy Elephants in this case.

Russell 2000:
(Click on image to enlarge)
Now with a horizontal level around 1,393 which will be interesting this week. After that, the next resistance level might be the all-time highs and the upper end of the long-term trend channel.

Current Portfolio

MAY SPX/SPY 2150/2160/2440/2450/221/245 Unbalanced Elephant
$1,529 net credit, 4 weeks to expiration. Looking safe on both sides for now:

Defense line is 2,225 to the downside (adjust Credit Put spread) and 2,410 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). SPX price is currently right there at the highest point of the tent. The next couple of weeks we are going to see that tent (pink line) go up nicely. No plans to take this Elephant off the table yet.

MAY RUT/IWM 1230/1240/1450/1460/126/146 Unbalanced Elephant
Net credit: $1416. Four weeks to expiration. No concerns at all after the market rebound.

Defense lines: 1,290 and 1,415.

JUN RUT/IWM 1220/1230/1470/1480/126/148 Unbalanced Elephant
The trade entered yesterday. Eight weeks to expiration and lots of baby-sitting ahead.
I set the defense lines here at 1,290 and 1,440. So, the May RUT Elephant and the June RUT Elephant both have the Put side defense line at 1,290. That means we have some concentration of risk on that point. Should RUT tank to 1,290 this week I'd be getting punished in both positions at the same time. Although that is not a nice situation to be in, we have two things in our favor: a) The defense line in the May position will move lower at a faster speed than that of the June position. So, come next weekend they are likely to be different. b) RUT is 7% higher than 1,290. A 7% fall in a week is a rather infrequent event. So, we are very likely to have time to re-assess next week. Risk on the Call side on the other hand is not concentrated (1,415 and 1,440), plus the fact that Call side risk is not really a big concern when it comes to Unbalanced Lazy Elephants.

Action Plan for the Week

- No new position in the portfolio unless we suddenly reach an oversold condition. We may be about 3% away from that, so it seems unlikely. But if we reach it, I will play it via a June SPX Credit Put spread.

- Adjust Put side of May SPX Elephant if SPX reaches 2,225. Close the Call side if SPX rallies past 2,410. Do nothing if SPX stays in between the defense lines. I'd like to close this Elephant when it reaches $1,200 in open profits. We are still far from that and we are not likely to see that number this week as the position is still hovering between $600 and $700

- Adjust Put side of May RUT Elephant if RUT reaches 1,290. Close the Call side if RUT rallies past 1,415. Do nothing with this position if RUT stays in between the defense lines.

- Adjust Put side of June RUT Elephant if RUT reaches 1,290. Close the Call side if RUT rallies past 1,440. Do nothing with this position if RUT stays in between the defense lines.

So, I'm basically going to be in defensive mode and chances are no new trades will be added.

The LT Trend Sniper system is still long Gold (via XAUUSD). Some progress was made early in the week that trigger another Stop Loss move (SL is now only 1/4 the distance of the original SL). After that there was some temporary weakness that almost kicked the Sniper out of the position.

The Sniper has two more day bars to see a new closing high. If this does not happen the position will simply be automatically closed (Lack of progress rule).

If you want to learn more about this fully automated trend following system, feel free to read this article.

Economic Calendar
Tuesday: Consumer Confidence. New Home Sales. 
Thursday: US Core Durable Goods and Pending Home Sales. European Central Bank Conference.
Friday: Europe's CPI. US GDP.

Good luck this week my friends,

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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