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BookingAlpha Option Trading Advisory

Saturday, July 1, 2017

Weekend Portfolio Analysis (July 1, 2017)

This week's analysis has been published at

Download Weekend Portfolio Analysis (2017-07-01).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The Weekend Portfolio Analysis will be available on this site next week for historical reference.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 (June 24, 2017) 
Recent Trading Activity

- Closed the Call side of the July SPX 2250/2260/2490/2500 Unbalanced Iron Condor on Thursday for a small $140 gain. It was more of a risk management move than a profit taking one. The Call side of this position made me uncomfortable for a while and as planned over the weekend, I would close it provided a positive monetary balanced could be extracted out of it. Looking now at the fact that we will almost have 4 full days of time decay (Saturday + Sunday + Monday with markets open only for half a session and then Tuesday with markets closed for Independence Day). I should have considered leaving the whole position on and then re-assessing on Wednesday morning, with much more premium in my favor. So, that could have been a small mistake there, but on the other hand I feel comfortable now to have put this behind. The SPY 249 strike Call options that had been purchased as upside hedge were also taken off the table.

Market Conditions
(Click on image to enlarge)
Stochastics: 44 (Neutral. Down from 50 last week)
McClellan: -1 (Neutral. Up from -7 last week)
Stocks above their 20 DMA: 54% (Neutral. Up from 53% last week)

No man's land.

After three weekends of all Oscillators moving lower despite price action, finally that bearish divergence played out and we saw weakness in the major indexes. The long term up-trend is still intact though. I'm still looking at that diagonal red line in the middle as potential support (SPX 2,400 - 2,410) for this week. If that line is taken then potential horizontal support at the previous swing low of Mid-May around SPX 2,355. At that point we would be in a short term oversold extreme and I'd be looking to initiate an Out of the Money Credit Put spread position.

We may wake up on Wednesday morning at a similar level as we are today, since Monday should be a very low volume day and US Markets will be closed on Tuesday. I'm not expecting good moves either way any of those two days and I'm already seeing this upcoming week as a three-trading-day shortened one. Time to take our eyes off the markets for a little while and enjoy other fine things in life.

The Russell 2000:
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RUT continues to behave very well, inside the limits of our range. Still looking at potential resistance for RUT at 1440 and first major support in the 1350-1365 zone.

Current Portfolio

JUL SPX 2250/2260 Credit Put spread
The remainder of what used to be an Unbalanced Iron Condor.
3 weeks to expiration. Net credit: $1,200. Feeling comfortable at 5 deltas.

(Click on image to enlarge)
Adjustment point: 2,310 (Close Put spread for a loss, deploy new spread at the 10 delta level). I want to take this one off the table for at least a $1,000 profit. That would be closing it at a 0.10 debit  (original credit obtained was 0.60 per, and we're playing 20 spreads).

JUL RUT/IWM 1310/1320/1500/1510/134/151 Unbalanced Elephant
Net Credit: $1,417. Three weeks to expiration.

Looking great overall and far from imminent danger.
(Click on image to enlarge)
Defense lines: 1,350 to the downside (adjust the Credit Put spread to the new 10-delta strike price), 1,480 to the upside (close all the Call options for a loss, no adjustments, just keep riding the Credit PUT spreads side). This position made great improvements in the last few days. We now have a great chance to successfully close this solid Elephant for max profits at expiration.

AUG SPX 2260/2270/2520/2530 Unbalanced Iron Condor
Net Credit: $1,500 and 7 weeks to expiration. Feeling comfortable: Call side at the 6-delta mark, Put side at the 11-delta mark. Still lots of baby sitting here.
Adjustment points 2,340 and 2,515 for now.

Action Plan for the Week

- I'll close the July SPX 2260/2250 Credit Put spread for 0.10 debit or lower. Even though the position looks safe and a candidate to ride all the way to expiration, I'm planning to add a new position this week and want to alleviate the triple downside risk currently carried before putting more capital to work.

- Keep riding the July RUT Unbalanced Elephant. Only adjust the Put side if the index falls to roughly 1,350. I'd be taking the 1320/1310 Credit Put spreads off the table at a loss and deploying new ones around 1,250 or lower (the presumed new 10-delta mark). To the upside, close all the Call options of the Elephant on a RUT trip to 1,480. No adjustments. The loss would be smaller than the Credit collected from the Put side. I believe both scenarios are unlikely to happen this shortened week.

- Regarding the August SPX Unbalanced Iron Condor, I'd take gains on the 2520/2530 Call side if the spread reaches 3 deltas. For that to happen SPX would need to correct down to around 2,390. Adjust the 2270/2260 Put side if SPX falls to 2,340.

- New position: an August RUT/IWM Unbalanced Elephant on Thursday or Friday. As usual, following these guidelines. However, if the market reaches a short-term oversold extreme I will go with a Credit Put spread instead.

The LT Trend Sniper robot went long EURUSD this week at 1.1338. The currency pair is trading now at 1.14211. So, 83 pips in positive territory for this trade so far. The Stop Loss has been trailed three times and the next one will be a move to the break-even level. The current risk in the position, should SL get hit, is only 0.75% of the account.

Sniper's results tracked live here.

Economic Calendar

Monday: US Markets close at 1 pm (NY Time). Canadian Markets closed all day
Tuesday: US Markets closed for Independence Day.
Wednesday: FOMC Meeting Minutes.
Thursday: ADP Non-farm Employment change. ISM Non-Manufacturing PMI.
Friday: Non-farm Payrolls. Unemployment Rate.

Happy Canada Day!
Happy Independence Day!
May you all have a great one.

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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