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BookingAlpha Option Trading Advisory

Saturday, September 2, 2017

Weekend Portfolio Analysis (September 2, 2017)

This week's analysis has been published at

Download Weekend Portfolio Analysis (2017-09-02).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The Weekend Portfolio Analysis will be available on this site next week for historical reference.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 publicly available: Weekend Portfolio Analysis (August 26, 2017) 
Recent Trading Activity

- Closed October RUT 1200/1190 Credit Put spread for a $500 gain on Monday.

- Closed September SPX 2310/2300 Credit Put spread for a $900 gain on Thursday.

Market Conditions
(Click on image to enlarge)

Stochastics: 93 (Overbought. Up from 42 last week)
McClellan: +134 (Neutral. Up from +20 last week)
Stocks above their 20 DMA: 69% (Neutral. Up from 42% last week)

No man's land, but close to a short term overbought extreme.

We were in a totally neutral stage last week and the oscillators were pointing up, with plenty of room, which made me favor the idea of some more upside in the short term. Now we're close to an overbought extreme, back near all-time highs and ready to challenge horizontal resistance this week.

Now, in favor of continued upside is Recency bias: the notion for most investors in the world, that the market has been very resilient this year and therefore, chances are it will continue to be so. Against: the so much discussed interest rate hike (although, honestly, recent hikes have not created permanent downside but just some shaky action for a few days. If anything I believe a hike is already priced in). The other potential factor against, is the government debt ceiling issue. Politicians will take it to the wire, as usual and markets will get nervous before a final miraculous solution unleashes a rally.

For the very short-term, this week, I believe the all-time high will be challenged, and if taken, the upside would not be far above SPX 2,500. That would take all oscillators to extreme overbought readings and price would be decently far from its own 50-day average at that point.

VIX back to its usual 10'ish. We've been dealing with it all year. Not making as much money as we could have, but still making. As long as realized volatility ends up being smaller than implied, we do well and absolute VIX readings become less irrelevant.

The Russell 2000:
(Click on image to enlarge)
Nice rally here this week. We have only one position in RUT and it is completely out of trouble. New Elephant play coming this week.

Current Portfolio

SEP RUT 1240/1250 Credit Put spread
SEP IWM 148 Long Calls
What is left of the September Elephant.
Net Credit: $840. Two weeks to expiration.
(Click on image to enlarge)
Defense line: 1,270. Really unlikely to be tested. This one is to be ridden all the way to expiration.

OCT SPX 2250/2260/2540/2545 Unbalanced Iron Condor
Net Credit of $1,500 and Seven weeks to expiration.
(Click on image to enlarge)
Defense lines: 2,330 to the downside and 2,535 to the upside (waiting until about 45 deltas given the low risk exposure on the Call side). If the thesis that SPX 2,500 is within reach in the short-term becomes a reality, then the SPX 2540/2545 Credit Call spread will be nearing 30 deltas. Normally, that would be my time to give up on them and take a loss. Thanks to the fact that there is very little exposure, we can afford to wait until SPX 2,535 without facing unreasonable damage.

DEC SPY 253 Calls
Small bullish speculative play from August 18th. Three contracts at 1.50 debit each.
Current value of these contracts is 2.55. Not bad. That's a +70% return on Investment in just a couple of weeks.
As nice as those open gains look, I will not be taking them off. I'll leave them as potential upside hedge for any Credit Call spreads that are threatened in the portfolio.

Action Plan for the Week

- No concerns with any of the existing positions. There should be no need to defend/adjust anything this week.

- I will take the 2540/2545 Credit Call spread side of the October SPX Unbalanced Iron Condor off for 0.10 - 0.15 debit if the markets were to fall and give me that price. Because the original credit was 0.50, closing at those debit would represent  0.35 - 0.40 gain per spread. For that to happen, the Credit Call spread would have to go down to 4 or 5 deltas. That would be a decline of 35 or 40 SPX points. I think that's unlikely this week, but if it happens, that's my go to move.

- Initiate an October RUT Unbalanced Elephant by the second half of the week, following the usual instructions (described here).

The LT Trend Sniper system had a pretty active and also rather unfortunate week.
As anticipated it went long EURUSD at 1.1945. It succeeded in trailing the Stop Loss two times, reducing risk in the position from 3% to 1.50%. Unfortunately the last Stop Loss level eventually took the robot out of the position at a loss.

Gold did trigger a Buy signal after the triple top formation was broken.
The Stop Loss has also been moved twice, reducing risk in the position from 3% to 1.5%. This position is still open.
More details about the LT Trend Sniper automated trading system can be read here.

Economic Calendar
Pretty light week on the Economic Releases front.
Also, remember markets will be closed on Monday for Labor Day.

Wednesday: ISM Non-Manufacturing PMI. 
Thursday: European Central Bank press conference.

Good luck this week folks.

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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