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BookingAlpha Option Trading Advisory

Sunday, May 20, 2018

Weekend Portfolio Analysis (May 20, 2018)

This week's analysis has been published at

Download Weekend Portfolio Analysis (2018-05-20).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The Weekend Portfolio Analysis will be available on this site next week for historical reference.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 2018 Track Record page

Previous Analysis now publicly available:
Weekend Portfolio Analysis (May 6, 2018) 
Recent Trading Activity

- Closed Call side of June RUT Elephant on Thursday for a $720 loss. The Put side is still in play, almost a sure winner now, and with a credit collected that is greater than the loss taken on the Call side. So, the position will end up being a small net winner in the end.

- Ditto for the Call side of the June SPX Elephant. Closed the same day. A $700 loss of . Put side still on, with a credit that is greater than the loss suffered on the Call side.

Both June Elephants lost on the Call side. Both should end up as net small winners by June expiration based on the credit that exists on the Put sides. Although small, the June cycle will be a positive one. Or at least the odds are very high for that to be the case.

Market Conditions
(Click on image to enlarge)
Stochastics: 69 (Neutral)
McClellan: +51 (Neutral)
Stocks above their 20 DMA: 67% (Neutral)

No man's land

Plenty of room to go both ways. Time for a neutral position rather than individual credit spreads on one side of the markets.

My guideline on the SPX is still the 2540 - 2800 horizontal channel. I think we can stay in there for a while and that would be beneficial to positions outside those limits.

The VIX at 13.42. The game is less interesting now with a lower VIX but remember, the absolute value of the VIX is not as important as whether it goes down or up after you enter your position. And this year's accident in February was more due to the fact that I was overly exposed with 5 positions at the same time, rather than the VIX exploding. We had pretty good results last year even though the VIX was the lowest in history. I intend to deploy the first July position later this upcoming week.

The Russell Index:
(Click on image to enlarge)
Much stronger all year and now in new all-time highs territory. There is room to run given that we are in no man's land territory, so caution should be exercised by those willing to play Credit Call spreads here.

Current Portfolio:
The SPY Calls and SVXY Calls expire in December and January of next year. All bullish bets on a market rebound.

Let's now look at the income plays.

Jun. RUT/IWM 1400/1410 - 144 Elephant Put side

Net Credit: $1,004. Four weeks to expiration.
(Click on image to enlarge)
Defense line: 1,455 to the downside (adjust Put side). With the RUT above 1600, this is a very safe position. Almost all the profit has been made, so it can be taken off by those less aggressive.

Jun. SPX/SPY 2450/2460 - 251 Elephant Put side
Net Credit: $1,057. Four weeks to expiration.
(Click on image to enlarge)
Defense lines: 2,525 to the downside (adjust Put side. With the S&Ps above 2,700 this one also looks very safe.

Action Plan for the Week

- The plan this week is to deploy the first July position. I'm leaning towards an SPX Elephant using strikes 2465/2475/2840/2850 (SPX) , number of contracts 20/20/7/7 along with long SPY 254 Puts (1) and long SPY 285 Calls (8):
As usual, strikes may change as the markets move. This is a rough idea. If we reach an oversold environment during the week, then the go to play will be an SPX Credit Put spread instead of an Elephant.

Economic Calendar

Wednesday: US New Home Sales. FOMC Minutes.
Thursday: European Central Bank Monetary Policy Meeting. US Existing Home Sales.
Friday: US Core Durable Goods. Fed Chairman Powell speaks.


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Check out 2018 Track Record

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