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Saturday, June 30, 2018

Weekend Portfolio Analysis (June 30, 2018)

This week's analysis has been published at

Download Weekend Portfolio Analysis (2018-06-30).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The Weekend Portfolio Analysis will be available on this site next week for historical reference.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 (June 23, 2018) 
Recent Trading Activity

- Initiated an August SPX Elephant position on Monday obtaining a $1,585 credit. Only added a Call hedge and no Put hedge as volatility was pretty elevated.

Market Conditions
(Click on image to enlarge)
Stochastics: 20.8 (Neutral. Down from 29 last week)
McClellan: -64 (Neutral. Down from -24 last week)
Stocks above their 20 DMA: 35% (Neutral. Down from 55% last week)

No man's land

Some more weakness early in the week. Down to 2691.99. In the previous analysis I mentioned potential support around 2670. It didn't go that low. The markets were close to oversold on Thursday as per our usual indicators. Didn't quite get there, but almost. At that point the potential for continued downside action decreases, unless there is truly more fear. After that, the rest of Thursday was strong and Friday was mixed, although strong early in the session. At the moment, it is a No man's land environment but the downside looks more limited (to me anyways). I think odds start to favor some short term upside now. Potential resistance still 2,800 and support along the red diagonal line, still around 2,670. A point at which we would be in an oversold environment, which combined with a high VIX would be ideal for an out of the money August Credit Put spread.

The Russell Index:
(Click on image to enlarge)
RUT's fall has been a little more vertical for the last couple of weeks. Contrasting with the previous period from the beginning of the year where it was consistently stronger than SPX. Horizontal support around 1,615. Resistance in the 1,710 region.

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.

Jul. SPX/SPY 2490/2500 - 255 Put side of Elephant
Net Credit: $1,057. Three weeks to expiration.
(Click on image to enlarge)
Defense lines: 2,565 to the downside (adjust Put side). About half the profits made. That could increase substantially this week.

Jul. RUT/IWM 1570/1575/1745/1750 - 159/175 Elephant
Net Credit: $1,684. Three weeks to expiration.
(Click on image to enlarge)
Defense lines: 1,615 to the downside (adjust Put side). 1,725 to the upside (close Calls at a loss, keep riding Put side, which has a credit that is greater than the Call side loss. At times it looked a little scary this past week, but looking much healthier now.

Aug. SPX/SPY 2430/2440/2845/2855 - 285 Elephant
Net credit: $1,585. Seven weeks to expiration
(Click on image to enlarge)
 Defense lines: 2,530 to the downside (adjust Put side). 2,805 to the upside (close Calls at a loss, keep riding Put side, which has a credit that is greater than the Call side loss).
New position, far from defense lines. Lots of baby-sitting ahead.

Action Plan for the Week

- Defend the RUT Elephant's Put side on a market sell off.

- Initiate the second August position later in the week. The candidate would be a RUT Elephant if we stay in No Man's Land condition. As usual, following the Elephant guidelines described on By waiting until later in the week, we give ourselves a chance to deploy simply a Credit Put spread in case the market reaches an oversold condition at any point during the week. An August RUT Credit Put spread around 1450 or lower during an oversold condition would be very attractive.

- In order to reduce downside exposure, I’ll consider closing the July SPX position.

Economic Calendar

Monday: Europe Manufacturing PMI and Unemployment Rate. US Manufacturing PMI.
Wednesday: US Markets closed for Independence Day.
Thursday: ADP Employment Change. ISM Non-Manufacturing PMI. FOMC Minutes. 
Friday: US Non-Farm Payrolls. Unemployment Rate. Trade Balance.

Good luck this week folks,

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Check out 2018 Track Record

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