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Saturday, July 21, 2018

Weekend Portfolio Analysis (July 21, 2018)

This week's analysis has been published at LTOptions.com

Download Weekend Portfolio Analysis (2018-07-21).pdf

If the above link doesn't work for you, simply log in to LTOptions.com, 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The Weekend Portfolio Analysis will be available on this site next week for historical reference.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 (July 15, 2018) 
Recent Trading Activity

- July RUT Elephant expired on Friday. A $1684 gain.

Market Conditions
(Click on image to enlarge)
Stochastics: 79 (Neutral. Down from 91)
McClellan: -14 (Neutral. Down from +19)
Stocks above their 20 DMA: 57% (Neutral. Up from 56%)

No man's land

Pretty much a sideways week with the index opening and closing at 2801. The interesting thing to me is that resistance in the 2800 region was broken when a high of 2816 was reached at one point. It's been a long 5-month long process of price consolidation and it looks like prices above 2800 are easily within reach now. I went into the week with a bullish bias, which I continue to have. Despite rate hikes and trade wars rhetoric the market keeps looking solid. But summer months are low activity months and they tend to be slow too. The index is 1.8% higher than its 50-day average and all three oscillators leave plenty of room both ways.


The Russell Index:
(Click on image to enlarge)
Unlike the SPX, the Russell didn't break resistance. It has been stronger than SPX almost all year, so this recent fact is interesting. Many people say that small caps lead the action, and that if they look weaker it is a sign that the market will roll over. I do not pay attention to those claims and have seen the contrary fact materialize many times. To me it is just interesting to see RUT not breaking resistance this week. It continues to be pretty close, and unlike SPX, this is all-time high territory for RUT. A break up there may lead to a nice rally.


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.



Aug. SPX 2430/2440 Elephant Put side
Net credit: $1,200. Four weeks to expiration
(Click on image to enlarge)
Defense lines: 2,520 to the downside (adjust Put side).


Aug. RUT/IWM 1500/1510 - 154 Elephant Put side
Net credit: $1,100. Four weeks to expiration
(Click on image to enlarge)
Defense line: 1,550 to the downside (adjust Put side).



Action Plan for the Week

- I'll be deploying the first September position this week. I'm thinking of a RUT Elephant. Strike prices: 1530/1540/1790/1800 (RUT) and 157/180 (IWM). Looks like this:
Number of contracts: 20/20/7/7 (RUT) and 1/14 (IWM). As usual, all these numbers may change slightly depending on market and volatility moves.


Economic Calendar

Monday: US Existing Home Sales.
Tuesday: Europe Manufacturing PMI and Finance Ministers meeting. US Manufacturing PMI.
Thursday: US Core Durable Goods. European Central Bank Press Conference.
Friday: US GDP

Good luck this week folks,
LT


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Check out 2018 Track Record


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