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Saturday, August 18, 2018

Weekend Portfolio Analysis (August 18, 2018)

This week's analysis has been published at

Download Weekend Portfolio Analysis (2018-08-18).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The Weekend Portfolio Analysis will be available on this site next week for historical reference.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 (August 12, 2018) 
Recent Trading Activity

- Initiated SPX September Elephant on Tuesday for $1,438 credit.

- Closed Call side of RUT September Elephant for a $364 profit on Wednesday. There is now a chance to redeploy it on a market rebound.

- Put side of RUT August Elephant expired for a $1,100 profit on Friday.

Market Conditions
(Click on image to enlarge)
Stochastics: 56 (Neutral. Down from 77)
McClellan: +43 (Neutral. Up from -64)
Stocks above their 20 DMA: 51% (Neutral. Up from 47%)

No man's land

As expected, some downside action early in the week and former resistance around 2,800 continuing to act as support. Prices rebounded there and oscillators are pointing upwards now. The index is 2% above its 50-day average, leaving a 1%-2% room to the upside before we reach extreme optimism. The 2870 level around all-time highs offered resistance earlier in August but I think little by little the market is gathering strength to finally take it. I am coming into this week with a bullish bias.

Looking downwards, I'm still using that red diagonal line at the bottom as potential long term support, situated in the low 2,700's.

The Russell Index:
(Click on image to enlarge)
Looking ready to attack All-time highs in the 1,710 region, an area that has been strong resistance three times before, and is now within reach again. The index is barely 1% higher than its 50-day avg, leaving plenty of room to take those all-time highs. Potential support, also horizontal in the 1615-1630 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.

Sep RUT/IWM 1530/1540 - 158  Elephant Put side
Net Credit: $1096. Five weeks to expiration
(Click on image to enlarge)
Defense lines: 1,585 to the downside (adjust Put side). Call side taken off at a profit and now I'm getting ready to redeploy if RUT keeps moving upwards and gets close to 1,710.

Sep SPX/SPY 2645/2650/2925/2935 - 269/293 Elephant
Net Credit: $1438. Five weeks to expiration
(Click on image to enlarge)
Defense lines: 2,635 to the downside (adjust Put side) and 2,885 to the upside (Close all Calls at a loss. Keep riding Put side, whose credit is greater than the loss to be suffered on the Call side, resulting in an overall net winning trade). Some pressure growing on the Call side at the moment. It would still take the index to surpass all-time highs, but being just a little over 1% away, it looks certainly close.

Action Plan for the Week

- Defend SPX September Elephant by simply closing the Call side if the index reaches 2,885 or so.

- Deploy a new Call side component on the RUT September position, completing an Elephant again if RUT rallies to all-time high territory around 1,710. The Call spread to sell will be 1780/1790 and as usual with an upside IWM hedge (179 strike Call)

- Deploy the first October position. I'm really indifferent about which symbol to start off the cycle with this time. I may go with RUT simply because I have no Call exposure on the symbol at the moment. Although that may change if RUT rallies and I get to re-deploy a Call side to the existing September RUT position. The new October position will be an Elephant, because we are not oversold. I will enter it on Thursday or Friday, and as usual, it will be done following the Elephant guidelines.

Economic Calendar

Wednesday: US Existing Home Sales.
Thursday: European Central Bank Account of Monetary Policy Meeting. Europe Manufacturing PMI. US Manufacturing and Services PMI. New Home Sales.
Friday: US Core Durable Goods.

I'll be flying to Toronto tomorrow and will be there for work until next Saturday. It's going to be a busy week and I may not be quick responding emails, but I will eventually get to each one of them. Next portfolio analysis will be on Sunday.

Have a nice week!

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Check out 2018 Track Record

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