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Saturday, October 20, 2018

Weekend Portfolio Analysis (October 20, 2018)

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

Download Weekend Portfolio Analysis (2018-10-13).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The Weekend Portfolio Analysis will be available on this site next week for historical reference.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 (October 6, 2018) 
Recent Trading Activity


Market Conditions
(Click on image to enlarge)
Stochastics: 40 (Neutral. Up from 11)
McClellan: -96 (Neutral. Up from -223)
Stocks above their 20 DMA: 19% (Oversold. Up from 11%)

No man's land.

Back to no man's land territory despite the fact that the market hasn't really recovered all that much and fear's still in the air. On the brighter side, a bullish divergence was formed during the week, when prices were at one point lower than last week's close, yet all oscillators had started to move up (higher lows). Moving all three oscillators back to oversold territory wouldn't take a lot as we are close to an oversold environment. With an elevated VIX, it is a good time for OTM Seller. Especially Put sellers.


The Russell Index:
(Click on image to enlarge)
I'm looking at potential horizontal support on the Russell in the 1520-1525 region. RUT is well below its 200-day average, so more serious damage has been done year. The index is negative for the year and in my view closer to a bottom than SPX. To me this is a better candidate for OTM Put selling.


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.



Nov RUT/IWM - 1460/1470/1810/1820 - 182 Elephant
Net Credit: $1568. Four weeks to expiration.
(Click on image to enlarge)
Defense lines: 1,525 to the downside (adjust Put side). 1,780 to the upside (close entire Call side at a loss. Keep riding Put side).


Nov SPX 2630/2620 Credit Put spread
Net Credit: $1200. Four weeks to expiration
(Click on image to enlarge)
Defense line: 2710. Adjust Put spread.


Dec RUT 1350/1340 Credit Put spread
Net Credit: $1400 (made a mistake last week saying it was $1200). Nine weeks to expiration
(Click on image to enlarge)
Defense line: 1435



Action Plan for the Week

- No new positions in mind as there is enough exposure already, even though this Friday we will be 8 weeks away from Dec expiration. I don't want to add a fourth position. The plan is to just baby-sit existing ones and consider defensive action if the market sell-off continues.


Economic Calendar 

Monday: US Retail Sales.
Tuesday: JOLTs Openings.
Wednesday: Europe CPI. US Building Permits. FOMC.
Thursday: EU Leaders Summit. Philly Fed Manufacturing Index.
Friday: Existing Home Sales.


Cheers. 
LT


Check out 2018 Track Record


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