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BookingAlpha Option Trading Advisory

Sunday, November 11, 2018

Weekend Portfolio Analysis (November 11)

Recent Trading Activity

- No Activity. It was an extremely busy week at the office that left me with only a handful of chances to watch the markets.

Market Conditions
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Stochastics: 88 (Overbought. Up from 77)
McClellan: +108 (Neutral. Up from +73)
Stocks above their 20 DMA: 55% (Neutral. Up from 49%)

No man's land

Market indexes nicely up this past week accompanied by all three oscillators. As mentioned here last week, based on my experiences from the 2012 and the 2016 elections, market participants just dislike uncertainty. Probabilities of a significant sell-off were small, and in fact favoring a relief rally was smart regardless of winning parties. Consequently, the VIX went down too, as predicted. The last session of the week did not look very strong, but in my opinion, being below the 50 and 100 day average, and close to the 200 and having started the historically most bullish period of the year, the downside is limited. I favor bullish price action into year end. Regardless of my bias, the 2800 region seems to be offering some resistance, and above that, the 2870 could also offer some. The 2800-2870 area would be a probable battle ground for a couple of weeks. We'll see. On the way down, I believe the horizontal 2600 will not be violated this year. Any downside action near there, would be a good long opportunity, also for selling Credit Put spreads below that level.

The Russell Index:
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RUT has been consistently weaker. Clearly below all three major moving averages now. The diagonal line offered resistance this week, not a great sign. The 1525 level should potentially offer some minor support and then the 1460 area, which I don't think will be violated in 2018. If I were to purely sell Credit Put spreads, this is the symbol I would use right now.

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 rest of the positions

Nov RUT/IWM - 1365/1375/1810/1820 - 182 Elephant
Net Credit: $1568. One week to expiration.
(Click on image to enlarge)
Defense lines: 1,400 to the downside (adjust Put side). Call side no longer a concern.

Nov SPX 2450/2440 Credit Put spread
Net Credit: $1300. One week to expiration
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Defense line: 2500. Adjust Put spread.

Dec RUT 1350/1340 Credit Put spread
Net Credit: $1400. Six weeks to expiration
(Click on image to enlarge)
Defense line: 1415.

Action Plan for the Week

- I'll deploy a December SPX Elephant on Monday.

- I'll let both November positions expire for max on Friday.

Economic Calendar 

Tuesday: Europe Economic Sentiment. China's Industrial Production.
Wednesday: US CPI. Fed Chairman Powell speaks.
Thursday: Philly Fed. Retail Sales. Powell speaks.

Friday: Europe CPI. US Industrial Production.

Good luck this week folks,

Check out 2018 Track Record

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