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BookingAlpha Option Trading Advisory

Saturday, February 23, 2013

Weekend Portfolio Analysis (02-23-2013)

SPX started trading at 1519.79 on Tuesday and closed the week at 1515.60 for a small 0.28% loss. And ladies and gentlemen that was the first negative week of the year.

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Stochastics at 27 neither overbought nor oversold
McClellan at -59 neither overbought nor oversold
53.40% of stocks are above their 20 SMA
70.32% of stocks are above their 50 SMA

We're not at extreme levels here, and to me this is no man's land. At this point I would avoid opening credit spreads close to current price action.

March positions

SPX 1445/1450/1560/1565 Iron Condor
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Probability of success 71.38%. The short Call Strike at 1560 is safe by now. 1530 should offer some resistance on the way up. And 1560 is pretty close to the 1565 all time high. I think, the market won't challenge that number in the next 20 days until expiration so I don't feel too bad about my upper side. As for the 1450 short Put side, the 1475-1465 area should offer some support there. If violated then I will start to get concerned. But so far, everything looking comfortable.

RUT 825/830/955/960 Iron Condor
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An 84.36% probability of success. I won't be touching this position during the week.

April positions

The first April position was entered yesterday. An SPX 1375/1380/1580/1585 Iron Condor.
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A 73.22% probability of success. And I won't have to touch this position during the week.

My plan for the week

Simply keep an eye on the March SPX 1445/1450/1560/1565 Iron Condor. That's the one that might need an adjustment in case the market rallies up to 1550 (unlikely) or if it breaks support below 1465.

Other than that, no more plans. If the market goes to a bullish extreme (McClellan +150, Stochastics 80, 70% stocks above 20 SMA) I will sell a RUT Bear Call Spread in April, with around 80% probability of success, whatever the credit that yields. If we go to a bearish extreme (McClellan -150, Stochastics 20, 30% stocks above 20 SMA) then I will try to sell a RUT Bull Put spread, same thing, around 80% probability of success, whatever the credit that yields at the moment.

Economic Calendar

This could be a very catalyst-driven week. Bernanke will be speaking Tuesday/Wednesday and seen as key after the FOMC Minutes shook up some investors this week. In addition to that:

Tuesday - New Home Sales.
Thursday - German CPI. USA GDP. China's PMI
Friday - ISM Manufacturing

Good luck this week folks!

Check out 2013 Track Record

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