Today I opened the first trade of the December 2013 options expiration cycle as follows:
BUY 4 Dec SPX 1600 Put @5.10
SELL 4 Dec SPX 1605 Put @5.30
SELL 4 Dec SPX 1835 Call @4.00
BUY 4 Dec SPX 1840 Call @3.40
Credit: 0.80 ($320)
Max Risk: 4.20 ($1680)
Days to exp: 56
Implied volatility is low but it tends to remain that way for the rest of the year as markets are usually strong in November and December. I think this market is overbought at this point, with over 75% of stocks above the 20 Simple Day moving average but I feel the short Put at 1605 is safe enough.
Finally a chart of SPX today for future reference:
(Click on image to enlarge)
Check out 2013 Track Record
Related Articles:
Weekend Portfolio Analysis (November 2, 2013)
Weekend Portfolio Analysis (November 9, 2013)
Call Side 1835/1840 adjusted further up to 1850/1855 on November 14
Weekend Portfolio Analysis (November 16, 2013)
Weekend Portfolio Analysis (November 23, 2013)
Weekend Portfolio Analysis (November 30, 2013)
Weekend Portfolio Analysis (December 7, 2013)
BUY 4 Dec SPX 1600 Put @5.10
SELL 4 Dec SPX 1605 Put @5.30
SELL 4 Dec SPX 1835 Call @4.00
BUY 4 Dec SPX 1840 Call @3.40
Credit: 0.80 ($320)
Max Risk: 4.20 ($1680)
Days to exp: 56
Implied volatility is low but it tends to remain that way for the rest of the year as markets are usually strong in November and December. I think this market is overbought at this point, with over 75% of stocks above the 20 Simple Day moving average but I feel the short Put at 1605 is safe enough.
Finally a chart of SPX today for future reference:
(Click on image to enlarge)
Check out 2013 Track Record
Related Articles:
Weekend Portfolio Analysis (November 2, 2013)
Weekend Portfolio Analysis (November 9, 2013)
Call Side 1835/1840 adjusted further up to 1850/1855 on November 14
Weekend Portfolio Analysis (November 16, 2013)
Weekend Portfolio Analysis (November 23, 2013)
Weekend Portfolio Analysis (November 30, 2013)
Weekend Portfolio Analysis (December 7, 2013)
Go to the bottom of this page in order to see the Legal Stuff
This is a nice December SPX IC. I will probably enter my first December bull put spread position next week. I will not have any bear call spreads for December because of the Santa rally that everyone is expecting. I will look to get in around 1600 too. I am hoping for a small drop next week. Markets do go down right? This year has been very unusual. I think it is safe to say this is the best bull market since 2007. I am going to limit the amount of contracts I sell for my bear call spreads to half until QE is slowing down. So I will end up with an uneven iron condor. Markets can remain overbought for a very long time. I hear chatter of 1800 this year. One of the best traders that I know thinks we will not hit 1800. A year ago, no one would have thought that RUT could be trading at 1120 and SPX over 1750 today. This goes to tell you no one really knows.
ReplyDelete