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Saturday, June 14, 2014

Weekend Portfolio Analysis (June 14, 2014)

The SPX Index went from 1948.97 down to 1936.16 this week for a 0.65% loss.
I'm writing this article in a hurry as we're going to meet a bunch of friends at the Toronto Islands today and I'm kind of late. By the way there is a nudist beach in one of the islands. Can you imaging talking about selling naked options being actually naked!??! That'd be cool.

This week I entered a 197 Put Calendar spread and I also sold the July 1805/1810 SPX Put spread yesterday as follows: 

Sell 5 SPX July 1810 Put @4.90
Buy 5 SPX July 1805 Put @4.60
Credit: 0.30 ($150)
Days to expiration: 35

I had to adjust the 1975/1980 Credit Call spread a few days ago. Normally when I make an adjustment I like to collect credit on both sides, the Calls that I sell further up in this case but also the Puts. It's nothing new, I've done it before, every time I make an adjustment. But in this case, I was seeing the market a little ahead of itself, with SPX price to faraway form its 50 DMA based on a historical perspective. I figured I would wait a little to be able to sell Puts at lower strike prices. The plan worked. Had I sold puts the same day of the adjustment I would have sold the 1840 strike, which was showing 10% probability of being in the money. By waiting for a couple down days, I could sell 30 points below for the same credit.

Market conditions
(Click on image to enlarge)

Stochastics: 50 (neutral)
McClellan: -27 (neutral)
67% of stocks are trading above their 20 Day Moving Average (neutral)

We're in no man's land and in the middle of the uptrend channel. This thing can move significantly in any direction. No point predicting any reversal or continuation at this point. The market is still in a long term uptrend channel that started back in November 16, 2012 in what has been one of the most spectacular runs in history, making it consequently challenging for options sellers.

June Positions
RUT 920/930 Bull Put Spread Will expire for full profit this week.

SPX 1710/1715 Bull Put Spread Will expire for full profit this week.

July Positions
SPX 1735/1740/2010/2015 Iron Condor 84% probability of success now with 34 days to go. I'm not concerned about this Iron Condor after the adjustment made on the Call side.

SPY 191/197 Double Put Calendar Spread I feel comfortable riding this baby right now. Even though the position is not showing a profit at the moment, price is in the middle of the range, so by now, staying put is the name of the game here.
(Click on image to enlarge)

July 1805/1810 SPX Put spread. Entered yesterday and with a 90% probability of success. With SPX at 1936,there's no immediate threat.

Action plan for the week
All the positions look comfortable at this point. That's good. Boring is good. And I think I have absolutely nothing to do at the moment. June expiration will be this Friday and it should bring a 2% portfolio growth.

Economic Calendar
Monday: Europe CPI
Tuesday: US CPI, Building Permits, Housing Starts
Thursday: Philly Fed, Jobless claims

Good luck this week folks!

Check out 2014 Track Record

Related Articles:
Weekend Portfolio Analysis (June 21, 2014)


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  1. Hi LT
    It was a good week for option sellers, nice, calm, slow retracement.
    I like your double calendar adjustment. Nothing to do but sit on it and be patient, like watching grass grow, it will rebuild value, you just won't see it happen day to day.
    I wish us all another calm week into option expiration.
    Take care

  2. Hi Henrik,

    You have several spelling errors on your post! I know you were a rush to get out of the door and did not have time to proofread your writing.

    It looks like you have 2 July credit put spreads on SPX. I know you don't want to close it because the commissions are pretty high up in Canada. If it was my trade, I would close the 1740/1735 and just have 1810/1805 iron condor with the 2010/2015. BTW, Nic issued a trading alert on Friday for the same exact July SPX bear call spread you have.

    Here are my current positions:

    June IWM 96/94 credit put spread (will let it expire next week)
    July IWM 95/93 credit put spread
    July IWM 123/125 credit call spread
    July SPX 2000/2005 credit call spread

    For next week, I will put on my first August position. I am not sure if I will do in on SPX or RUT first. I will let price action dictate which one I will take. I am also leaning towards selling an iron condor since we are in no man's land. I will make sure to keep it under delta on 10 because like you said, it can swing up and down since we not overbought nor oversold.