Weekend Portfolio Analysis (January 24, 2015)

Pretty quiet week where the market moved up a little bit in just 4 trading days from 2020.76 to 2051.82 for a 1.52% gain. The S&P500 is now almost flat for the year, in fact it was up for the year at one point in yesterday's trading session. It all gets interesting from here as the market moves up and volatility gets killed making the options selling business more challenging. Time will tell if this is a replay of the 2013 & 2014 story, but so far, the long term uptrend channel is still in play.

Yesterday I started playing the March expiration cycle. I entered a March unbalanced Iron Condor on the SPX index. I spent exactly one month without entering trades (Talk about being a lazy trader). I didn't set that level of inactivity as my goal. I was simply playing by my rules. So far I have only traded one position in January, one in February and one in March. Hopefully I get more opportunities in the March expiration cycle to be a little more active and obtain more credits.

March 2015 SPX unbalanced Iron Condor

Today I sold an SPX unbalanced Iron Condor using March options.

Sold March $SPX 1845/1850/2170/2175 unbalanced Iron Condor. Half size on the Calls side. Received .30 credit for Puts and .50 credit Calls
— The Lazy Trader (@lazytrading) January 23, 2015

My interview on the OptionAlpha podcast

Folks, I was invited to the OptionAlpha podcast where I was interviewed by Kirk, whom many of you already know. It was quite an honor as he is one of the traders I always looked up to and because, well, he's been trading since he was born, or so I hear.

We talked about the challenges of trading while having a full time job, we talked about strategies and the specific details in terms of entries, exits, position sizes etc. No hype, no general market useless talk but concrete stuff the way we all like it here at The Lazy Trader. You have the bonus of listening to my beautiful voice and Latin accent for the first time. You just can't miss this opportunity. Check it out!

ETF Rotation Systems to beat the Market - SPY + IWM + EEM + EFA + TLT + TLH + DBC + GLD + ICF + RWX

This is the fifth and last chapter of the ETF Rotation Systems to beat the Market series. If you haven't done so, you may want to read the previous chapters:

- ETF Rotation Systems to beat the Market - American Equities
- ETF Rotation Systems to beat the Market - Global Equities
- ETF Rotation Systems to beat the Market - American Equities + TLT + GLD + IYR + EEM
- ETF Rotation Systems to beat the Market - SPY + EFA + IEF + GLD + ICF

Today we are going to take the concept of diversification a little farther. We will exploit the idea of the fourth chapter materialized in the SPY + EFA + IEF + GLD + ICF portfolio. That is, we will create a portfolio that uses the same asset classes: Equity (US), Equity (International), Bonds, Real Estate and Commodities but this time we will choose two symbols for each category instead of just one.

Weekend Portfolio Analysis (January 17, 2015)

Yesterday was January expiration and with that I'm officially up for the year. The SPX 1820/1825 Credit Put Spread, as anticipated, expired worthless yielding max profit. This was the only position I played in the January expiration cycle. The return for January after trading costs is +1.12%. There was a point in the cycle where I should have sold the 2150/2155 Credit Call spread, but I was excessively patient waiting for the 2160 level to reach 10 deltas, which never happened. Had I sold the 2150/2155 Credit Call spread we would have been talking about a 2% or 3% growth for the month instead of 1.12%. Anyways, the S&P500 is down 1.9% for the year which means the vast majority of investors in the universe is negative, so I'm fine with my small out performance.

ETF Rotation Systems to beat the Market - SPY + EFA + IEF + GLD + ICF

Welcome to the fourth chapter of the ETF Rotation Systems to beat the Market series, where we explore different ETF Rotation portfolios and their potential to outperform the markets and do it with less volatility and smaller draw-downs. If you haven't done so, you may want to read the previous chapters:

- ETF Rotation Systems to beat the Market - American Equities
- ETF Rotation Systems to beat the Market - Global Equities
- ETF Rotation Systems to beat the Market - American Equities + TLT + GLD + IYR + EEM

In the previous chapter we started to diversify the portfolio by adding other asset classes into the mix. The American Equities + TLT + GLD + IYR + EEM portfolio delivered some very interesting results in terms of both performance and draw-downs for 12 years of back test. With such encouraging results we inevitable start to wonder, how far can this go?

ETF Rotation Systems to beat the Market - American Equities + TLT + GLD + IYR + EEM

Welcome to the third chapter of the ETF Rotation Systems to beat the Market series, where we explore different ETF Rotation portfolios and their potential to outperform the markets and do it with less volatility and smaller draw-downs. If you haven't done so, you may want to read the previous chapters:

- ETF Rotation Systems to beat the Market - American Equities
- ETF Rotation Systems to beat the Market - Global Equities

So far, we've only discussed systems whose instruments belong to one single asset category: Equities. The Global Equities rotation system delivered a solid +17.2% Compound Annual Growth Rate for over a decade. But it was still pretty volatile (17.6% volatility) and its worst draw-down at -22.2% would have had many investors screaming for the exit. That's what happens with equities: the asset class that over time delivers the best returns is also the most volatile one. Although the yearly return of the portfolio was solid, we need to address the volatility on that equity curve and also that worst draw-down value. We'll address that by exploring the benefits of diversifying the portfolio with other components such as Bonds, Real Estate and Precious Metals.

ETF Rotation Systems to beat the Market - Global Equities

This is the second chapter of the ETF Rotation Systems to beat the Market series. If you want to know what this is all about,  you may want to read the Introduction here.

On the previous chapter I showed you a simple ETF Rotation System purely based on American Equities. We saw how it out performed the SPY while being less volatile which are the two main goals of ETF Rotation systems.

However, given the nature of the markets and the constant uncertainty about the future, being invested on a single country for long periods of time poses significant risks. While we know that the US Markets have grown about 7% a year on average for the last century, there is absolutely no guarantee that this will continue to be the case going forward. The risk of being invested in equities of a single geographic area can be clearly exemplified with the case of Japan.

The Nikkei 225 Index made an all time high of 38,957.44 on December 29, 1989.
Today, more than 25 years later, the index is trading at 17,197.73. Yikes!

Weekend Portfolio Analysis (January 10, 2015)

Pretty exciting week in the markets with violent moves in both directions. In the end the SPX index opened at 2054.44 and closed the week at 2044.81 for a 0.47% loss.

There was a good opportunity on Tuesday to sell Puts, which I couldn't take advantage of while being caught up in meetings all day. My frustration was clear on Twitter. Of course, in retrospective now anybody can say how great an opportunity it was for selling Puts after seeing the rebound, but that's not my point. I mentioned last week the levels at which I would be interested in selling Puts. Definitely with the SPX below 2000 selling Puts in the mid 1700's was a very attractive opportunity. I simply missed it, and after that I wasn't going to be happy trading at inferior strike prices. That's how my mind works. So I said..."The F with it". I'm not trading it unless we fall to similar levels.

ETF Rotation Systems to beat the Market - American Equities

Because I'm usually hungry for trading and investing related content, it's unavoidable for me to spend two or three solid hours during the weekends on the web looking to learn something new. Most times, I find way too many things that lack real value or that do not offer real actionable ideas. Long gone are the days when I used to waste my life reading random gurus' opinions and forecasts. There is tons of information on the markets out there. A very small portion of it, is truly worth something. However, from time to time you find that little gem and you're allowed to experience that Eureka moment once again.

One trading technique that has really picked my interest in the last couple of months is ETF Rotation systems. I already knew about them but never paid much attention. It was via fellow blogger/trader Dan from ThetaTrend.com that I became really interested in this concept.

Weekend Portfolio Analysis (January 3, 2015)

Welcome to the first Weekend Portfolio Analysis of 2015. If this is your first time reading the blog, this is a typical article I write on weekends (usually on Saturdays) where I go over all my current positions and plan my next moves ahead of time for the upcoming week.

This week the SPX index went from 2087.63 down to 2058.20 for a 1.41% loss. As I said on last week's analysis, in this scenario I wouldn't enter new trades, which is exactly what I did. Let's move on to the current market conditions.