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Sunday, February 1, 2015

Weekend Portfolio Analysis (February 1, 2015)

Man, I'm sleepy. No, seriously, I truly am. Let's see how I manage to write this one.

Back in 2010 when I started this blog, I would have just kept sleeping as the site was barely visited by 2 or 3 readers per day. Things are a bit different today and I know many readers are waiting for the weekend portfolio analysis, which keeps me motivated. So, here it goes.

Market conditions
The markets went from 2047.86 down to 1994.99 last week for a pretty significant 2.58% loss. I was pretty quiet and didn't enter new trades as extreme oversold conditions have not been reached yet.

(Click on image to enlarge)
Stochastics: 22 (neutral)
McClellan: -37 (neutral)
Stocks above their 20 Day Moving Average: 36% (neutral)

We are still in no man's land although quickly approaching a short term oversold extreme. I still won't enter new trades until that extreme is reached. However, if you are not as mechanically driven as I am, you can consider selling Puts already. When markets go down the VIX goes up making the sale of Credit Put spreads more attractive. Right now with the VIX at 20.97 you can sell March Puts on SPX with 90% probability of success down in the 1740's which is a 250 point loss from current levels and 350 points from the Christmas highs, that is around 17%, which is extreme for a 2 month time span.

Selling Calls under these circumstances is a no-no. Too risky.

February positions
SPX 1875/1880/2190/2195 Iron Condor
$320 credit. 18 days to expiration and 84% probability of success. Still Looking good. Not as stress free as last week but expiration is getting closer. Still pointing to a +3% portfolio growth in February.

March positions
SPX 1845/1850/2170/2175 unbalanced Iron Condor
$220 credit and 46 days to expiration. The Put side of this trade has a 21% probability of expiring in the money. Not thirty yet, but time to start looking at it carefully.

Action plan for the week
The Put side of the March unbalanced Iron Condor is my main concern right now. According to my estimates, if SPX falls to 1950-1960 this week, that spread may reach the 30% probability and it would be time to adjust the trade. If that happens, I will close the 1854/1850 Put side for a temporary loss and will deploy capital in the low 1700's or high 1600's, where there should be no problems. The trade should be a wash in the end or a very small loss if anything. Not the end of the world.

If the market reaches an oversold extreme condition I will open a new trade, possibly in RUT using February options in the mid 1050's. It should be all safe down there.

If on the contrary  we move sideways or up, I will keep honoring my alias. That is good. Doing nothing is good. The fewer positions the better. Less stress, more time to focus on your full time job etc. Doing nothing means that all your existing positions are burning Theta decay and working little by little for you without being threatened. Learn to cherish and appreciate that passivity.

The bleeding on the Euro stopped this week. The EURUSD went up a little and then moved sideways.
(Click on image to enlarge)

The  LT Trend Sniper is still in the short EURUSD position that started on December 21 last year but part of the profits were lost this week. This is a necessity in order to stay in the trend and exploit it to its limit. The markets never move in a straight line. The small Forex portfolio is now up +13.83% for the year (vs +15.08% last week)

(Click on image to enlarge)
The Sniper is very likely to finally exit its short EURUSD position this week if a closing price below 1.1206 is not made by Wednesday 5pm Eastern Time (GMT - 5) or even earlier than that if price keeps moving up in the next couple of days.

For more information about this strategy, visit the LT Trend Sniper's page

Economic Calendar
Sunday: China Manufacturing PMI
Monday: German Manufacturing PMI, US ISM Manufacturing PMI
Wednesday: ADP Nonfarm Employment Change, ISM Non-Manufacturing PMI
Thursday: US Pending Home Sales
Friday: Nonfarm Payrolls, Unemployment Rate

Good luck this week!

Check out 2015 Track record

Go to the bottom of this page in order to see the Legal Stuff


  1. “We are still in no man's land although quickly approaching a short term oversold extreme.”

    I agreed. If we drop next week, I will start selling April credit put spreads.

    What I did last week:

    Last week, I closed the Feb RUT 1000/990 cps for .10 debit. I got in this position on December 1st, 2014 for .80 credit. Profit is .70.

    Plans for this week:

    I am hoping to close the Feb SPX 1800/1795 cps for .05 debit. If the market goes down again, I will sell April credit put spreads.

    Current Positions:

    Feb SPX 1800/1795 cps
    Mar 31st RUT 1000/990 cps
    Mar SPX 1720/1710 cps

    You can follow me on Twitter @lienjonathan where I tweet my high probability credit spread trades in real-time for free. You can like my Facebook page and see all my open and closed trades and track record below.

  2. Nice work in 2014 your return.

    How long have you been trading for?

    1. Gen Y, I assume you are asking me. I have been trading since the late 90s.

  3. I was close to getting filled this morning on April SPX 1700/1690 cps and April RUT 980/970 cps but the market got away from me and never looked back. Hopefully I will have another chance this week.