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BookingAlpha Option Trading Advisory

Saturday, April 9, 2016

Weekend Portfolio Analysis (April 9, 2016)

The S&P500 went from 2073.19 to 2047.60 this week, for a -1.23% performance. Year to Date, it is now up 0.18%. It's good to finally see the horny bull take a pause, alleviating some of the pressure on our Credit Call spread positions.

Recent Trading Activity

- Defended the May31 SPX 2125/2150 Credit Call spread on Monday by adding 2150 long Calls and a 1885/1890 Credit Put spread.

Market Conditions
(Click on image to enlarge)
Stochastics: 48 (neutral)
McClellan: -52 (neutral)
Stocks above their 20 DMA: 51% (neutral)

We are in No man's land here. Decent environment for Iron Condor plays. There are already three Credit Call spread positions, so, no additions in my case for now. As for my personal bias, at the moment I am as bearish as one can be. I think some more downside lies ahead and that bearish divergence is just starting to play out. Of course, playing the hand you are dealt, respecting price action and risk management takes precedence over any random blogger's bias. I have found myself trading/defending positions against my bias many times, just because price action in the end is the truth that must be respected and risk most always be managed first. Those elements take precedence over your opinions or ego. But, yeah, I'm bearish, and I have been now for like 3 weeks.

Current Portfolio

May31 SPX 2125/2150 Credit Call Spread
SPX 2150 Long Calls & 1885/1890 Credit Put spread

With the defensive move added to the original CCS, the T+0 line on this position is pretty flat right now. The goal is not to make money here, but to close it all once an overall break-even balance is reached. Because of the flatness in the T+0 line, I can afford to not have to do anything with the Credit spreads even way past 30 deltas. My boundaries are 1910 and 2110. If neither of those values is reached, this position will stay in the portfolio until about the first week of May, where I project to close it all for break-even.

June30 SPX 2150/2175 Credit Call Spread
Nice relief at 17 deltas, down from 25 deltas last week. Adjustment point for the week estimated at around 2,090. I believe we won't see this number, but if we do, I will deploy a new 2225/2250 using full size.

July29 SPX 1650/1675/2200/2225 Unbalanced Iron Condor
No concerns. Looking great for now.

July SPY Long 169 Puts
Portfolio Insurance

Action Plan for the Week

- If SPX rallies to about 2,090, defend the June30 SPX 2150/2175. I will take a loss and will deploy a new CCS with twice the number of contracts, using 2225/2250. I think this scenario is unlikely.

- If SPX rallies beyond 2,110, close all the May31 SPX options for a loss and deploy a May31 Credit Call spread above 2,200. I view this scenario as a remote possibility for this week.

- Sell June30 RUT Credit Put spreads if we reach an oversold extreme condition, which is within reach if the market declines 3% or so from current levels.

- Cash gains on long SPY July Puts on an 80%-100% ROI shall the markets fall significantly.

- Close all May31 SPX Positions for a loss if SPX reaches 1,910. In this case I would be simultaneously cashing gains from June Credit Call spreads, July Credit Call spreads and July SPY Long Puts. After closing all this, I would also deploy a new SPX Credit Put spread in the 1600's. I think this scenario of SPX reaching 1,910 is unlikely for this upcoming week.

The LT Trend Sniper robot is still Long EURUSD. The position has been in play since March 31 at an entry price of 1.13403.
The trend really hasn't made much progress, but at least the Stop Loss has been moved twice and now it is only half the original distance. The max risk in the position at the moment is therefore only 1.5% of the account should SL be hit. The EURUSD currency pair has been moving sideways for the last few days and if no progress is made this week, the Sniper has a high probability of closing the position for a small win or just a near break-even result in order to wait for another breakout.

Economic Calendar
Tuesday: US Federal Budget Balance
Wednesday: Retail and Core Retail Sales, PPI, Crude Oil Inventories.
Thursday: Europe's CPI, US CPI, China's GDP and Industrial Production.
Friday: Michigan Consumer Sentiment.

Options Trading results - With closed positions and trading costs included, we are down 0.39% for 2016. The S&P is up 0.18%. The portfolio is currently 38% invested, 62% in cash.

Forex Trading results - Up +2.68% for the year. Long EURUSD at the moment.

Let there be rock. See you at the Pearl Jam concert tonight!

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Check out 2016 Track Record

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