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BookingAlpha Option Trading Advisory

Saturday, May 27, 2017

Weekend Portfolio Analysis (May 27, 2017)

This week's analysis has been published at

Download Weekend Portfolio Analysis (2017-05-27).pdf

If the above link doesn't work for you, simply log in to, navigate to the "Weekly Analysis" tab and download the document from there.

The Weekend Portfolio Analysis will be available on this site next week for historical reference.

All currently open positions can be seen on the Track Record page

Last Weekend Analysis now available: Weekend Portfolio Analysis (May 20, 2017) 
Recent Trading Activity

- Closed Put side of June RUT Elephant for a $954 gain on Friday. The entire June RUT Elephant is now closed. The idea of closing this one was not mentioned in the previous Weekend Portfolio Analysis. I just decided to reduce downside exposure (as crazy as it sounds nowadays) and readers still have a long weekend in the middle. If anything, by the time the markets open on Tuesday it should be even easier to get filled at perhaps better debits that what I paid given the extra days of time decay. Otherwise, holding this one to expiration should not be a big deal as it looks far (RUT 1230).

- Initiated a July SPX Unbalanced Iron Condor position on Friday for a net $2,150 credit. First position in the July regular expiration cycle.

Market Conditions
(Click on image to enlarge)
Stochastics: 95 (Overbought. Up from 27 last week)
McClellan: +41 (Neutral. Up from -16 last week)
Stocks above their 20 DMA: 47% (Neutral. Up from 38% last week)

No man's land.

Back to all-time highs and with only 47% of stocks trading above their 20-day average. When previous all-time highs have been made we have consistently been seeing more than 60% of stocks trading above their own 20-day averages. This time, it's less than half of them. Here are the different schools of thought. Many would argue that there is a bearish divergence: higher prices but "less" participation of individual stocks in the rally. Others would think, wow, only 47% of stocks above their 20-DMA, there is plenty of room for the index to move further up if more individual stocks are far from being technically overbought. Both are obviously speculative arguments anyways, but I personally prefer to lean towards the conservative side, and the conservative side in this case means "don't be so confident in a short term decline, and just recognize the fact that the market is far from a short-term technically overbought scenario". I'll be careful with the upside, especially now that horizontal resistance has been broken.

Now the Russell 2000, looking weaker than SPX, and where for the first time in a while I have no position:
(Click on image to enlarge)
I left the yellow horizontal mark but like I mentioned before, it looks out of trouble and like a very high probability winner for those who still hold it.

Current Portfolio

JUN SPX 2240/2250/2465/2475 Unbalanced Iron Condor with SPY 228 long Put
Net credit: $1447. Three weeks to expiration. Put side comfortable at the 4-delta mark. Call side at 9 deltas, up from 3 deltas last week. Boy, do these deltas on the Call side move fast. Should have closed this side earlier, but hindsight is always 20-20. Anyways, not too much trouble at the moment here anyways.
Remember this is the "4 to 1 ratio" of Puts to Calls Unbalanced Iron Condor. Because of this ratio, there is not too much upside risk. Adjustment points for the week are SPX 2,295 and SPX 2,445. Now, although 2,445 looks far, it is less than 1.5% higher. So, it is right there. On the Call side we can wait until SPX 2,455 given how small it is and move it up to SPX 2,500 if an adjustment is necessary. That said, I will try to close this Call side for whatever gains I can get.

JUL SPX 2250/2260/2490/2500 Unbalanced Iron Condor
$2150 credit. 8 weeks to expiration. Lots of baby-sitting ahead.
Adjustment points: 2,335 to the downside. 2,455 to the upside. The upside adjustment line is annoyingly close to that of the June SPX Unbalanced Iron Condor analyzed earlier. Simultaneous potential double trouble. One more reason to take the Call side of the June SPX position off the table.

Action Plan for the Week

- No new position unless we reach a short-term oversold condition. If that were the case, I'd go with a July RUT Credit Put spreads at 10 deltas as usual, and 0.60 credit or better (10-point wide). Or 0.30 credit, 5-point wide. Although the first option is preferable as it requires fewer contracts and therefore less in commissions. 

- June SPX Unbalanced Elephant: Take Call side of for whatever gains I can get. If this is not possible and the Call side starts off the week showing losses due to a gap up, then hold. Adjust at SPX 2,455.

- July SPX Unbalanced Elephant: Adjust Put side at SPX 2,335, Call side at SPX 2,455. Take Call side of at 4-5 deltas for gains if markets fall.

More progress on the long EURUSD position by the LT Trend Sniper system
Now at the break-even level. There is no more risk here.
More details about this robot here.
Sniper's results tracked here.

Economic Calendar

Monday: US Markets Closed.
Tuesday: CB Consumer Confidence. Manufacturing and Non-Manufacturing PMI.
Wednesday: Europe CPI. US Pending Home Sales.
Thursday: US Manufacturing PMI.
Friday: US Non-Farm Payrolls. Unemployment Rate.

Good luck this week,

If you are interested in a responsible and sustainable way of trading options for consistent income with solid risk management, consider acquiring LTOptions, my options trading system to the last detail.

Check out 2017 Track Record

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