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BookingAlpha Option Trading Advisory

Sunday, March 18, 2018

Weekend Portfolio Analysis (March 18, 2018)

This week's analysis has been published at

Download Weekend Portfolio Analysis (2018-03-18).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The Weekend Portfolio Analysis will be available on this site next week for historical reference.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 2018 Track Record page

Last Weekend Analysis now publicly available:
Weekend Portfolio Analysis (March 10, 2018) 
Recent Trading Activity

- No Activity. Quiet week for me just baby-sitting positions.

Market Conditions
(Click on image to enlarge)
Stochastics: 51 (Neutral. Down from 73)
McClellan: +53 (Neutral. Down from +159)
Stocks above their 20 DMA: 64% (Neutral. Down from 73%)

No man's land

Close to overbought across the line last weekend and now back to no man's land. Resistance (upper diagonal red line) was strong again. Sometimes it amazes me how those simple lines work. To many, Technical Analysis is just useless wizardry. To a certain extent I agree that not all trading decisions are to be made based on technical analysis alone. After all, a resistance level is there, only to be broken one day. Ditto for support. However, at the same time, I have little doubt that there are regions, clusters of prices, where the action gets more interesting, perhaps as a self fulfilling prophecy. I see it in my own personal investing activity. If I buy a stock around support and support is broken after that, then I'm losing money. Depending on how deep the stock falls, or how many weeks or months it takes to recover, I may choose to sell as soon as my position gets back to break-even, just because I'm tired of it: "Old support becoming new resistance". Just to mention one of the basic scenarios. Of course, my own little action is not enough to cause anything in the markets, but those of the herd, once the herd is big enough, influence offer vs demand imbalances at inflection points that many are looking at.

Back in no man's land, not an ideal time to play one side of the market. So, I'm going with an Elephant on Thursday or Friday of this upcoming week.

The Russell Index:
(Click on image to enlarge)

Current Portfolio:

The SPY Calls and SVXY Calls expire in December and January of next year. Same as the Synthetic stock position, which is equivalent to being long 200 shares of SPY, but needing much less buying power. The goal with all of them is to hold them for as long as possible. They may fail, of course, but they are calculated risks. All the SPY and SVXY Calls barely add up to seven thousand dollars. Or 7% of the original 100K portfolio.

The synthetic SPY stock position occupies decent room (13.8K), but since it is the same as being long stocks, there is no way to lose all that money. For example if SPX finishes the year at 2500 (SPY 250), it would be a 14 point loss (from artificially long stock at 264). So, 14 points multiplied by 200 synthetic shares would be a $2800 loss. A similar calculation can be done assuming SPY finishes the year at 240, 230 etc. To the upside, it is also the same thing. Let's say SPX finishes the year at 3,000 (SPY 300). That would be a 36 SPY point gain from synthetically long stock at 264. Thirty six points for 200 artificial shares, would be a $7,200 gain in dollar terms.

Let's now look at the income plays.

Apr. SPX/SPY 2440/2450/2890/2900 - 290 Elephant
Net Credit: $1,608 and five weeks to expiration.
More than half the max potential profit has been made.
(Click on image to enlarge)
Defense line: 2,525 (adjust the Put side). 2,850 on the Call side (close for a small loss. Keep riding Put side, whose credit is greater than whatever loss the Call side suffers.

May. RUT/IWM 1450/1460/1670/1680 - 148/168 Elephant
Net Credit: $1,445 and five weeks to expiration
(Click on image to enlarge)
Defense line: 1,500 (adjust the Put side). 1,635 on the Call side (close for a small loss. Keep riding Put side, whose credit is greater than whatever loss the Call side suffers.

Action Plan for the Week

- I may keep attacking the market purely with Elephants for the rest of the year. I don't want to be so rigid with this decision, so, there may be Unbalanced Iron Condors from time to time. But for now, as long as see I small odds of a strong corrections, Elephants will be favored. Late this the week, the plan is to initiate an SPX Unbalanced Elephant following the usual guidelines (chapter 6)

- If an oversold environment is reached, then instead of an Elephant it will be a May SPX Credit Put spread.

- More than half the max potential profit has been made on the SPX April Elephant. I'd usually ride it for 3 more weeks (until two weeks before expiration), but capital is limited now after the early Feb losses.So, I may need to close it this week before deploying the new one with May expiration.

Economic Calendar

Tuesday: Europe Economic Sentiment.
Wednesday: US Home Sales. FOMC Statement.
Thursday: Philly Fed Index.
Friday: US Core Durable Goods.

Good luck this week folks,

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Check out 2018 Track Record

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