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Saturday, April 28, 2018

Weekend Portfolio Analysis (April 28, 2018)

This week's analysis has been published at

Download Weekend Portfolio Analysis (2018-04-28).pdf

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The Weekend Portfolio Analysis will be available on this site next week for historical reference.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 (April 22, 2018) 
Recent Trading Activity

- Initiated a June RUT Elephant position on Monday. Net credit $1,316. In the end I had a tough time getting filled on SPX, so I went with the Russell. Next one (this upcoming week) will be an SPX position.

Market Conditions
(Click on image to enlarge)
Stochastics: 43 (Neutral. Down from 67)
McClellan: +6 (Neutral. Up from +3)
Stocks above their 20 DMA: 57% (Neutral. Down from 65%)

No man's land

Maybe it is time to stop seeing an uptrend channel (upper diagonal red line) in favor of a more mundane potential horizontal resistance around 2,800. The market mood has definitely changed from the old days where it would go up no matter what (good news, bad news, lack of news, everything was a good reason to rally). The upper end of the long term uptrend channel is now nearing all-time highs territory around 2,870 and boy, that looks pretty far. 

As usual in no man's land territory: plenty of room to go both ways. The 2540 - 2800 range may become the battle field for a few weeks and I’ll be looking to deploy my positions preferably outside those boundaries. SPX Elephant coming over the next few days (unless we get an oversold market). No SPX Position at the moment.

The Russell Index:
(Click on image to enlarge)
Two positions here, both looking good. Still looking at RUT 1,615 as potential resistance.

Current Portfolio:
The SPY Calls and SVXY Calls expire in December and January of next year. All bullish bets on a market rebound.

Let's now look at the income plays.

May. RUT/IWM 1375/1385 - 141 Elephant Put side
Net Credit: $948 and three weeks to expiration
(Click on image to enlarge)
Defense line: 1,425 (adjust the Put side).
Most of the profit has been made here. This position is the remainder of an Elephant whose Call side was closed at a $688 loss. The profit made on the Put side is already greater than said loss, which results in a small victory for the May RUT Elephant.

Jun. RUT/IWM 1400/1410/1650/1655 - 144/166 Elephant
Net Credit: $1,316. Seven weeks to expiration.
(Click on image to enlarge)
Defense lines: 1,460 to the downside (adjust Put side) and 1,620 to the upside (close all Calls at a loss and keep riding Put side, whose credit will be larger than the loss on the Calls).
This is the new position entered this past week, so there's a lot of baby-sitting ahead.

Action Plan for the Week

- Deploy the second June position. I'll use SPX. If we reach an oversold environment then a Credit Put spread. We'll be in an oversold environment with SPX below 2600 (currently 2669) and at that point, the 10-delta Puts will be in the low 2,300's. If an oversold environment is not seen, then an Elephant will be the go to move. This one for example doesn't look too bad: 2430/2440/2810/2820 (20 Put spreads + 7 Call spreads). All that hedged with 1 SPY 250 Put (long) and 7 SPY 282 Calls (long)
This is just an idea that may change depending on market moves.
A smaller player can play 4 Put spreads + 2 Calls spreads + 2 long SPY Calls (20K account size). Or even smaller 2 Put spreads + 1 Call spread + 1 long SPY Call (10K account size).

- In addition, I will try to close the May RUT Position (Put side of what originally was an Elephant). Max potential gain at expiration is $948. Let's see if this can be closed for a gain greater than $800.

Economic Calendar

Monday: Chicago PMI. Pending Home Sales.
Tuesday: US ISM Manufacturing PMI.
Wednesday: ADP Non-Farm Employment Change. FOMC Statement, Interest Rate Decision.
Thursday: Europe CPI. US ISM Non-Manufacturing PMI.
Friday: US Non-Farm Payrolls. Unemployment Rate.

Good luck this week my friends,

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Check out 2018 Track Record

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