August 19, 2017

Archives for August 2007

Post Options Expiration

SPX settled at 1450.11, roughly 5 points above the short strike of  the original put spread in our August cycle Iron Condor strategy. If we had only been smart enough to wait for the 58 point increase from yesterday's close. Okay, enough sarcasm. Yes, SPX settled at 1450.11. The lrage move was sparked by the fed's decision to cut the key discount rate by half a percentage point to 5.75%. I will discuss the August cycle Iron Condor trade in great detail in the Expiration Report due out later this weekend (paid subscribers only). As for next week, we could see a continued move to the upside Monday as post-expiration, particularly the trading day following expiration is bullish. Read yesterday's post for more details. However, I do feel … [Read more...]

Will the market follow through?

The market experienced a wave of panic this morning. As a result the major market benchmark, S&P 500 (SPX) sold off to 1370, a level not seen since the short correction that began in late February. However, the surge lower led to one of the biggest intraday reversals in quite some time and the S&P actually closed the day in the black, up 0.32%. The intraday move brought the S&P proxy back into neutral territory, but the Dow (DIA), and the tech-heavy Nasdaq 100 (QQQQ) remain in an "oversold" to "very oversold" state. Seasonal tendencies have had no bearing on the current market although I think this could change with post-expiration on the horizon. As I always state around options expiration; post-expiration, specifically the trading day … [Read more...]

Downside Action Continues

The recent plunge in the market has moved all of the major benchmarks below their respective 200-day moving averages. The Dow (DIA), Nasdaq, and S&P have plunged 760, 154, and 91 points respectively. For the S&P this is the largest 5 day drop since July 2002. As expected the sharp drop has led to the major benchmarks moving into an oversold state. As for our Iron Condor position, we several weeks ago the underlying SPX was nearing the short strike of our bull put spread so we decided to take off the position locking in a loss of roughly 24%. Five days ago (when the plunge began) we decided to add another bull put spread to bring in some premium and therefore decrease our loss a bit. Almost immediately after we added the position the … [Read more...]

Major Indices Nearing Extremes

Tomorrow promises to be very interesting. On a technical basis, the major benchmarks that we follow are nearing short-term extremes and another push lower would certainly in oversold territorry. Typically, when the overall market reaches this type of extreme a short-term bounce (1-5 days) is to be expected. We have managed to miss the entire move in our ETF Extremes strategy which proves that being in cash IS a position. If the aforementioned situation occurs (market pushes into very oversold territory) we could see a signal in the strategy. As always, we will let our paid subscribers know (in real-time) once/if we take a position. As for our Iron Condor strategy, the underlying SPX is once again nearing the short strike of our bull … [Read more...]

Short-term Seasonal Strength Upon Us

Options expiration is finally here and short-term seasonal strength is upon us. As I stated last week Tuesday, Wednesday and Thursday of this week are overwhelmingly positive on a seasonal basis so if the historical precedent holds our SPX Short Iron Condor position should bode well over the short-term. The S&P is still sitting on its 200-day so we will be watching this closely to see how the market reacts over the coming days. If the market falls below and the move is sustained we will be watching for another test of the August lows at 1430. If the aforementioned situation occurs then this will be the third test of the 1430 area this over the past few weeks. A breakdown below would certainly be negative and the 1400-1405 area would be … [Read more...]

Retest of August Lows – 200-day MA Holds

The retest that I spoke of yesterday occurred today in the S&P. The S&P bounced off of 1430 (August low) sharply and then began to vacillate widely. This could prove positive for the market as it moves into the end of what has been a crazy August option expiration cycle. On a seasonal basis next week as a whole is overwhelmingly positive. I say as a whole because Monday is historically weak with only 38.1% of all days since 1985 closing in positive territory. However, according to the Stock Trader's Almanac "the Monday before August expiration the Dow has been up 9 out of the last 11 years". Tuesday, Wednesday and Thursday as I said are overwhelmingly positive on a seasonal basis so if the historical precedent holds our SPX Short Iron … [Read more...]

Bull Put Spread Added – S&P Now Sitting On 200-day MA

Rising volatility allowed us to add the bull put spread back on today in the SPX Short Iron Condor strategy today. The pullback increased the VIX roughly 4% so we decided to add the spread for a credit of $.70. This decreases our loss for the month, that is if the market is able to hold above 1405 through options expiration. We added the position with the underlying SPX trading at 1478, 73 points above our short strike or 4.9%. At the end of the day SPX was trading at 1453, 48 points above our short strike, or 3.3%. The S&P closed right above the 200-day moving average so the next few days could be crucial to the market over the intermediate-term. My guess is that the low of 1430 could be tested over the next few days. The positive is … [Read more...]

Hindsight is 20/20

I feel Helen Reddy's statement sums our SPX Iron Condor position best, "Hindsight is wonderful. It's always very easy to second guess after the fact". The underlying SPX is well within our chosen range with only 6 full trading days left (SPX is a European style option) until options expiration. Unfortunately, when the SPX raced down towards our short strike we decided to take off the spread for a loss. I am not upset by this decision as it was the prudent decision for risk management reasons. However, I am upset at myself for not rolling down at the same time we took the positions off. Yes, the market could have raced lower even further, potentially breaching our new short strike, but I would have taken precautions to minimize risk (and … [Read more...]

No post tonight

I am leaving for NYC so there will be no post tonight. I will be back early tomorrow (or possibly very late tonight) with some thoughts on the current market, the overbought/oversold measures and more Iron Condor discussion. Andrew Crowder … [Read more...]

Iron Condor – Selling Premium?

I apologize for the tardiness of the post. I was lacking electricity for several hours this afternoon which put me a little behind schedule. Anyway..... I am going to keep it short and sweet tonight. The declines this morning pushed the oversold indicators in extreme territory and wouldn't you know it the intraday reversal began. It was a powerful move to the top, but concern is that the sharp advance lacked participants. Tomorrow brings the almightly Fed Release (2:15 Est.), so expect to see some volatility around that number. My sense is that things are going to calm a bit as we move closer to option expiration. The Vix peaked out at 26.47% the highest reading since around this same time in August 2003. However, its time above 26 … [Read more...]