Sitting in Cash

I exited my last USO position this afternoon. Here is the following trade:

The trade made $.61 (20 contracts at an avg. price of $2.53) or 24.0%.

I will be back either late this evening or tomorrow with a summary and a copy of my TOS trade summary over the past week/month.  Stay tuned! Also, I will have a complete monthly summary of the Options Portfolio in the upcoming FREE Newsletter.

Market Rallies Off Lows. Possible Short-term Rally Ahead?

It was a wild day for the market and traders alike. The market (Dow) staged a late day rally to close down 22 points after a plunge of 292 points at the open. Best of all, the major indices (DIA, QQQQ, SPY and IWM) are still in a short-term oversold state which means that the probability of a continued short-term bullish run is better than average. I am looking for a close in the gap from 5/20 in all of the indices mentioned.

I currently have positions in USO and IWM, as well as a mid-day purchase of GDX. Here is the trade from my TOS account:

I also added another IWM position to the mix:

Both trades did extremely well today. The GDX trae is currently higher 35.3% or $.71 and the IWM trade is up 26.1% or $.52. However, my USO position is still underwater as well as my other IWM trade. I still expect a move to the upside to close the gap from 5/20 so if this does indeed occur I could reap quite the profit for the portfolio. As I stated before the major indices remain in a short-term oversold state so the probability of a move higher looks likely based the historical oversold/overbought precedents I follow.

Still Holding USO and IWM

I actually purchased 1o more contracts on IWM this morning due to the large gap down and the short-term oversold state of the underlying Russell 2000. I am hoping that patience pays, but preserving capital might get in the way. I will be back with the trade for all of you loyal followers of the blog shortly.

Kindest,

Andy

Russell 2000 (IWM) Looks Ripe

The bullish engulfing pattern that was established Friday in IWM, the oversold nature of the underlying, and lastly, the unclosed gap from 5/20, has led me to place a short-term trade in the Russell 2000 (IWM).

Here is the trade from my Thinkorswim account:

I would like to see a move up to $66.58. This would be the level at which the gap would close from 5/20 and where I would most likely look to exit the trade or tighten my stop.

I also still have 20 contracts out on USO for an average price of $2.53. I am currently down 17.0% on the trade, but have not given up on a bounce. If  the underlying pushes lower and back through the 5/20 low of $31.64 then I will take off the trade. Otherwise, I plan on holding until the anticipated bounce occurs.

Stay tuned for more this afternoon!

Kindest,

Andy

Added Another USO Position

I just purchased another 10 contracts in USO. Yes, I am doubling down in a sense, but I am fairly confident in a short-term bounce as many of the bullish indicators are at/near historical levels.

I will be back with the exact trade from my TOS account alter this afternoon.

Happy trading!

Andy

Could Not Resist the Oversold State of USO

The United States Oil Fund (USO) currently sits in a short-term ‘very oversold” position. I was able to take advantage of the oversold extreme at the open as the underlying USO spiked higher at the open and afforded me a wonderful opportunity to take some profits (reported in an earlier post). At the end of the day USO had once again made new lows, so I am once again attempting to take advantage of the high-probability trade by buying a few more calls. Here is the trade placed in my Thinkorswim account:

There are quite a few short-term technical indicators that are screaming for a bounce to occur, so I am not going to fight Mr. Probability. I still think we could trade in a 1110-1180 range for quite some time. A break and hold below 1110 and that could spell lots of trouble for the bulls, but that is a more of an issue over the intermediate-term time frame. Over the short-term I think a retest of the lows could occur tomorrow followed by a sharp spike in the indices as we approach options expiration.

Another respected blog that I follow also has a similar sentiment to mine regarding the oversold extreme in oil and very notable statistics about the historical performance after such an extreme oversold reading.

• Oil is Oversold

Currently, the RSI (2) of USO reads 1.15, which is a reading that in most cases leads to a short-term bounce. Of course, USO was back in January and the indice spiked for a day only to turn right over and collapse. However, this time is different for a few reasons, but the main one is that the longer RSI (14) has moved into historical realms as well. When both of these indicators line up like this the probability of a bounce increases significantly.

Furthermore, the S&P 500 has dipped into a short-term oversold state which is another encouraging sign for the short-term bull.

Have a wonderful night and try not to read too much before tomorrow open.

Kindest,

Andy

Options Trade Update

The higher open today allowed me to take off the three positions that I established yesterday. I would have preferred a move that closed the gap, but all three pierced my underlying support levels so I decided it was best to go ahead and take my profits off the table.

Here are the following trades from my TOS account:

The net profit for the trades was $845.00 which resulted in an 3.8% gain for the My Options Portfolio. My Options Portfolio is now up 14.0% since it was initiated at the beginning of May.

Here are the overall results for the trades I placed from Monday.

• S&P 500 (SPY)  +10.2%
• SPDR Gold Trust (GLD)  +9.3%
• US Oil Fund (USO) +10.1%

I am stepping away from the screen for a bit to visit the park with my child. I find that time away from the screen is often needed and after the blistering 7 trading days that I have had I feel as though it is much deserved. Realistically, we all know that a 100% win ratio will not hold up, but I will continue to allow Mr. Probability to work for me and with sound risk management I should continue to see decent gains trickle into My Options Portfolio.

I will be back later for a few additional comments. Stay tuned!

Kindest,

Andy

Summary of Today’s Options Trades

Vacillation is the word that best describes today’s trading – widely vacillating to be more exact. I bought a few calls early in trading day  (check the earlier post from today) in the S&P 500 (SPY) and an hour and a half later purchased a few calls in the Gold (USO).  The technicals I follow closely moved into a short-term oversold state with an unclosed gap (5/14) looming overhead in the major market index – a set-up that I most often prey upon.  My expectation is to see a short-term move in the SPY that takes index back to $155.89 (the low from 5/13) . An advance in the index would certainly move conversely with the overbought state in Gold (GLD) so I decided to buy a very small position in GLD. I set my limit order for $2.75 , but the market makers only took three of my contracts after the ETF moved briskly lower. Both positions should fare well in the event of a short-term bounce.

Later in the day, the market tested the lows from earlier in the trading day and I decided to buy a larger position (long calls) in the United State Oil Fund (USO). Yes, another long position, but again, I am only playing off of the short-term oversold state in USO so I do not expect to hold this position or any from today’s trading for more than a few days, with the potential for a few hours. More specifically, once the gap closes in USO ($36.08) or a move to a short-term overbought state occurs I plan on exiting the position. As always, I will see what the market offers me and try to take best advantage of the situation at hand. There are no guarantees, so I will again try my best to take what the market offers me.

Here is the USO trade I placed late in the day on the TOS platform (the best platform options trading platform by the way):

Unfortunately, the market moved against my first 2 trades (SPY and GLD) as soon as I placed them and I almost had to exit the SPY trade (nearing stop-loss).  GLD held on nicely and the USO trade that was placed later in the day suffered a minor pullback, but managed to move higher as the closing bell neared. SPY also rallied into the close so tomorrow could be an interesting day for my current positions. I expect to see a continuation of the short-term bounce (up to the gap fill mentioned above) in the S&P 500 (SPY), but of course as we all know, there are no guarantees in trading/investing.

Kindest,

Andy

I Have the Gold Bug

I just purchased a few contracts in GLD. I follow Tim Knight and think highly of him as a technician and when I saw that we were thinking the same about the state of GLD I decided to purchase a few puts. Unfortunately, I was only able to buy three puts before GLD moved away from my limit price ( I typically never chase).

Here is the trade:

I will be back later with a follow-up on my trades.

Happy trading,

Andy

Very Short-term Trade – SPY

I woke up this morning with the same assumption that I had last week – this market is headed lower. Maybe not today, maybe not tomorrow. When taking a look at the S&P 500 (SPY) over the short-term  it looked like a decent area to try a call. Of course, this would only be  a short-term play and I intend on keeping my stops fairly close so I decided to place the following in my thinkorswim account:

So far the trade isn’t holding up so I could be out of this almost as soon as I got it. Unfortunately, that is how it goes sometimes. I can only go on probabilities as a trader and as we know there are no guarantees in trading/investing. The key is  to manage your risk wisely.

Kindest,

Andy

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