My Options Portfolio Keeps Chugging Along

My Options Portfolio experienced its third straight month of gains and is currently up 50.1% since its inception back in early May 2010. Click here for all of the trades. I have also posted all of the trades for each month (I do this at the end of each month) from my ThinkorSwim account. I hope this helps all of you with transparency concerns. My loyal readers already know that transparency is king in my eyes. By the way, any trades that are currently open will go on next months account post. I currently have an SPY and IWM position open and I have posted both trades in recent posts. Furthermore, as always I will post these trades as soon as they are closed.

For the month the My Options Portfolio advanced 17.5% or $6,155.50. Again it is now up 50.1%, or 13,822.50 since its inception three months ago.

Short, Shorter and Shortest – Are the Bears Near?

Here are the two trades that I placed yesterday. My Options portfolio  now about 50% short. The overbought state of the major indices has increased the probability of a short-term reprieve. There are also a few other factors that are playing into the bears favor over the very short-term. Only time will tell. Have a wonderful night and see you all bright and early for another exciting day.

SPY Trade

Just a quick post  - I added to my current SPY put position by adding a few more contracts at the 111 strike. The major benchmarks have pushed into a short-term overbought state so I expect a reprieve in the next day or two. I will be back with the official trade this afternoon after the bell.

Happy trading!

Kindest,

Andy

New Position in SPY

I decided to place the following trade today:

My trade is based on a few factors that have come into play. While the major benchmark is not overbought it did hit a rare TICK reading yesterday (+1624), which in the the second reading in history. In the past, when a TICK hits 1500 or above the following trading day (today) is only positive 25% of the time. Moreover, the next two days are historically weak with the the days trading positive at the end of the day 28% and 34%, respectively.

I will be back later this evening with more. I would love to hear what you have to say in the comments section of this post. Trading ideas/ thoughts, etc.

Kindest,

Andy

SPY Trade Today – Options Portfolio at High – Up 50.1%

If you were following me in the comments section of the latest post (where I have been announcing my trades in real-time) you should be aware of the trade I posted earlier in the trading day. Friday’s selling left the market in a short-term oversold state, so after another plunge at the open I decided to buy a few SPY calls to take advantage of the short-term situation. Not my typical trade (as I am more of a swing trader), but certainly not out of the ordinary if Mr. Probability is showing me an edge.

As a result, I made 5.6% on the trade, or $205 after commissions, to bring My Options Portfolio up 0.4%, to 50.1%. You can check out the all of my trades here. As always I also post my trades directly from my TOS account (above) because Transparency is King!!

Kindest,

Andy

Bears Take Charge – My Options Portfolio Up 49.4% YTD

What a day! After building a short position in SPY based on my short-term analysis the bears finally took charge today and pushed the market lower 2.75%. Over the past week or so I have been writing about how the probability of a short-term decline was imminent. It took patience and discipline to stick by my analysis while keeping my focus on the most important factor of any trade, risk management. Once again, patience pays.

The trade tacked on another 5.4% or $2,095. As a result, My Options Portfolio is now up 49.4% since its inception on May 8, 2010. You can view all of my trades here and verify my all of my trades as I post all of my trades directly from my TOS account at or near the time of the trade (typically in the afternoon after the trading day is over). Moreover, I post all of my trades again at the end of each month to make it a bit easier to follow for my loyal readers. Transparency is king!!!

Here are the trades placed today, plus I have posted the entry trades again.

The S&P is once again in a neutral state, so I will most likely be sitting on my hands over the next few trading sessions. I have yet to look at my charts to see if any nice setups are taking shape after today’s price action. I would imagine that most of the ETFs that I follow and typically trade are all in a neutral state, but I could be mistaken. OF course, I will try to let you know what I am seeing when the time comes.

I wanted to thank all of my contributors in the comments section. The ultimate goal of this blog is to create a community of traders, particularly options traders, to share trading ideas and thoughts as they arise throughout the day, week, month. I encourage everyone to participate.

Kindest,

Andy

Yes, Trading Can Be Frustrating At Times

Yes, today was, should I dare say, frustrating. My combined position of SPY puts moved into positive territory near the open only to rally hard at the close of the day. It is certainly easy to be look in hindsight and say, I should have taken off my positions when the $108.24 level on the S&P was hit (close of the gap from several days ago), but the major benchmark was still in an overbought extreme so I thought more selling was ahead. Of course, the selling could be right around the corner and I think it is over the short-term, but (for reasons I will state shortly) that still does not hide the fact that trading can often be an endeavor that requires much patience and conviction. As an options trader outside noise (media, etc.) creates emotional trading and as an options trader (we deal with more volatility than most other traders) I am required to stay disciplined and trade  accordingly when the market vacillates widely.  This means abide by my risk-management guidelines through position-sizing and stop-losses. This keeps me in the game and keeps my cumulative profits in tact.

So, with that being said the current market, in my opinion is still due for a short-term reprieve. Over the last three days the S&P 500 (SPY) has been met with strong overhead resistance while sitting at a short-term overbought extreme. Yes the gap from 7/13 closed today (which does concern me a bit), but that does not hide the fact that the S&P is plagued with the aforementioned bearish signals.

Furthermore, at the beginning of the trading the SPY had managed to close above its open for six straight days, which is a feat that has not occurred since May 22, 2001. That particular date, if any of you can remember that far back, marked the end of that rally. The next day (which would be today), the S&P was only able to close above its open 2 out of 9 times when it was below the 200 moving-average.

Moreover, the Rydex Bull/Bear RSI Spread has hit an extreme reading which signals a short-term pause is near. Couple that with the Rydex Beta Chase Index in an extreme and the probability of a move to the downside  increases that much more.

In fact, over the past ten years there have been only 19 occasions when both Rydex indicators hit this type of extreme at the same time and out of the 19 there have been only 3 occasions when the S&P displayed a positive return three days later. However, even the 3 occurrences were eventually met with bearish fate over the short-term.

With that being said, you can see why I am still in the short-term bearish camp. As I always say, as a high-probability mean-reversion trader I have to base my analysis on what makes the most sense to me and that is when Mr. Probability is leaning heavily towards one side, whether it is bullish or bearish. Certainly, even though the herd is quickly moving towards the bullish camp (and maybe that is the right call over the intermediate-term, who knows), but over the short-term my analysis sides with the bearish camp. We shall see soon enough who is right.

Have a wonderful night!

Kindest,

Andy

The Week Ahead – Up, Down, Sideways? Hmmm.

Last week I spoke about the short-term oversold nature of the major indices and how a bounce was likely given the extreme oversold readings. In addition, the seasonal winds were blowing in the direction of the bulls as the Nasdaq’s 12-day mid-year rally began (in late June and ends on July 13th). According to the Stock Trader’s Almanac the average gain for the 12-day mid-year tech rally is 3.2% versus the 0.1% for July as a whole. Moreover, the Almanac states to watch for “huge market gyrations” after July 4th, “both up and down”.

The Almanac goes on to mention that  ”in the mid-80’s the market began to evolve into a tech driven market and control in summer shifted to the outlook for the second quarter earnings of technology companies”. As a result, the Nasdaq’s 12-day mid-year rally from the end of June through mid-July is the strongest.

As we know the bounce came to fruition and now the major indices have moved back into a short-term “very overbought” state while at a strong area of overhead resistance. Furthermore, with the exception of the Russell 2000 (IWM) all of the major indices have closed their gaps that were left unclosed since June 29th. The unclosed gap in IWM could pull the market higher over the short-term, but I think the more likely scenario is one that witnesses a short-term reprieve over the next 1-2 days and then another surge resumes, with the Russell leading the way. Once the gap closes then all bets are off. The market should be back in a short-term neutral state. However, I do think that the bears will ultimately reign supreme. Earnings season is upon us and my guess is that we will continue to see weakness both fundamentally and economically.

One thing is certain, we shall see soon enough. It truly doesn’t matter to me quite honestly. I trade what the market presents. As a high-probability mean-reversion trader I will continue to take advantage of the froth that the market offers.

I will be back with more tomorrow. It is late here on the East Coast and the bed is calling. Good night!

Kindest.

My Options Portfolio – Up 41.7% Since Inception in May

I was able to exit all of my open positions today and as a result, My Options Portfolio advanced 10.4%. My Options Portfolio is now up 41.7% since its inception in the beginning of May. A disciplined risk-management approach (position-size, stop-loss) has helped me to achieve my current percentage gains. Also, as you can see through my transparency (all of my trades have been posted directly from my ThinkorSwim account) my strategy of patience coupled with a sound risk-management has been quite effective. My hope is that all o you will join me on my journey and participate in the comments section of the website.

Click Image to View Trades

Check out out all of my trades since the inception. Moreover, you can view all of the trades directly from my ThinkorSwim account each month on the My Options Portfolio page.

Please do not hesitate to email me with questions or comments.

Kindest,

Andy

June 29th Gap Fill Ahead?

Several of the major indices I follow (SPY, QQQQ, and DIA) have moved ever closer to closing the gap that was established on 6/29. IWM, well, it is a different story. The divergence from the other major benchmarks has been somewhat puzzling, but I still think the gap will eventually close before any significant decline occurs.

In yesterday’s post I mentioned several reasons why I think the market was headed higher over the short-term.

1. The large gap in all of the major indices (plus almost all sector ETFs) from 6/29 has yet to close
2. All of the major indexes have moved into a short-term oversold extreme (just look at the RSI (2) readings)
3. Read the first link from my aforementioned links. Serge is right on in my opinion.
4. Lastly, the start of the second half brings in retirement funds, etc. Furthermore, the Nasdaq’s 12-day mid-year rally begins in late June and conveniently ends on July 13th. According to the Stock Trader’s Almanac the average gain for the 12-day mid-year tech rally is 3.2% versus the 0.1% for July as a whole. Moreover, the Almanac states to watch for “huge market gyrations” after July 4th “both up and down”.

Today the market rallied hard and has moved into a short-term overbought state so I would not be surprised to see a slight pullback before the short-term advance continues. However, I also would not be surprised to see a gap up at the open that closes most of the gaps (the one exception IWM) from 6/29.

If a gap higher does occur I plan on taking off most (if not all) of my positions – IWM included. Right now I have a nice gain, so I want to lock in some profits, particularly if the 6/29 gaps are closed.

This is the levels I am looking at for closing out my established positions:

• SPY – $107.14
• IWM – $63.91
• QQQQ – $44.81

I hope all of you have a wonderful evening.

Kindest,

Andy

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