Daily Market Newsletter

I have no positions at this time. Not the right type of market for these trades. If/when the price rallies higher to resistance, that might be an excellent time to place a LP Iron Condor.

I have no remaining positions. Calendar spreads are good for markets with some volatility but they are long vega so we can’t enter them during IV spikes.

The calendar spread tracking sheet is available for your download here. Yes, if you follow the math in the sheet, all of the numbers account for commissions in and out of the trade. Please note: If you trade these positions please keep the size small, to the point where you “do not care” about the success or failure of this position.

I personally believe that while markets are in “runaway” mode, easy gains may be had however there is always a huge amount of risk to “buying at the top” as we saw at the end of last week. We’ll look to go shopping soon.

To combat this risk, I am targeting stocks using short puts/covered calls that offer a much lower absolute risk point, where in event of crash we can almost define our total risk by the price of the underlying. While this is not how I intend to manage risk in these positions, I view this as fundamentally more solid than trying to actively manage risk on assets that are going for $$$hundreds which have also gone parabolic. I have the following positions in play:

• VXX Stock – I own 12 shares of this stock and will hold until Armageddon occurs.
• SLV Stock – I have 1000 shares of the SLV that was assigned at the $15 level. I sold FEB18 $17 calls (1/2) against my stock position for $.17 credit and these expired on Friday. I will sell APR calls, see below.
• NUGT stock – I was assigned on NUGT at the $31.5 price level. I sold the NUGT 23FEB $32 calls for a $.45 credit. We can let these expire tomorrow.
• DUST – We are out of DUST for the time being.
• BAC – I sold BAC 16MAR $28 puts (2/6) for a $.48 credit. I closed these down for $.05. (2/20)
• GLW – I sold the 20APR $25 puts (2/12) for a $.25 credit
• HPE – I sold the 16MAR $14 puts (2/12) for a $.23 credit.

We used the recent dip to sell against uptrending assets.

I want to sell the 20APR SLV $17 calls for at least $.17 credit whenever possible. The price is not moving in the right direction to fill these, so I’ll just keep this order open and continue to look for this fill.

The crypto market had somewhat of a swoon today, almost all assets down. Perhaps part of this was related to an attempted hack of a Japanese exchange, where someone attempted to withdraw trillions of dollars of Bitcoin. Difficult, as the market cap is only $500Bn at this point.

Investors should currently be looking to find technical entries to warehouse BTC/ETH/LTC assets for eventual trades on Alt-coins. You should also be looking to devices like “trezor” or other cold-storage devices to keep your assets off of the network, or other secure wallet such as Navcoin. Relying on the security of your broker is no longer good enough; no one can log into your ETrade account and “steal” your stock assets, but the whole nature of Cryptocurrencies and their portability means that someone can grab your assets and transfer them elsewhere. I will continue to discuss the tradingview platform in daily videos as I think that it is currently the best way to chart the “big three.”

Viewing the SPY from the current Friday closing price at 273.11, there is a +/- 5.411 EM into this coming Friday. This is larger than normal but only about half of what we saw last week. Remember that last week had a 90+ point SPX EM and it exceeded that move.

The EM targets for this Friday’s close is 278.52 to the upside, and 267.70 to the downside.

I don’t really have any interest in fading the EM this week, because the market is in transition.The price totally blew through the upper boundary last week and is not a good level of support/resistance because the range is not compressed, so the liquidity at these levels becomes less compressed and effective.

I have no current positions. I will consider setting up another ratio fly as price approaches resistance:

Entry criteria are:

• Using calls
• 17 to 50 calendar days
• center strike .25 to .40 delta
• ratio is 1/3/2 quantity, from the bottom, calls are long/short/long

We will exit the spread at a 60-70% level of credit received. The max risk on the trade is defined on the graph if the price goes much higher. There are no early exits, only exiting the week of expiry to avoid assignment. Also avoid dividend periods. I am currently trialing some trades and will discuss them in the newsletter; after a few cycles, I will start adding these trades to circulation. TOS scan code: http://tos.mx/hvWmMl

I have the following positions:

• BIDU 23FEB 255/257.5 Debit Call Spread (1/29) entered for a $1.25 debit. This is my one left-over long from the January rally and I’ll see if this can offer any scrap value tomorrow.
• MU 16MAR 45/46 Debit Call Spread (2/20) entered for a $.47 debit. I will look for a 50% return.

No additional trades right now.

The “Hindenburg Strategy” is meant to capture “value” from successive corrections that lead up to the final “death spiral” with a Bear Market. The basic principle is to buy 3-month out long puts on the SPY, and to finance those puts by the sale of credit spreads. Frankly, selling the “financing” trades has been a huge challenge in this low-vol environment. I will only sell put spreads on decent pullbacks that allow me to secure put spreads 10% OTM

I have no positions at this time and need to see the price rally to recent highs again to reload. It’s not just the price, it’s also the implied vol which needs to drop.