Daily Market Newsletter

I have no positions at the current time.

Let’s set up an SPX LP Condor on the 24AUG SPX Weekly series, for a $2.50 credit, seeking a 25% return. I will discuss how to set up this trade in today’s video. If I see more than a 10 point gap in either direction to start the trading day, I will not enter any positions until that gap is closed.

I have no remaining positions. Calendar spreads are good for markets in quiet/trending character, so there is a good shot that we can start to play these again.

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 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 currently have 17AUG $16.50 SLV calls (6/8) for $24 credit. .

No entries at this time; I’d like to see if this current pullback has any more desire to go lower.

The crypto market has seen a decent rally to the upside over the past two weeks; watch the BTC/USD $7800 level to see whether or not this move is “real.”

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 Friday closing price at 281.42, there is a +/-3.525 EM into this coming Friday.  This is slightly larger than last week’s 3.217 EM, which shows the reflection of the uncertainty of last week’s earnings and the likelihood of forward volatility.

The EM targets for this Friday’s close is 284.95 to the upside, and 277.90 to the downside.

Last week’s upper EM was a good fade, as we had discussed earlier in the week. I believe that we have another opportunity for an EM fade this week, simply because I believe that there is a good chance that we stay range-bound in the near future.

I took the following trade on Friday:

• SPY 27JUL 283 long put (7/27) I entered this position for a $.38 debit and closed it out about two hours later for a $.78 credit; this gave me a net profit after commissions of $38/contract or a net 100% return on capital. This was a SPY EM fade as it was clear that the downside move was on and the upper EM was going to give way. I actually set up this trade while checking out of my hotel room and just put a 100% limit order on, which fired when I was on the road. My maximum risk on the trade would have been the debit paid.

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:

• XLB 10AUG 58.5/60.5 call vertical (7/11) entered for $.91 debit. I will look for a 50% return from this trade.
• XRT 17AUG 49/51 call vertical (7/17) entered for $1.02 debit. I will look for a 50% return from this trade. If the price hits the $51 level and gets stuck there, let’s exit the trade rather than fight overhead supply.

No other trade setups at this time. We are better off looking for ETFs and Indices to play in the near term while earnings season is going full tilt.

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 entered the 17AUG SPY 245 puts (5/14) for a $1.41 debit. I will hold these through the next test of the 200 dma.