Daily Market Newsletter

I have the following positions in play:

• SPX 25MAY 2675/2680*2740/2745 Iron Condor (5/16) entered for a $2.50 credit. I’ll submit a $1.80 GTC debit limit order tomorrow. If the price starts to break above the SPX 2750 level then I’m probably better off bailing out of the trade.

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 or periods of elevated volatility. The IV is starting to resolve lower so we might be back in business if the price resolves back into quiet/trending.

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 sold 15JUN SLV $17.5 strikes for an $.18 credit. (4/19). 
• NUGT stock – I was assigned on NUGT at the $31.5 price level.  I opened up the $31.5 04MAY calls for a $.50 credit (4/13) and closed them for $.04 (4/27). I rolled these to the 25MAY $31.5 calls for $.35 credit. (4/27). I will look to roll those calls out near the end of this week. 
• SSO – I sold the 15JUN $70 puts (4/4) for $.70 credit.

No other setups at this time; I want to look for the next “scary” drop in the markets to sell puts again.

The crypto market has come under a lot of pressure lately and I attribute this to the market still being under the influence of a bear. Until a major “higher low” is printed these rallies will persist and be faded.

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 272.85, there is a +/- 3.388 EM into this Friday. This is once again smaller than the last few EM values of +/- 4.05 EM, +/- 4.215 EM, and  +/- 4.768 points. This might be telling.

The EM targets for this Friday’s close is 276.24 to the upside, and 269.46 to the downside.

I don’t really have any interest in fading the EM this week, because the market is in transition, and we are more likely to see expanded range movements during this type of character. Realized volatility is out-running the Implied right now. We saw the lower EM level get tested really hard two weeks ago into the “back week” EM, and last week the upper EM got obliterated.

I am not going to play a long iron condor this week, even though there is some energy left on the daily chart at present. We have seen a 131 point move higher in the SPX in just over a week, which is a stretch in any circumstances.

I have the following positions in play:

• SPY 18MAY 260/261 debit put spread (5/7) entered for a $.15 debit. I have entered a $.49 GTC exit credit, but will try to close this position for any possible value this week.
• SPY 18MAY 273/274 debit call spread (5/7) entered for a $.15 debit.I closed this position (5/10) for a $.40 credit based on the fact that the price was at the back-week EM and also the descending trendline. This gave me a net profit of $105 on this position with five contracts.

I am pretty much done with the current set of EM spreads, unless we see the price return to the downside again by the end of this week – unlikely.

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 no positions at the current time.

Before I go back into Whale trades, I want to see the market consolidate at this level. If it does so over the next week, then we’re probably seeing the transition.

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.