Daily Market Newsletter

 

 

 

 

I have the following position:

• SPX 11NOV 2080/2085*2185/2190 LP Iron Condor (10/17)- I entered this position for a $2.50 credit, and per my recent advisory I closed this position with limit order for $2.00 debit GTC (10/21). This created a 16.8% return in the space of 5 days.

I don’t want to go back to the well with another position until “the move” shows up, whenever that is.

 

 

 

 

 

 

 

 

 

 

I have no time spreads at the current time. My preference is to take these on DAILY exhaustion and not WEEKLY exhaustion signals, since the weekly exhaustion creates unwanted price volatility. Similar to the LP Condors above, I will likely have to expand my view to include equity candidates that are showing a likely short-term consolidation. This is never my first choice due to the additional variables that we encounter.

I have the following positions in play:

 

• SDS Stock – I still own 100 shares of this stock from 2011 and will continue to write calls against this position with every correction/pullback.
• 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, and will continue to write time against these shares on every rally. I will look to sell more calls in the next bounce higher in SLV.
• SSO – Waiting for the next pullback to sell puts against the SSO, preferably at the 50 level or lower. .

Nothing to do at this time with current positions. 

 

Looking for the next edge. Price has been so choppy that it’s been difficult to identify the next edge.

I have the following positions in play:

• QQQ 11NOV 116/118 debit put spread (10/17) – I entered this trade by buying the 118 put and simultaneously selling the 116 put, for an .84 debit, and I will look for about a 50% return from this trade.

I have no current positions. I really don’t like any swing trades long over the next couple of weeks. What I do feel comfortable doing is setting up a couple of short-term earnings trades using vertical spreads. I’m going to size these in a manner where I really don’t care about the outcome of the trade, so there is no “stop” but I will have to close a profitable trade, or one near the money.

I’m going to set up a bearish put spread on GILD on Monday. Earnings are Tuesday after market, so the position could be entered at any time on Monday, or Tuesday prior to the closing bell. I will use the 4NOV series, and “center” the price around a $1-wide spread, such as the 4NOV 73.5/74.5 put spread, aiming to spend about a $.50 debit per contract. The 74.5 puts are long, and the 73.5 puts are short. I’m taking this one bearish as the last several reports have ended to the downside, and the overall market tone is negative. More than likely I will have to adjust the location of those strike prices on Monday to account for any gaps.

On Monday night I will discuss an Iron Condor for earnings as well, because GILD’s IV percentile is very high. We’ll see if there are any other stocks that we want to play earnings on this week.

Please keep capital utilization low for these trades as the edge is lower than most trades that we take.

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.

 

 

 

To remove the current series of puts, I will look for a move down to and below the SPX 2100 level.

I never got the upside “burst” to allow me to sell call spreads above SPY 230 that I wanted; now I can concentrate on selling put spreads at some level below SPY 200.

We currently have the following positions in play with this strategy:

• SPY NOV 197 Long Puts – I entered this position (8/22) for a $1.56 debit.
• SPY JAN17 193 Long Puts – I entered this position (10/24) for a $1.33 debit.