Daily Market Newsletter

I have no positions at this time. Not the right type of market for these trades. As we can see by the price blowing through the EM on a weekly basis, IV < HV these days.

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 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 20APR $16.5 calls (2/26) for $.17.
• NUGT stock – I was assigned on NUGT at the $31.5 price level.  I sold the 20APR $31.5 calls for $.30 (3/21) with the big rally in GLD.
• DUST – We are out of DUST for the time being.
• GLW – I sold the 20APR $25 puts (2/12) for a $.25 credit. I was not able to close this position early and will now probably have to endure a test of support.
• XLF – I sold the 20APR XLF $27 puts for $.41. These are under pressure right now but I’m holding through the pullback.
• SSO – I sold the 15JUN $70 puts (4/4) for $.70 credit.

No other setups at this time. My focus in the short-term will be to close the XLF trade. At this point I’m going to remove the early closing debit on the GLW trade.  

The crypto market is still wringing out the excess of late 2017. A ‘lower high’ was printed on BTC and this might be the beginning of a quick death-spiral to knock out the rest of the weak hands. The next rally will have zero participants, as it should be on any good rally moving into “disbelief” phase.

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 Thursday closing price at 263.43, there is a +/- 6.33 EM into next Friday. This is only slightly smaller than this week’s EM was at +/- 7.7 points.

The EM targets for this Friday’s close is 269.76 to the upside, and 257.10 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, like how the lower EM target was totally blown through the previous week.

Once again, the lower EM was blown through this week although the price closed the above the level, and held one more time today.

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:

• LUV 6APR 59.5/60.5 debit call spread (3/12) entered for $.50 debit. This will expire OTM.
• MSFT 6APR 96.5/97.5 debit call spread (3/12) entered for $.51 debit. Might have a chance if the rally continues.
• V 20APR 124/125 debit call spreads (3/19) were entered for $.50 debit.

All of our call spreads are underwater; I will do what I can to salvage value from the MSFT and LUV trades tomorrow but it’s unlikely to occur.

No new trades for this week; we’ll mostly be doing swings on the S&P500 in the next week or two.

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. I missed my opportunity by a couple of days on the recent bounce back up. Conditions are never perfect to enter this trade, you have to do it mechanically.