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 closed this position (5/18) for a $1.80 debit, which gave me a net $124 profit and a 24.8% return on risk after commissions.

It feels good to have a near-perfect short condor setup go off like this. This might be an effective weapon on an upside recovery but the signals will be rare. We’ll look for the next setup but it won’t be for some time.

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 rolled  to the 25MAY $31.5 calls for $.35 credit. (4/27) and I closed these  (5/18) for a $.02 debit. I rolled these to the NUGT 22JUN $31 calls for $.30 credit (5/18). 
• 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 Friday closing price at 271.33, there is a +/- 3.387 EM into this Friday. This is almost precisely what it was last week, and the price stayed well within the EM.

The EM targets for this Friday’s close is 274.72 to the upside, and 267.94 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, although last week was the first week that we saw that featured a smaller-than-EM move. Transition might be happening again.

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 no positions in play.

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.

I think that there is a good chance of seeing the Whale Trade being back in business soon. Unfortunately, no setups showing this weekend..

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.