Daily Market Newsletter

I have no positions at this time.

We’ll park this strategy until the next high-probability condition shows. We’ll want to see daily exhaustion on the SPX or RUT after a strong move, at the very least. This strategy works best with a quiet/trending market.

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:

• SLV Stock – I have 1000 shares of the SLV that was assigned at the $15 level. I sold the 31DEC $15 SLV calls (10/3) for $.16.
• SSO – I sold SSO 16NOV $109 puts (10/8) for $1.20 credit. I’m still fine with this position

No other entries at this time.

The crypto market is holding tough while equities get slammed. So far I am not seeing a lot of correlation between these markets.

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 275.95, there is a +/-7.161 EM into this coming Friday.  This is significantly larger than last week’s 4.886 EM and reflects the fear/indecision in the markets from last week.

The EM targets for this Friday’s close are 283.11 to the upside, and 268.79 to the downside.

It’s going to be difficult for the price to make it to one of these EM markers this week so they might be a good fade level.

This is a new section for this newsletter; I would like to start to carefully build some bearish positions that would be the virtual opposite of a covered call, yet I will use deep ITM long puts as the short stock substitute, and write short covered puts against those long puts.

I would like to add one additional consideration to the criteria, in that I’d like to see the price print a “lower high” first on the daily chart. Otherwise what is “high” can go “higher” as we’ve seen repeatedly over the years.

I will also publish the criteria for managing the short and long positions with this strategy. This is definitely counter-trend for now but might prove to be valuable down the road.

We previously were seeing LOW and UNP show up on this scan, and both would be winners now. . Quite honestly nothing has really faded after showing on this scan. We might need to wait for larger timeframes to exhaust themselves as it appears like 2017 is repeating again.

Previously I was seeing MRK, PFE, and LLY show up on this scan; I added the MRK 16NOV $75 puts for about $7.00/contract as a paper trade. I’ll just track this one on paper for now while we develop management rules. If the price drops I will sell short-term puts against it (on paper). Even these NOV puts are still underwater after today’s distribution.

The scan that I discussed in the 8/4/2018 video is available to download for thinkorswim here: http://tos.mx/OvdVnz

I will also be adding a second Larry Connors scan to this section as well; here is the Connors Crash scan: http://tos.mx/BhHuKL

I have the following positions at this time:

• IWM 19OCT 170/172 debit call vertical (9/17) entered for $1.03 debit and will look for 50% return on this position. This one looks dead with only two weeks to go.
• NVDA 02NOV 285/287.5 debit call spread (10/1) entered for $1.22 debit, looking for 50% return on this trade. I might have missed my opportunity to make a quick 30% and get out.

No other entries at this point .

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. We have no positions at the current time.

I have the following positions:

• SPY 16NOV 257 Puts (8/23) entered for $1.50 debit. I closed these (10/11) for a $2.15 credit. This gave me a net $63/contract profit after commissions, or a 42% return on capital
• SPY DEC 262 Puts (9/17) entered for $1.72 debit. I closed these (10/11) for a $4.20 credit. This gave me a net $246/contract profit, or a 143% return on capital.

I will “reload” again on the next bounce up.