Option to Profit Week in Review
September 1 – 5,  2014
 
NEW POSITIONS/STO NEW STO ROLLOVERS CALLS ASSIGNED/PUTS EXPIRED CALLS EXPIRED/PUTS ASSIGNED CLOSED
7 / 7 2 4 3  / 0 0  / 0 0

    

Weekly Up to Date Performance

September 1 – 5, 2014

< strong>New purchases for the week beat the unadjusted S&P 500 by 1.4% and the adjusted index by the same 1.4% during a week that the market almost broke its string of consecutive weekly gains, until it pulled a rabbit out of its hat on Friday afternoon.

It was a week that the market was essentially unresponsive to anything going on, even showing no response to disappointing employment statistics and yawning at news of a peace accord between Ukraine and whoever is representing the other side.

While the news of a peace pact should have sent the market higher, as fears of conflict sent markets strongly lower, the news of the employment statistics could have taken the markets in either direction, depending on whether it’s taken as good news or bad. Given that the Federal Reserve is pretty much done with Quantitative Easing and isn’t likely to intervene unless there is some real systemic problem, the disappointing numbers should have been received in a negative manner.

But they weren’t.

Still, with Friday’s late gain the market managed another in a week of 5 successive weekly finishes higher.

Performance of closed positions continued to out-perform the S&P 500 performance by 1.7%. They were up 3.6% out-performing the market by 89.4%. 

It was a much busier trading week for new positions than I had expected it to be, as the week ended up closing almost precisely where it had started.

That’s usually a good thing for new positions and this week was a good reflection of that kind of market behavior.

I like weeks when there is a mix of assignments and rollovers, but would have been happier had there been more new covered posit
ions sold. When weeks are flat those latter opportunities  don’t pop up very often.

Despite hitting another new closing high and despite the seeming geo-political peace in Ukraine and despite the EU looking as if it may undertake some more market friendly actions, no one is ebulliently bullish.

Maybe that’s a good contra-indicator.

Barry Ritholtz, a very well respected market analyst and investment advisor believes that the news that CNBC viewership is at all time lows is a contrarian sign suggesting the market is poised for even further runs higher.

Based on this morning’s disappointing Employment Situation Report numbers, it may also mean that people who can’t find employment may be willing to give up their basic cable subscriptions before they give up their smartphones.

While Ritholtz interprets the news as a bullish indicator it does question whether any of that fabled money on the sidelines will then ever find its way into the markets helping to propel it even higher. On the other hand, maybe we don’t want that money to chase stocks because that may be the ultimate kiss of death.

While I would love to see some sanity return to the markets, I’m not quite ready for that kiss of death and would prefer to find myself complaining about the climb higher and the ever decreasing level of volatility.

Next week will be helped by having some assignment generated cash for recycling, but the week also starts at a cash level lower than this week had started with, due to the buying spree, so I don’t think that I’ll be chasing stocks, either, especially with the market not really having taken any kind of meaningful rest.

With a number of positions set to expire next week and the same for the following week, which also happens to be the end of the monthly cycle, there is flexibility in terms of what kind of option time frames to use for any new purchases, as there are invariably new positions, even when not in the mood to chase after anything.

At the moment, my guess would be that I would still be looking at the weekly expirations, as those forward week premiums are still just so incredibly low. Looking at premiums for such stocks as General Electric and Pfizer you realize just how far those premiums have fallen, but as history shows it won’t always be that way.

I would, however, be more than happy to see the market continue on a path higher, especially if it is the slow and grinding type or the type that simply has lots of daily back and forth. Even in a low volatility environment those are the best kind of weeks to operate within.

This week was a good example of that, particularly if you can throw some dividends into the mix.

Hopefully next week will be some more of the same.

 

      

This week’s details may be seen in the Weekly Performance spreadsheet * or in the PDF file, as well as as in the summary.below

(Note: Duplicate mention of positions reflects different priced lots):



New Positions Opened:   BP, COH, GM, INTC, LVS, TMUS, WFM

Puts Closed in order to take profits:  none

Calls Rolled over, taking profits, into the next weekly cycle:  EBAY, LVS, TMUS

Calls Rolled over, taking profits, into extended weekly cycle:  none

Calls Rolled over, taking profits, into the monthly cycleCOH

Calls Rolled Over, taking profits, into a future monthly cycle: none

Calls Rolled Up, taking net profits into same cyclenone

New STO:  IP, PFE

Put contracts expired: none

Put contracts rolled over: none

Long term call contracts sold:  none

Calls Assigned:  BP, INTC, WFM

Calls Expired:   none

Puts Assigned:  none

Stock positions Closed to take profits:  none

Stock positions Closed to take losses: none

Calls Closed to Take Profits: none

Ex-dividend PositionsCOH (9/5 $0.34), MOS (9/2 $0.25)

Ex-dividend Positions Next Week:  GM (9/8 $0.30), NEM (9/9 $0.25)

 

 

For the coming week the existing positions have lots that still require the sale of contracts:   AGQ, BMY, CHK, CLF, COH, FCX, JCP, LULU, LVS, MCP, MOS,  NEM, PFE, RIG, TGT, WFM, WLT (See “Weekly Performance” spreadsheet or PDF file)



* If you don’t have a program to read or modify spreadsheets, you can download the OpenOffice Suite at no cost.