Option to Profit Week in Review
December 22 –  26,  2014
 
NEW POSITIONS/STO NEW STO ROLLOVERS CALLS ASSIGNED/PUTS EXPIRED CALLS EXPIRED/PUTS ASSIGNED CLOSED
3 / 3 2 1 3  /  0 2  / 0 0

    

Weekly Up to Date Performance

December 22 – 26, 2014

For once in the past month oil was not the headline story. All anyone cared about was “The Interview” and the fact that the DJIA hit and then surpassed the 18000 level.

While not exactly a week setting any records for opening new positions, the 3 added this week was much more than last week’s single new position and they ended the week 1.8% higher, beating the unadjusted S&P 500 by 0.9% and the adjusted index by 1.2%.

T
he market still put in a respectable week ending 0.9% higher on an unadjusted basis and 0.6% on an unadjusted basis.

An equal number of assignments occurred this week as the number of new positions and the closed positions for 2014 finished 3.6% higher, as compared to 2.1% for the S&P 500 for the comparable holding periods. That 1.6% advantage represents a 75.5% difference in return.

This was an interesting week in that there was very little news other than the GDP report, which helped push the DJIA past the 18000 level. Not that anyone really expected too much news in what is usually a very slow week, anyway.

Otherwise all anyone discussed was the goings on surrounding the film “The Interview.”

While all attention was focused on the story and the story behind the story, as well as the various games being played, no one really talked about oil and the market simply went higher every day, setting more and more closing highs, although just barely on Christmas Eve.

Still, it was record after record, with 2014 now guaranteed to close the year having set a new closing high record on average once a week.

You would think, that being the case, that the market would have been much, much higher than it is going into the final 3 trading days of the year.

This week was a good one, but I would have been much happier had there been more opportunities to sell calls on uncovered positions. There weren’t too many positions that required rollovers, so there weren’t too many trades for this trade shortened week.

Next week will be the first in about 2 months that there aren’t very many option contracts already scheduled to expire at the end of the week.That will limit the kind of strategies used as they will all likely focus on simply weekly options, without looking at forward contracts very much.

With the sudden turnaround when the market was about 5% lower and volatility was relatively high, at least by standards of the last 3 years, the attraction of suitable premiums to look at expanded weekly options has dried up.

That means that for the coming week, with some additional cash having come from assigned positions, the likelihood is to look for new positions with options expiring next week, rather than looking to far ahead into the future. The problem, however, is that next week is another trade shortened week and so the premiums are going to reflect the reduced time value, not to mention the reduced volatility.

That seems to set up the same kind of conditions that were around for this week. I wouldn’t mind if that were the case, as long as the market itself moved forward.

The exception to those low premiums is with any possible trades in the oil sector, where a longer term horizon may still be able to generate a decent premium and would be well suited for the kind of time horizon necessary to see some meaningful recovery in prices.

Next week may offer some opportunities to dip toes in a little more to continue adding some energy positions as there continues to be some evidence of some cautious buying going on as prices just seem so incredibly low.While there are still those calling for oil to go to $40/barrel, it’s not to easy to see how that happens unless some producers totally dismiss the laws of supply and demand and try to stab either their competitors or their fellow cartel members in the back before they can stabbed themselves.

With some cash being recycled I’m willing to redeploy it, especially since I want to have something to actually be in a position to generate some income. However, if there really is a Santa Claus Rally coming next week, I would much rather conserve that cash and have the opportunity to sell calls on uncovered positions.and would especially like to get a few more assignments in the process.

Given that I was definitely not on the “naughty list” this year, that’s the least I expect to close out the year.

 

 

 

 

 

   

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:   DNKN, DOW, HAL

Puts Closed in order to take profits:  none

Calls Rolled over, taking profits, into the next weekly cycle:  none

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

Calls Rolled over, taking profits, into the monthly cycle: GM

Calls Rolled Over, taking profits, into a future monthly cyclenone

Calls Rolled Up, taking net profits into same cyclenone

New STO:  GME (1/17/15), LXK (1/17/15)

Put contracts expired: none

Put contracts rolled over: none

Long term call contracts sold:  none

Calls Assigned: DOW, HAL, MOS

Calls Expired:  GDX, JOY

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 Positions: none

Ex-dividend Positions Next Week:  DOW (12/29 $0.42)

 

 

For the coming week the existing positions have lots that still require the sale of contracts:   AGQ, ANF, AZN, BP, CHK, CLF, COH, DOW, FCX, GDX, GME, HAL, HFC, .JCP, JOY, LVS, MAT, MCP, MOS,  NEM, RIG, SBGI, TMUS, 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.