Daily Market Update – February 9, 2015 (8:30 AM)

There is extraordinarily little economic news scheduled to be released this week.

 While there are a few companies of note reporting earnings this week, none of them will get too much attention for much longer than it takes to report the earnings and none of them will be impactful. They may be interesting, but not impactful.

It’s in the following two weeks that major national retailers begin to report their earnings and provide some guidance into the next quarter, which will be the first one to fully have a chance to show some benefit from reduced oil prices on the economy.

And if there is no impact?

At least it will put the debate to rest as oil prices now seem to be stabilizing at a point 10% above the very recent lows.

This week oil may be the most important story, but as with a few weeks ago the story just as easily could become how the stock market and oil prices have come decoupled, as was already seen last Friday and seems to be the developing case as the futures are trying to set the tone for the week to begin.

With a little more cash to begin the week but still with an objective of trying to raise that cash level at the end of the week, I don’t anticipate doing much in the way of adding new positions this week.

While I’d prefer to at least see some more activity than last week I wouldn’t mind seeing some give backs of last week’s gains. Unless you have an unbridling bull market awaiting, it’s hard to digest a weekly 3% gain and right now there’s not too much reason to expect that there’s that kind of a bull market awaiting, at least not until the retailers start their reporting.

AS was the case last week, there’s not much reason to want to jump in with additional funds when the market is already rising. If you’re otherwise invested, at least you can enjoy the ride with what you already have at risk, rather than add more to that risk exposure.

With a few positions set to expire this week and twice as many next week to end the February 2015 option cycle, the likelihood for any new positions this week is to look for weekly expirations, so as to not add to the risk of having too many expire next week and still maintaining a chance  of adding to cash reserves.

As has been the case for quite some time, but has been difficult for most of 2015, my preference continues to be trying to find opportunities to put uncovered positions to work or to squeeze more income out of existing positions by rolling them over. Part of that becomes necessity if markets aren’t continually rising as they did in 2013 and 2014, resulting in a consistent stream of assignments.

Thus far, 2015 has been more like 2011 and 2012 and would be even more so if the volatility could still climb higher. That would lead to far less opening of new positions and much more trading that centers on rollovers and fin
ding new covers for uncovered positions.

AS long as the market trades within a reasonable range, rather than taking a large drop downward, that can be a very nice environment and may even see more reason to look at monthly option contracts in order to lock in premiums that themselves are moving higher due to the volatility rise.

That’s still my dream for 2015.