Option to Profit

Week in Review

 

June 29 July 2, 2015

 

NEW POSITIONS/STO NEW STO ROLLOVERS CALLS ASSIGNED/PUTS EXPIRED CALLS EXPIRED/PUTS ASSIGNED CLOSED EX-DIVIDEND
1 / 1 1 1 0 /  0 2  /  0 0 3

 

Weekly Up to Date Performance

June 29 – July 2,  2015

Another miserable week in the markets, highlighted by a 350 point drop and some half-hearted attempts to bounce back.

You know that it’s a bad week when your new positions, or in this case, a single poistion, could be down 1.0% for the week and still out-perform the market.

That position beat the adjusted and unadjusted S&P 500 by 0.2%. It was down 1.0% for the week, while both the adjusted and unadjusted S&P 500 were 1.2% lower.

Once again, it was a week that ended without giving any compelling reason to want to commit money toward new positions the following week, although that could change following the results of the Greek referendum on Sunday.

Existing positions, over-invested in energy stocks, lagged the general market this week, despite a rally for some energy positions to close the week. 

With no assignments for the week theere remain 44 closed lots in 2015 andd they out-perform the market. They are an average of 5.0% higher, while the comparable time adjusted S&P 500 average performance has been 1.3% higher. That  3.7% difference represents a 283.3% performance differential.  

It has been a while since there has been any good news to give the markets a reason to move higher.

But despite the lack of good news and the fretting about interest rates moving higher and the uncertainty that comes with the Greek debt crisis, the market is barely down 3%.

That puts it at about the mid-way point for one of those mini-corrections that we’ve come to know over the past 3 years, but that has now itself been long overdue.

I’ve been reluctant to spend down cash reserves, as small as they are, for the past few weeks, but did loosen up a bit this week, only to see that a market that goes much lower and still go even lower.

With no positions set to expire next week and only 2 lots going ex-dividend, it looks like another week of diminished income.

There wasn’t much of a silver lining in last week, although volatility did go up about 20%, but the option premiums are still on the paltry side. That’s especially true in further out weeks, indicating that the options market isn’t expecting the volatility t pick up.

As that’s been the case the volume in the options market is much less liquid and it’s harder to get trades done.

That’s been especially true for rollovers, which require trades on both sides of the equation, but it has also made it more difficult to sell options on uncovered positions.

When the closing bell rang on Thursday to end this week, I had 6 unexecuted trades. That has been the story for quite a while.

I usually place trades on a “day” basis so that if unexecuted, they get cancelled. Lately, however, I’ve been placing them on a “good until canceled” basis, getting tired of having to re-do order entry.

I tend not to be greedy over a penny, especially if that makes the difference between getting a trade done or not, but with forward week volatility being so low and the premiums along with it, it’s very difficult with some trades to justify leaving the pennies on the table, because they constitute a much larger portion of the net premium than ever before, as do the trading costs.

With Sunday being t
he scheduled date of the Greek referendum, it is entirely possible that a “Yes” vote, which most would interpret as an affirmation of wanting to stay in the EU and keeping a common currency, might be just the catalyst the market needs, at least for the short term.

That, at least, could get us to July 8th, when another earnings season begins.

I continue to believe that many companies are going to surprise to the upside on revenue and profits as their worries about currency exchange didn’t materialize to the extent that they projected.

Interestingly, though, no one has revised upward prior to earnings.

Any sense that profits are higher, as long as the USD and EUro can maintain their current relationship going into the next quarter, should be viewed as being positive.

Taken together with employment data that, at best, were in line with expectations, or perhaps even a bit disappointing, that may mean “later, rather than sooner” for those keeping an eye of the FOMC’s intentions to hike interest rates.

Needless to say, it will be a week for watching and again not much of a reason to spend new money. Any pop on Monday, if the news from Greece is received in a positive way, will hpefully be an excuse to sell calls. The question, if that opposrtunity arises, is whether to go for a short term contract, or to try and take advantage of what may be a short lived pop and lock in a longer term contract, even if the forward volatility keeps those premiums low.

 

 

 

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

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



New Positions Opened:   CSCO

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:  WY (8/14)

Calls Rolled over, taking profits, into the monthly cycle: none

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

Calls Rolled Up, taking net profits into same cyclenone

New STO:  BBY (9/18)

Put contracts expired: none

Put contracts rolled over: none

Long term call contracts sold:  none

Calls Assigned: none

Calls Expired:  CSCO, DOW

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 PositionsEMC (6/29 $0.11), WFM (6/20 $0.13), CSCO (7/1 $0.21)

Ex-dividend Positions Next Week: GPS (7/6 $0.23)

For the coming week the existing positions have lots that still require the sale of contracts:   AGQ, ANF, AZN, CHK, CLF,  CSCO, DOW, FCX, GPS, HAL, INTC, JCP, JOY, KMI, LVS,  MCP, MOS, RIG, 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.