Weekend Update – July 31, 2016

Let me get this straight.

The people sequestered in their nearly meeting for 2 days in Washington and who only have to consider monetary policy in the context of a dual mandate are the smartest guys in the room?

We often hear the phrase “the smartest guys in the room.”

Sometimes it’s meant as a compliment and sometimes there may be a bit of sarcasm attached to its use.

I don’t know if anyone can sincerely have any doubt about the quality of the intellect around the table at which members of the FOMC convene to make and implement policy.

While there may be some subjective baggage that each carries to the table, the frequent reference to its decisions being “data drive” would have you believe that the best and brightest minds would be objectively assessing the stream of data and projecting their meaning in concert with one another.

One of the hallmarks of being among the smartest in the room is that you can see, or at least are expected to see what the future is more likely to hold than can the person in the next room. After all, whether you’re the smartest in the room and happen to be at Goldman Sachs (GS) or at the Federal Reserve, no one is paying you to predict the past.

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Week in Review – July 25 – 29, 2016

 

Option to Profit

Week in Review

 

July 25 – 29, 2016

 

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

 

Weekly Up to Date Performance

July 18 – 22, 2016


Maybe this week wasn’t another one of  one record after another, but it was still pretty good.

Even if the market really didn’t move very much.

In this week of an FOMC Statement release and the GDP, no new positions were opened.

While sitting around and conserving cash, the S%P 500 was down 0.1% for the week.

Again, not a very impressive week, but still enough to make me happy

That’s because existing positions again bested the S&P 500, this time by an additional 0.7%, in what was really a good week.

With  no  new closed positions on the week closed positions in 2016 are still 6.8% higher, while the comparable performance for the S&P 500 during the same holding periods has been 1.9% higher. That represents a 267% difference in return on closed positions. As with every week in 2016, I’d be much more impressed if there were far more of
those closed positions to point toward. With such few closed positions for the year, the differential could just as easily have been in the other direction and of a similar magnitude, yet also signifying little.

I could get used to repeating this week after week.

This was another good week in what continues to be a good year, despite not opening any new positions this week.

It’s always nice to see asset values rise some more, but I still prefer to have some activity accompany the gains and this week there was plenty of activity.

It almost felt like the good old days.

This week had 3 rollovers and 3 positions had calls sold on them.

On top of those, there were 3 ex-dividend positions, so it was a fairly good week despite the market itself doing nothing of consequence.

Being still so close to at all time highs I’m not eager to put too much at risk in the chase as next week is set to begin.

The only problem is that there are no expiring positions next week and only 2 ex-dividend positions, so I’m hoping that something else will pop up.

I’d especially like to add to the list of positions with outstanding short calls written against them.

I’ve been patiently waiting for a long time for that to be the case and am happily seeing the end result of all of the hoping and crossed fingers.

Next week may be a quiet one, but if oil can reverse course, it could be the lift that the market needs to break through its recent highs and I wouldn’t mind continuing along for the ride.



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:  none

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:  MRO (8/26)

Calls Rolled over, taking profits, into the monthly cycle: HPQ (10/21)

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

Calls Rolled Up, taking net profits into same cyclenone

New STO: none

Put contracts expired: none

Put contracts rolled over: MRO (8/12)

Long term call contracts sold:  none

Calls Assigned:  none

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 Positions   F (7/27 $0.15), MS (7/28 $0.20), KMI (7/29 $0.125)

Ex-dividend Positions Next Week: INTC (8/3 $0.26), BP (8/3 $0.595)

For the coming week the existing positions have lots that still require the sale of contracts:   AGQ, ANF, AZN, BBBY, BBY, CHK, CLF, COH, CSCO,  CY, DOW, FAST, FCX, GDX, GM, GPS, HAL, HFC, HPQ, INTC, IP, JCP, JOY, KMI, KSS, LVS, MCPIQ, MOS, NEM, RIG, WFM, WLTGQ, WY (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.



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Daily Market Update – July 29, 2016

 

 

Daily Market Update – July 29, 2016 (7:30 AM)


The Week in Review will be posted by 10 PM and the Weekend Update will be posted by Noon on Sunday.

The following trade outcomes are possible today:

Assignments: MRO (puts)

Rollovers: HPQ

Expirations:   MRO

The following were ex-dividend this week:   F (7/27 $0.15), MS (7/28 $0.20), KMI (7/29 $0.125)

The following are ex-dividend next week:   INTC (8/3 $0.26), BP (8/3 $0.595)

Trades, if any, will be attempted to be made prior to 3:30 PM ZEDT

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Daily Market Update – July 28, 2016 (Close)

 

 

Daily Market Update – July 28, 2016 (Close)


Yesterday the market did something differently.

It actually closed off from its highs of the day.

Those highs weren’t really any higher, but the market did rally after its knee jerk reaction to the FOMC’s non-action, but then in the final minutes of the day, the selling hit and the market ended the day just below the break-even line.

This morning there was nothing really on tap and the futures seemed to be reflecting that case. By the time today came to its end, the market was well off from its lows, but did retreat a little bit to finally close with a small loss signifying nothing.

With yesterday’s FOMC Statement release, the expectation is that there is less than an even chance of the FOMC finally finding a reason to raise rates in 2016.

This Friday there’s a GDP release and there could be a start to the kind of data that could move the FOMC into action.

What the FOMC did do a few months ago was to leave open the possibility that they could make a decision without having a regularly scheduled meeting required to do so.

That could mean August or at anytime between meeting as we now have 5 months left to go in 2016 and the expectations for multiple rate rises in 2016 have withered.

The expectation for the remainder of 2016 is that those expectations continue to be withered, although a single rate rise wouldn’t bring much back to life.

This morning markets continued to be flat as Facebook once again showed that it’s not ready to pick up the mantle once held by the likes of IBM, Microsoft and even Apple.

While Facebook was up strongly after last night’s earnings, it isn’t a stock to move markets, as the others once could.

For now, the earnings have been good enough, but it appears as oil is again taking center stage.

Since I have 2 oil positions expiring this week, I hope that the next  day does something to breathe a little bit of life back into oil.

Otherwise, it’s already time to start looking forward to the following week and hoping for even more opportunities to sell calls on some existing uncovered positions as was again the case offered yesterday.

More of that could make all of this worthwhile.

Being able to sell some more calls on another of the uncovered positions also made today a little more worthwhile, but I wasn’t able to get rollovers done for the two expiring oil positions.

Maybe tomorrow and if so, that will bring a good week to an even better end.

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Daily Market Update – July 28, 2016

 

 

Daily Market Update – July 28, 2016 (7:30 AM)


Yesterday the market did something differently.

It actually closed off from its highs of the day.

Those highs were really any higher, but the market did rally after its knee jerk reaction to the FOMC’s non-action, but then in the final minutes of the day, the selling hit and the market ended the day just below the break-even line.

This morning there’s nothing really on tap and the futures seem to be reflecting that case.

With yesterday’s FOMC Statement release, the expectation is that there is less than an even chance of the FOMC finally finding a reason to raise rates in 2016.

This Friday there’s a GDP release and there could be a start to the kind of data that could move the FOMC into action.

What the FOMC did do a few months ago was to leave open the possibility that they could make a decision without having a regularly scheduled meeting required to do so.

That could mean August or at anytime between meeting as we now have 5 months left to go in 2016 and the expectations for multiple rate rises in 2016 have withered.

The expectation for the remainder of 2016 is that those expectations continue to be withered, although a single rate rise wouldn’t bring much back to life.

This morning markets continue to be flat as Facebook once again shows that it’s not ready to pick up the mantle once held by the likes of IBM, Microsoft and even Apple.

While Facebook is up strongly after last night’s earnings, it isn’t a stock to move markets, as the others once could.

For now, the earnings have been good enough, but it appears as oil is again taking center stage.

Since i have 2 oil positions expiring this week, i hope that the next 2 days do something to breathe a little bit of life back into oil.

Otherwise, it’s already time to start looking forward to the following week and hoping for even more opportunities to sell calls on some existing uncovered positions as was again the case offered yesterday.

More of that could make all of this worthwhile.

.


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Daily Market Update – July 27, 2016 (Close)

 

 

Daily Market Update – July 27, 2016 (Close)


Yesterday was one of those days that optimists could point at and say that as the market was hovering around its all time highs, and was able to again close well off from its intra-day lows, shows consolidation and strength.

That could be the case, as Monday was the same, despite ending up with a loss.

That was also the case as the market was reacting to the actual “Brexit” voting.

For me it was just another in a long series of 2016 days without any trading, but with those complaints tempered by a look at the bottom line which has a number of positions clawing back from their disappointing behavior in 2015.

As the record high level of the markets gets increasingly precarious, even as a base may slowly be forming, there is also increasing desire to either want to exit some positions, even if ROIs may not be anything to brag about, or at least secure some additional ROI by selling calls, collecting dividends and waiting out some actual profit on the underlying shares.

For too many positions that has been a frustratingly low proposition. The moves higher in individual positions that are still underwater are greeted by a mix of greed and hope on my part.

In those cases, even being able to close out some of those positions at a breakeven would secure a very good 2016, but still wouldn’t necessarily create an environment of more trading opportunities.

At these levels there may be more energy in positions that haven’t kept up the pace but may become attractive to others looking for the rare undiscovered gems among other positions thought to be too pricey.

Did I mention hope?

Additionally, with a portfolio still overweight energy positions, the recent decline in oil prices hasn’t taken a toll on the bottom line.

As analysts are calling for about another 10% decline in the price of oil after having already had a 10% drop in just a couple of weeks, I look at it as portending a move higher, sooner rather than later.

That’s pretty much how things work out.

Usually the siren calls come right before the inflection.

If that’s the case, I expect continued outperformance.

So I was happy to sit and await today’s FOMC Statement release and then Friday’s GDP.

The bad news is that the market, although recovering from a brief sell off after the announcement actually declined quite a bit in the final 30 minutes to end the day unchanged and people scratching their heads about where the theme resided today.

There was none, if you were also wondering.

The good news is that I did find an opportunity to sell calls on another uncovered position before it, like so many other stocks today reversed course and took opportunity along with it.

With only a handful of positions set to expire this week and 2 of them energy positions, I hope that some stability returns this week and along with it some more trading, too. 

But at this point, I’m pleased with having had some ex-dividend positions and a couple of new call sales and still some hopes of either rollovers or assignments within the next 2 days.

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Daily Market Update – July 27, 2016

 

 

Daily Market Update – July 27, 2016 (7:30 AM)


Yesterday was one of those days that optimists could point at and say that as the market was hovering around its all time highs, and was able to again close well off from its intra-day lows, shows consolidation and strength.

That could be the case, as Monday was the same, despite ending up with a loss.

That was also the case as the market was reacting to the actual “Brexit” voting.

For me it was just another in a long series of 2016 days without any trading, but with those complaints tempered by a look at the bottom line which has a number of positions clawing back from their disappointing behavior in 2015.

As the record high level of the markets gets increasingly precarious, even as a base may slowly be forming, there is also increasing desire to either want to exit some positions, even if ROIs may not be anything to brag about, or at least secure some additional ROI by selling calls, collecting dividends and waiting out some actual profit on the underlying shares.

For too many positions that has been a frustratingly low proposition. The moves higher in individual positions that are still underwater are greeted by a mix of greed and hope on my part.

In those cases, even being able to close out some of those positions at a breakeven would secure a very good 2016, but still wouldn’t necessarily create an environment of more trading opportunities.

At these levels there may be more energy in positions that haven’t kept up the pace but may become attractive to others looking for the rare undiscovered gems among other positions thought to be too pricey.

Did I mention hope?

Additionally, with a portfolio still overweight energy positions, the recent decline in oil prices hasn’t taken a toll on the bottom line.

As analysts are calling for about another 10% decline in the price of oil after having already had a 10% drop in just a couple of weeks, I look at it as portending a move higher, sooner rather than later.

That’s pretty much how things work out.

Usually the siren calls come right before the inflection.

If that’s the case, I expect continued outperformance.

So I’m happy to sit and await today’s FOMC Statement release and Friday’s GDP.

With only a handful of positions set to expire this week and 2 of them energy positions, I hope that some stability returns this week and along with it some trading, too.

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Daily Market Update – July 26, 2016 (Close)

 

 

Daily Market Update – July 26, 2016 (Close)


Since the day or two after the Brexit vote, there have been very few attempts at a triple digit loss, much less an actual triple digit loss.

Yesterday was an attempt at one, but the market, just as it did during those Brexit lows, finished the day well off from its lows.

For optimists, that’s always a good sign and it definitely worked out that way more than a month ago, the last time there were any cumulative declines. Every day in the string of declines ended up well off from the intra-day lows.

This morning, there didn’t seem to be any follow through brewing, but then again, not much of anything was brewing as markets were flat.

The impetus may again be coming from oil, which was weak yesterday and was weak again today as oil was now well below its near term high and comfortably below the $50 level.

As it would turn out, and maybe it was coincidence, much like the near daily coincidences we saw for about the first 6 months of the year, but as oil turned around today and headed higher, the market did, as well.

And so, today, just like yesterday, the close well well off from its lows.

Again, a good sign, especially with some earnings news that hit after the closing bell that could have some carry through tomorrow.

As we await tomorrow’s FOMC Statement release and Friday’s GDP, even as earnings are now pouring in, oil may be returning as the principal story leading the market higher or lower.

I didn’t part with any cash yesterday and was willing to do so today if there were some further price declines, but they weren’t really there or large enough.

I’d have been happy for a repeat of Monday and would have taken any opportunity to sell some calls on uncovered positions, even if tying them up for a few months would be welcome.

After having some of those positions sitting and wallowing for months without generating any premiums, what’s another few months?

Slowly, the number of uncovered positions is being whittled down, but there are still far too many.

It will likely take some continued market moves higher and sustained ones. at that, to see the majority of those positions become performing ones, but I always remain as optimistic as those who look at the day’s trading action at the market’s close.

So my expectation was for another quiet day on the personal level as it looked as there was little reason for the market to be anything but busy today and there just wasn’t much reason for trading swings to pick up as the week progresses, unless the FOMC pulls a surprise or the GDP stuns.

Even Apple’s nice jump in the after hours may be nice, but not really the sort of thing to pull the market higher.

At this point, I think an FOMC surprise would send markets lower and a GDP surprise to the upside would send markets higher.

But, that would mean that there’s some role for logic and logic tells us that’s rarely the case.


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Daily Market Update – July 26, 2016

 

 

Daily Market Update – July 26, 2016 (7:30 AM)


Since the day or two after the Brexit vote, there have been very few attempts at a triple digit loss, much less an actual triple digit loss.

Yesterday was an attempt at one, but the market, just as it did during those Brexit lows, finished the day well off from its lows.

For optimists, that’s always a good sign and it definitely worked out that way more than a month ago, the last time there were any cumulative declines. Every day in the string of declines ended up well off from the intra-day lows.

This morning, there doesn’t seem to be any follow through brewing, but then again, not much of anything is brewing as markets are flat.

The impetus may again be coming from oil, which was weak yesterday and is weak again today as oil is now well below its near term high and comfortably below the $50 level.

As we await tomorrow’s FOMC Statement release and Friday’s GDP, even as earnings are now pouring in, oil may be returning as the principal story leading the market higher or lower.

I didn’t part with any cash yesterday and would be more willing to do so today if there were some further price declines, but if not, I’d be more than happy to be able to do as was the case yesterday.

Any opportunity to sell some calls on uncovered positions, even if tying them up for a few months would be welcome.

After having some of those positions sitting and wallowing for months without generating any premiums, what’s another few months?

Slowly, the number of uncovered positions is being whittled down, but there are still far too many.

It will likely take some continued market moves higher and sustained ones. at that, to see the majority of those positions become performing ones, but I always remain as optimistic as those who look at the day’s trading action at the market’s close.

So my expectation is for another quiet day on the personal level as it looks as there is little reason for the market to be anything but busy today and there may not be much reason for trading swings to pick up as the week progresses, unless the FOMC pulls a surprise or the GDP stuns.

At this point, I think an FOMC surprise would send markets lower and a GDP surprise to the upside would send markets higher.

But, that would mean that there’s some role for logic and logic tells us that’s rarely the case.


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Daily Market Update – July 25, 2016 (Close)

 

 

Daily Market Update – July 25, 2016 (Close)


Ordinarily, any week with both an FOMC Statement release and the release of the latest GDP data could be expected to be a game changer.

No one is expecting that this week and neither am I, but that could be a mistake.

The FOMC, when it last raised interest rates in December 2016 didn’t exactly have the most overt data on its side. At the moment, the data isn’t great, but it may be heading in a more positive direction than last time.

The FOMC has made it clear that a rate hike need not be tied to a scheduled monthly meeting and August is an off month.

That raises the possibility that there could be a rate hike this month or any time between Wednesday and the regularly scheduled meeting in September.

A hike now would take lots by surprise and would likely not be viewed in a positive way, at least in the short term.

With lots of itchy trigger fingers as the market is sitting at all time highs, there could be lots of reason to sell and take profits.

That’s especially true if you think about the facts.

One fact that may be germane is that in all of its history, the market had only gone on to add 2% or more to an all time closing high on 3 occasions.

You might want to do some quick math to see where we currently sit.

I sit with only 3 expiring positions this week and two of those are in the same position, but on opposite sides of the coin.

One short call and one short put and with earnings in that position being reported next week.

While I wouldn’t mind spending some money this week to supplement the 3 ex-dividend positions, I think that I’d like to see an assignment of the short call and an expiration of the short put.

If not, then the next tactic is to roll those over, likely beyond the next week, but being mindful of an upcoming ex-dividend date, as well.

The futures weren’t doing very much this morning and as much as I might want to supplement the week’s income, I was reluctant to stick my neck out too far, still sitting at such lofty levels.

I expected to be a passive watcher as the morning got underway and to weigh the options, but I also expected to become a buyer on any downside movement.

Instead, even as the market was hitting triple digit losses, I couldn’t see anything worth the risk, but was very happily pleased by the opportunity to sell some calls on an uncovered position, even though having to use November calls.

We’ll see what tomorrow brings.

Maybe there will be a reason to part with some cash, but for now, I’ fine with just watching and treading water.

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