Daily Market Update – August 22, 2016 (Close)


There isn’t too much on tap for this week, what with summer winding down.

Although there will be a GDP release to end the week, the real news may come along with that summer ending tradition in Jackson Hole, Wyoming as the Kansas City Federal Reserve Bank holds its annual monetary policy symposium.

I wonder why they don’t hold it in Kansas City? At least the Missouri version.

That means that people will be listening to every word and every nuance to get some idea of when the FOMC may finally decide to raise rates.

If you listened to Stanley Fischer, the Vice-Chairman of the Federal Reserve, he indicated that the FOMC had pretty much all of the data it needed to do so.

In that case many will be looking for words of validation over the 2 days of the meeting which Janet Yellen skipped last year.

That meeting was a yawner, but it may be different this year, as Janet Yellen is scheduled to give a big speech and there may even be some wonder as to whether she is open to another term.

This week looks as if it will be getting off to a quiet start, continuing the pattern of the past few weeks.

Markets are still within easy reach of surpassing the all time high, which itself was more than 2% above the previously recognized high.

That’s something that has only happened 4 times in history, so this really is a pretty remarkable time.

This week may not be so remarkable, though.

I have some more cash available after the expiration of puts and that looked for a very short while as if it might be joined by cash from the assignment of a single lot of calls set to expire this week.

That is until I decided to keep the position alive by rolling it over in the face of a large decline in the shares today.

The trade off was that I was willing to take another 1.8% in income for an additional 2 weeks if the shares fell less than an additional 4% in that time period.

If it falls more, maybe I can keep the position alive even longer.

While I wouldn’t mind having some additional opportunities to generate income, I like the idea of collecting more cash in the event that we realize that there hasn’t been too much of a reason to have gotten to these new highs.

Beyond that, there’s also that pesky “sell on the news” phenomenon.

Still, while collecting more cash, I wouldn’t mind if this week does bring some more strength, if only to have the opportunity to finally sell some calls on positions that have been tantalizingly close the past few weeks and that have been begging for the opportunity to generate some income.

With no ex-dividend positions this week and now no more rollovers, the only prospects for generating cash this week are to either spend down some of the cash reserve or sell calls on uncovered positions.

I’d prefer the latter, but may be willing to take the former, especially if there is some profit taking early in the week.

Otherwise, I do like some of the earnings related positions highlighted this week, but as the caveat in the weekly article pointed out, I’m only likely to bite in the event of some sig
nificant drops after earnings and may be then more inclined to do traditional covered call trades, rather than selling puts, in the event that there is going to be an ex-dividend date near at hand.

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