Week in Review – April 6 – 10, 2015

 

 

Option to Profit Week in
Review –  April 6 –  10,  2015
 
NEW POSITIONS/STO NEW STO ROLLOVERS CALLS ASSIGNED/PUTS EXPIRED CALLS EXPIRED/PUTS ASSIGNED CLOSED
1 / 1 3 5 1  /  0 0 / 0 0

    

Weekly Up to Date Performance

April 6 – 10,   2015

This was a surprising week, to a degree, as the market dug out of the hole created for it last Friday when it had no opportunity to respond to the Employment Situation Report as the futures and bond markets reacted as if it was something akin to the end of the world.

This week there was just a single new position opened and it trailed the both adjusted and unadjusted S&P 500 by a large 1.5%, as the market had a stealth rally and has now finally strung some consecutive days higher together. 

The new position gained 0.1% while the unadjusted and adjusted S&P 500 each gained 1.6% for the week.

Existing positions broke their streak of out-performance and trailed the S&P 500 for the week by 0.2%.

Positions closed in 2015 continue to out-perform the market. They are an average of 5.3% higher, while the comparable time adjusted S&P 500 average performance has been 1.5% higher. That 3.8% difference represents a 257.6% performance differential. That remains unusually high and is associated with the longer period of holding of those closed positions than is more typically the case. I would much rather see that differential be smaller but be based on far more assignments resulting in closed positions. This week saw only one new position added to the list of those closed on 2015.

 

For just a few minutes this week as trading opened, did it look as if this might be yet another in a series of weeks with a significant downward bias that began at the end of February.

Instead, after those few minutes were up and traders realized that the futures market’s reaction to the Employment Situation Report the previous Friday was really unwarranted, it simply did the right thing.

Someone came to the realization that the previous month’s decision to greet the news of a terrible Employment Situation Report with dumping stocks didn’t make too much sense when the same dumping was done the previous month because the numbers were too good.

Unless of course we’re at that point that bad news is bad news and good news is bad news.

As irrational as the market sometimes seems, it doesn’t get to that point very often.

While there really wasn’t too much news this week to move the market in either direction and certainly not in any perceptible size, it did just that.

What made the week pretty impressive is that not only did it not allow the previous Friday’s futures trading a chance to really take hold, but it also recovered from 2 days of late sell-offs that dashed decent rallies, as the week came to an end on a very positive note.

In fact the week came to its close at the highs, leaving the S&P 500 less than 0.5% away from it’s all time high.and volatility once again near its 52 week low and easily in range to  drop below that level with only a single day’s rally necessary to do so.

That positive note is made even more impressive by virtue of it coming right before the financials begin to report their earnings and before the season really gets underway in earnest the following week.

Instead of being cautious or tentative traders went in buying instead of selling, even though you would have been very hard pressed to have found anyone of merit suggesting that there were good times ahead for the market.

The week was a good one, even with some under-performance. The ability to generate income from a nice combination of new options sales and rollovers was welcome and for now I do like the way next week’s expiring positions are set up.

Although I would have liked to have seen more assignments this week the principal goal of generating income was satisfied and next week’s expiring positions are still in reasonable striking range of being assigned or being rolled over.

With a fair number of positions set to expire next week as the monthly cycle comes to an end each of the 4 weeks in the May 2015 cycle already have some positions populating them. It’s been a while since there has been that kind of time diversification.

With the number of positions for next week already sufficient, as long as there continue to look as if there may be some in line to be assigned, my goal for next week would be to be able to rollover whatever is possible in order to generate the week’s income.

With only a single assignment I would like to preserve cash, particularly since there’s not too much to preserve at the moment and I would like to see that reserve grow.

New purchases for next week, if any, would likely equally look at a weekly expiration as it might at an expanded weekly. However, with volatility going even lower it does get more difficult to consider going out too many weeks into the future.

The exception may be for those positions that will have earnings entering into the equation, as the banks really get things going next week and the next few weeks may be fairly hectic as earnings pour in.

 



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:   WFM

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:  KO (5/1), UAL (5/1), WFM (4/24)

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

Calls Rolled Over, taking profits, into a future monthly cycleGDX (5/15), GPS (5/15)

Calls Rolled Up, taking net profits into same cyclenone

New STO:  BAC (5/15), CHK (5/15), LVS (5/8)

Put contracts expired: none

Put contracts rolled over: none

Long term call contracts sold:  none

Calls Assigned: HAL

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: GPS (4/6 $0.23), WFM (4/8 $0.13)

Ex-dividend Positions Next WeekABBV (4/13 $0.51), CHK (4/13 $0.09), FCX (4/13 $0.05)

 

 

For the coming week the existing positions have lots that still require the sale of contracts:   AGQ, ANF, BAC, CHK, CLF, COH, DOW, FAST, FCX, GDX, HAL, HFC, .INTC, JCP, JOY, LVS, MAT, MCP, MOS,  NEM, 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.



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Daily Market Update – April 10, 2015

 

 

 

Daily Market Update – April 10, 2015  (8:00 AM)

 

The Week in Review will be posted by 6:00 PM and the Weekend Update will be posted by Noon on Sunday:

The following trade outcomes are possible today:

 

Assignments: Halliburton

Rollovers:  Coca Cola, The Gap

Expirations:  Market Vectors Gold Miners ETF, Whole Foods

 

The following positions were ex-dividend this week:  The Gap (4/6 $0.23), Whole Foods (4/8 $0.13)

The following positions will be ex-dividend next week:  AbbVie (4/13 $0.51), Chesapeake Energy (4/13 $0.09), Freeport McMoRan (4/13 $0.05)

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

 

 

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Daily Market Update – April 9, 2015 (Close)

 

 

 

Daily Market Update – April 9, 2015  (Close)

Yesterday’s was another day of a failed rally, as the market squandered another triple digit gain, although it did manage to stay above water. In fact, when you consider the huge drop taken by oil prices yesterday and the portion of the S&P 500 comprised by energy positions, the market actually did fairly well for the day.

This morning, as this news-free week was winding down, is looked as if it’s going to be another flat open, but when the day came to its end, nothing was squandered. It wasn’t a terribly exciting day, but it worked for me. It was a day that was different from those recently preceding it in that it stayed on the same mellow course all through the session.

What had distinguished this week a little has been the occasional change in direction during the trading day, instead of simply alternating from day to day. For the most part, that’s not something that we had seen in more than a month. During that time, while we’ve seen a lot of flat openings being portended by the futures market, that hasn’t been the way the market has actually traded for much of that period.

For most of that time there’s been very little reason to account for the switch in magnitude seen so often, just as there’s been very little reason to explain the switch in direction from day to day, that had really been a hallmark of March, while April continues to look for its own character.

That character may get formed over the next week as earnings season got underway yesterday. At some point we will have heard from enough companies with large interests abroad to get a feeling for just how much earnings will be depressed and just how much they may be expected to impact earnings for the coming quarter.

For all of the emphasis that’s put on EPS growth from comparable periods, the suggestion that EPS growth is decelerating isn’t the sort of thing that investors are happy to hear about. They so much like to hear about accelerating EPS data, that they’re completely willing to overlook how it happened, such as through large buyback programs.

So these coming weeks may be interesting. Maybe even more so than with the usual beginning of earnings season

With just two days left to go for the week my eyes are set on whatever opportunities there may still be for rollovers and a hope that at least some of the positions will get a chance to be assigned.

That’s pretty much the hope for every week, where it doesn’t get better than when you have a nice combination of opening positions, rollovers, assignments and sales on uncovered positions.

With only one new position opened this week and only two new sales of previously uncovered positions, that leaves rollovers and assignments for this week and at least those still look like possibilities, as long as the market can stay in the game. With no real news today and none due tomorrow, it would be easy to think that there’s nothing to know the market off of its perch, but we all know how quickly the mood can change even when there’s no apparent catalyst.

Every now and then that mood becomes buoyant, but there’s been a definite lack of optimism being expressed lately.

But who knows, that may be the most positive thing of all.

Maybe the more people warn of calamity or pulling your wagons together, the better things may be in the coming week as things ma
y end up not being as bad as we’ve been coming to expect.

 

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Daily Market Update – April 9, 2015

 

 

 

Daily Market Update – April 9, 2015  (8:45 AM)

Yesterday’s was another day of a failed rally, as the market squandered another triple digit gain, although it did manage to stay above water. In fact, when you consider the huge drop taken by oil prices yesterday and the portion of the S&P 500 comprised by energy positions, the market actually did fairly well for the day.

This morning, as this news-free week is winding down, is looking as if it’s going to be another flat open.

What has distinguished this week a little has been the occasional change in direction during the trading day, instead of simply alternating from day to day. For the most part, that’s not something that we had seen in more than a month. During that time, while we’ve seen a lot of flat openings being portended by the futures market, that hasn’t been the way the market has actually traded for much of that period.

For most of that time there’s been very little reason to account for the switch in magnitude seen so often, just as there’s been very little reason to explain the switch in direction from day to day, that had really been a hallmark of March, while April continues to look for its own character.

That character may get formed over the next week as earnings season got underway yesterday. AT some point we will have heard from enough companies with large interests abroad to get a feeling for just how much earnings will be depressed and just how much they may be expected to impact earnings for the coming quarter.

For all of the emphasis that’s put on EPS growth from comparable periods, the suggestion that EPS growth is decelerating isn’t the sort of thing that investors are happy to hear about. They so much like to hear about accelerating EPS data, that they’re completely willing to overlook how it happened, such as through large buyback programs.

So these coming weeks may be interesting. Maybe even more so than with the usual beginning of earnings season

With just two days left to go for the week my eyes are set on whatever opportunities there may still be for rollovers and a hope that at least some of the positions will get a chance to be assigned.

That’s pretty much the hope for every week, where it doesn’t get better than when you have a nice combination of opening positions, rollovers, assignments and sales on uncovered positions.

With only one new position opened this week and only two new sales of previously uncovered positions, that leaves rollovers and assignments for this week and at least those still look like possibilities, as long as the market can stay in the game. With no real news coming today nor tomorrow, it would be easy to think that there’s nothing to know the market off of its perch, but we all know how quickly the mood can change even when there’s no apparent catalyst.

Every now and then that mood becomes buoyant, but there’s been a definite lack of optimism being expressed lately.

But who knows, that may be the most positive thing of all.

 

 

 

 

 

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Daily Market Update – April 8, 2015 (Close)

 

 

 

Daily Market Update – April 8, 2015  (Close)

Yesterday’s late sell-off prevented a repeat of two consecutive higher closes, so they continue to remain elusive in 2015, but at least this morning wasn’t an assured loser, as the futures were trading flatly to begin the day.

Also on the bright side is that the close yesterday gives the market a chance to digest Monday’s unexpectedly large gains following the turnaround from the morning’s sell-off.

Otherwise, there isn’t too much news for the rest of the week, although the minutes from last month’s FOMC meeting will be released and you can be certain that each and every word will be dissected by lots of people with very different lenses.

There shouldn’t be anything shocking in there, although it could offer some insight into just how concerned the FOMC may be about the strengthening US Dollar and how that may be acting to slow the growth of the economy.

They may also be caught discussing how the drop in energy prices hasn’t yet seem to materialize into the kind of increased consumer activity that just about every economist projected and resulted in a significant upward change to the projected 2015 GDP.

Instead, however, most all attention ended up being diverted by the news of a verdict in the Boston Marathon Bombing trial.

All of that came on the day that earnings season begins after today’s market close.

The only question as we head into the second quarter of earnings, the one in which we were all expecting to hear about increased consumer driven revenues and decreased energy related prices, is how much have we prepared ourselves for currency related issues.

For companies that have lots of exports it may be difficult to deal with the stronger dollar that ends up making those goods more expensive to overseas buyers. However, for those companies that make lots of sales from their direct activities abroad the strengthening US dollar’s impact may only be as much as their currency hedging activities failed to offset.

Companies like Apple, Microsoft and others likely will report decreased earnings from currency shifts, but likely to a much lesser degree because of their hedges, just as some airlines hedged the price of fuel for years to their advantage.

There will still be earnings surprises, but we may be better prepared for the upcoming quarter than expected, as the expectation for currency related charges has now been in the air for quite some time.

However the season begins this afternoon, it will be an interesting few weeks.

For a while it has been hard to identify a possible upside catalyst. Earnings, even if below analysts expectations, may end up being that surprise catalyst.

For the rest of the week I think it will just be a case of sitting back and waiting, while hoping for those opportunities to sell options, rollover or cash out of positions may come along.

Today ended up with a pretty flat close,
although if looking to be very critical you could point to a second consecutive day of a failed rally, as the market was up by triple digits early in the day. Given the very strong downward move by energy stocks today the DJIA and S&P 500 did reasonably well, as the latter is about 20% energy.

So what today may mean, whether in the big picture or just for the day is dubious.

Just more of the same tomorrow and one step closer to seeing this week come to an end, still within striking range of decent outcomes on those positions set to expire.

 

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