Author Archives: TheAcsMan

Daily Market Update – October 24, 2014 (8:30 AM)

The Week in Review will be posted by 6 PM and the Weekend Update will be posted by noon on Sunday.

The following outcomes are possible today:

Assignments:  none

Rollovers:  CHK

Expirations:  ANF, EBAY, GDX, JOY, LVS

In general, DOH Trades are preferred to expire, with the least preferable outcome being assignment. This past week had 3 DOH Trades and 2 early in the week rollovers, all trades that were made as volatility was somewhat higher than during the latter half of the week.

The past week’s ex-dividend positions were Fastenal (10/22 $0.25) and Blackstone (10/23 $0.44)

There are no ex-dividend positions next week.

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

Daily Market Update – October 23, 2014 (Close)

Since we always look for answers to everything, it’s most likely that the events in Canada influenced the market’s unexpected downturn yesterday, but it’s also not likely that was the case.

While it was unusually slow in being reported and events developed slowly, the market really didn’t have too much of a reaction until early in the afternoon.That reaction may have also been influenced by the continuing slide in oil prices.

This morning the futures are acting as if yesterday was an aberration.

On the other hand it may be possible that once again earnings are taking center stage as a number of good earnings were reported this morning, with the industrial side of things continuing to look good.

One of those companies reporting this morning, Caterpillar, may be a little like the kind of market leader that IBM used to be. These days when Caterpillar does well, it’s also taken as an indicator that China is doing well and increasingly China is where so much of our focus needs to be.

Those earnings, as well as for 3M, are as good of a reason as you can find to explain why today offset all of yesterday’s loss and then some, bringing this week, so far to a 3.4% gain.

Yesterday was a disappointing one as I was hoping for some chance to sell covered calls in a rising price environment. .

That didn’t happen, but with today’s early indication, perhaps today could have been that kind of day, although the volatility that had continued to fall as the market shoots higher served to make it less appealing to either take DOH related risks or less appealing to look at extended weekly trades.

Today wasn’t much better, at least in that regard.

The morning began with the S&P 500 about 4% below it’s September highs and while it was nice seeing the early morning indication higher, it did remove some of the inclination that I found myself with as yesterday’s market was coming to a close. I now felt less inclined to add positions as the increase just added another layer of uncertainty.

While the net result of the week thus far has been decidedly positive, the ease of the reversal lower, as seen yesterday is a reminder that the climb back from 9% lower may have some unsteadiness in it.

Although I certainly don’t mind watching net asset value increase as the market moves higher it’s really not the same if you’re not deriving some real and tangible benefit from the market’s actions.

So far this week there have been scant few trades and so there has been scant little income derived. While I would love to see that change during the remainder of the week, I just
don’t know if that will be the case and with little to no assignments for the week the coming week may be one that continues the recent trend of little to no activity, especially on the new position purchase end of things.

That puts more reliance on the ability to rollover and sell new option positions.

Sooner or later we’ll get some more clear idea of what is really going on right now.

Are we climbing back from a 9% correction or is this just a trap?

Other than in hindsight there is just no way to know. Other than looking at data points from the past that strongly suggest that very large moves higher are illusory, there’s little to give an indication of what days like today mean. Certainly the previous 200 and 300 point gains over the past few weeks haven’t had the kind of short term impact that we would have expected or liked.

But maybe today was different? Tomorrow may give some clue to that question.

.

Daily Market Update – October 23, 2014 (9:15 AM)

Since we always look for answers to everything, it’s most likely that the events in Canada influenced the market’s unexpected downturn yesterday, but it’s also not likely that was the case.

While it was unusually slow in being reported and events developed slowly, the market really didn’t have too much of a reaction until early in the afternoon.That reaction may have also been influenced by the continuing slide in oil prices.

This morning the futures are acting as if yesterday was an aberration.

On the other hand it may be possible that once again earnings are taking center stage as a number of good earnings were reported this morning, with the industrial side of things continuing to look good.

One of those companies reporting this morning, Caterpillar, may be a little like the kind of market leader that IBM used to be. These days when Caterpillar does well, it’s also taken as an indicator that China is doing well and increasingly China is where so much of our focus needs to be.

Yesterday was a disappointing one as I was hoping for some chance to sell covered calls in a rising price environment.

That didn’t happen, but with today’s early indication, perhaps today will be the day, although the volatility continues to fall as the market shoots higher and makes it less appealing to either take DOH related risks or less appealing to look at extended weekly trades.

The morning begins with the S&P 500 about 4% below it’s September highs and while it’s nice seeing the early morning indication higher, it does remove some of the inclination that I found myself with as yesterday’s market was coming to a close. I now feel less inclined to add positions as the increase just adds another layer of uncertainty.

While the net result of the week thus far has been decidedly positive, the ease of the reversal lower, as seen yesterday is a reminder that the climb back from 9% lower may have some unsteadiness in it.

Although I certainly don’t mind watching net asset value increase as the market moves higher it’s really not the same if you’re not deriving some real and tangible benefit from the market’s actions.

So far this week there have been scant few trades and so there has been scant little income derived. While I would love to see that change during the remainder of the week, I just don’t know if that will be the case and with little to no assignments for the week the coming week may be one that continues the recent trend of little to no activity, especially on the new position purchase end of things.

That puts more reliance on the ability to rollover and sell new option positions.

Sooner or later w
e’ll get some more clear idea of what is really going on right now.

Are we climbing back from a 9% correction or is this just a trap?

Other than in hindsight there is just no way to know. Other than looking at data points from the past that strongly suggest that very large moves higher are illusory, there’s little to give an indication of what days like today mean. Certainly the previous 200 and 300 point gains over the past few weeks haven’t had the kind of short term impact that we would have expected or liked.

But maybe today will be different?

.

Daily Market Update – October 22, 2014 (Close)

Earnings continue this week and next and with the exception of some high profile names in the DJIA, thus far earnings have been reasonably good.

They have also likely been the reason for the market reversing its downtrend, although the very factors that may have sent the market lower may now be the ones sending it higher as they all have taken a break.

Ebola, ISIS, dropping energy prices, you name it. There’s really nothing going on right now and that allows for attention to be placed to where it rightfully belongs.

In an ideal world all we would really need to focus upon would be fundamentals and prospects for growth. We wouldn’t have to have our attentions diverted by so many extraneous factors, especially the ones that cause us to worry or panic.

This morning the futures were indicating a calm opening, although that was the situation yesterday as well, but yesterday and on Monday, there was undue influence from earnings related declines in some big names that obscured the building strength in the rest of the market.

This morning there was none of that fog from bad numbers to confuse the situation and the S&P 500 and the DJIA may actually perform in line with one another, as opposed to the DJIA lagging by about 0.8% over the past two days.

A little bit of stability would have been a nice thing right about now. While the market had reached a low point of about a 9% decline from its September peak, it is still about 4% below that level. Committing funds to new positions is rarely a good idea when markets are heading straight in one direction or another, nor is it really a good idea when they wildly alternate between drops and climbs.

Over the past month, however, there haven’t been many alternatives. What we haven’t seen are many days of little to no movement.

And today was no different.

It was a triple digit loss, closer to 200 points than to 100 points, because the calm was broken in Canada and possibly because the briefly seen stability in oil prices was disrupted.

Normally that would have meant oil prices went higher, but these days it means that they are going lower.

With yesterday’s move higher, I was content seeing asset appreciation on paper but would have been much happier if able to convert some of those moves higher into opportunities to sell calls. What you may have noticed, though, is that the sharp climb higher yesterday and the stealth climb on Monday that was otherwise obscured by IBM, saw large drops in volatility and along with it, drops in premiums.

That drop in premium has made the DOH trades that I was hoping to execute look less appealing from a risk – reward perspective.

That may change tomorrow as volatility recaptured some of what was lost earlier in the week, as suddenly even volatility has volatility.

This morning I didn’t expect to be buying anything and this now may end up being the second consecutive week of refraining from adding any new positions. I could get used to that as long as there is some other source of recurring income, so that would require some consistency in rollovers  or sales of new covered positions. Ideally, both of those would be occurring, but so far this week has been slow in the latter, although there were already some early rollovers that took advantage of some price moves higher while still being out of the money.

As the afternoon wore on, however, I found myself beginning to get ready to possibly add some new positions, but given the uncertainty regarding today’s terrible events in Canada, it might be a good idea to wait until there is some clarity.

With a number of DOH Trades set to expire this week that means a need to roll them over in the event that assignment seems likely. Ideally, DOH trades are allowed to expire, unless the volatility is still very high, in which case the cost of the transaction could be easily offset by the transaction. With those DOH trades and the objective of not seeing them get assigned, I don’t anticipate too many assignments, if any, this week.

Otherwise, today, at the mid-week point, it looked like a day for watching for any selective opportunities on an individual basis.

Of course, those really didn’t come along, so that wait is delayed until tomorrow.