Category Archives: Week in Review

 

 

Option to Profit Week in Review –  March 16 – 20,  2015

NEW POSITIONS/STO	NEW STO	ROLLOVERS	CALLS ASSIGNED/PUTS EXPIRED	CALLS EXPIRED/PUTS ASSIGNED	CLOSED
1 / 1	5	2	2  /  0	5  / 0	0

    

Weekly Up to Date Performance

March 16 – 20,   2015

This was a difficult to describe week.

Each and every day, followed the trend that began with the last 2 days of the past week and closed at a triple digit change in the direction opposite that of the previous day’s close.

That’s something you don’t see very often.

There was only a single new position opened for the week. It beat the adjusted S&P 500 by 1.2% but trailed the unadjusted S&P 500 by 1.0% in a week that the market again followed only a single story, but lots of interpretations of the meaning of that story.

The new position was 1.6% higher for the week, while the unadjusted S&P 500 finished 2.7% higher and the adjusted S&P 500 was only 0.4% higher, as the sole purchase for the week was on Thursday, effectively undoing much of the gain subsequently seen on Friday to close the week.

Positions closed in 2015 continue to out-perform the market. They are an average of 5.6% higher, while the comparable time adjusted S&P 500 average performance has been 1.9% higher. That 3.8% difference represents a 202.3% performance differential.

 

All eyes were focused on the FOMC this week and the market really didn’t know what it was looking for, nor what it really wanted.

Sometimes, just like a small child, who is more interested in just receiving something, there wasn’t much attempt to discern whether what was received was good, bad or indifferent.

It’s not very clear that the market got anything resembling clarity to the question of when the FOMC will begin to raise rates, but it did act as if all was now crystal clear.

The market itself seems to be telling a different story and it’s far from one that’s crystal clear.

This is what the past few days of trading looked like at the closing bell:

This is sort of ridiculous.

What makes it ridiculous is that there’s been basically no volatility during the course of these past few days. The market, with the exception of a single one of those days has ignored the pre-open futures trading and just headed in a single direction and had traded with almost no intra-day variation.

The exception to that lack of intra-day variation was this past Wednesday when the FOMC Statement was released.

With all of this faux volatility, there actually hasn’t been much real volatility, even as
the uncertainty has seemed to be increasing. In fcat, the volatility is about at the last low point, which was at the beginning of December 2014, even though it may not really feel like that.

This was a difficult week to want to make any commitments and was a perfect example of how the slightest change in your timing could have made such a significant difference in outcomes.

Looking forward to the next week there’s really no additional information that’s available to push in one direction or another.

For those who look at charts, looking at the net change in the closing level of the DJIA over the past 7 trading sessions shows lower highs and higher lows, so there will surely be someone who will say that the prevailing pattern is for a breakout in prices to the upside.

I have a hard time embracing that, but the reality is that for more than 2 years that really has been the case, regardless of what the charts have looked like.

I was happy to see positions go along for the ride this past week and was especially happy to have a chance to find some new cover for some of the previously uncovered positions. Although there were a couple of rollovers and a couple of assignments, there were too many expired positions to end the March 2015 option cycle.

With some additional cash available next week being added to the pile and with only 2 positions set to expire next week, the greatest likelihood is that any new positions would primarily look at next week’s expiration, rather than in forward weeks. With a smattering of positions already sprinkled through the individual weeks of the April 2015 option cycle and with premiums again following volatility lower, there’s little incentive to look at further diversifying positions by time of expiration.

While I wouldn‘t mind letting go of some of the cash reserve in order to pick up some new positions next week, my preference would be to have another week such as this past one. I’d prefer to generate the income from existing positions, where possible and put as little additional capital at risk until there is really some clarity.

That should begin fairly soon as earnings season is about to begin anew in just a couple of weeks as we may finally get some information regarding the impact of falling energy prices as well as the impact of the strengthening US Dollar.

 



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:   MET

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:  none

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

Calls Rolled Over, taking profits, into a future monthly cycle:  LXK, MRO

Calls Rolled Up, taking net profits into same cycle:  none

New STO:  AZN (4/24), GDX ($21 4/10), GDX ($20 4/2), HAL (4/10), KO (4/10)

Put contracts expired: none

Put contracts rolled over: none

Long term call contracts sold:  none

Calls Assigned: GME, SBGI

Calls Expired:  BAC, BP, DOW, EMC, GDX

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: LVS (3/19 $0.65)

Ex-dividend Positions Next Week: DOW (3/27 $0.42)

 

 

For the coming week the existing positions have lots that still require the sale of contracts:   AGQ, ANF, CHK, CLF, COH, 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.



 

 

Option to Profit Week in Review –  March 9 – 13,  2015

NEW POSITIONS/STO	NEW STO	ROLLOVERS	CALLS ASSIGNED/PUTS EXPIRED	CALLS EXPIRED/PUTS ASSIGNED	CLOSED
2 / 2	1	2	2  /  0	4  / 1	0

    

Weekly Up to Date Performance

March 9 – 13,   2015

This was another bad week, further separating March from February and making it look like January, as there continues to be very little reason for the back and forth kind of motion that is leaving the market with a bias toward the downside.

New positions beat both the unadjusted and adjusted S&P 500 by 0.3% in a week that the market again had no real stories to react to and just like the previous week seemed to trade in a different vacuum each day.

However, despite the relative out-performance, this was was just like last, as those positions still were losers. The 2 new positions were 0.6% lower while both the adjusted and unadjusted indexes were 0.9% lower.

Existing positions, continued their second week under-performing the overall market as energy and metals continued last week’s weakness, abandoning their February gains.

Positions closed in 2015 continue to out-perform the market. They are an average of 5.0% higher, while the comparable time adjusted S&P 500 average performance has been 1.9% higher. That 3.2% difference represents a 169.9% performance differential.

 

This week was one that was predominated by interest rates, currency exchange rates and declining energy prices again.

What made some of the week’s action hard to understand and certainly hard to take was hearing such people as Blackrock’s Chief Global Investing Strategist blame the week’s sharp decline on the sudden realization that currency issues were going to impact corporate earnings.

It’s not clear who he was referring to as having just come to that sudden realization, but I can tell you that the people least likely to have come to that realization on a timely basis are not the people that move markets.

I can only assume that he was referring to portfolio managers.

You would have thought that they would have known better, especially since there are some fairly well understood cycles and “cause and effect” pairs that have demonstrated themselves as inviolate over time.

It doesn’t take too much of a genius to know that a country with a trade deficit and seeing the value of its currency climb significantly in relationship to its trading partners is likely going to see that deficit rise and is going to see corporate earnings dependent upon trade with those countries with weakening currencies decrease.

So why the sudden surprise by those who should know more and better than you and I?

This, like last week wasn’t one to be very pro-active, as there really wasn’t any justification for what was going on. Although some stock prices started looking more appealing, the uncertainty surrounding markets could have been making all of those bargains illusory.

Most week my internal metric is to see a total of 10 trades get performed. That includes some combination of new positions, new STO trades, rollovers and expirations. Most weeks that number is achieved, but not this week. Unlike previous weeks when it was a mistake to count those chickens before they were assigned, this week didn’t offer much chance of even getting them rolled over, as all of those orphaned positions were either in energy or metals.

It was a set back to see some positions expire without the chance to roll them over, although I was happy to see a couple of positions assigned and to at least create some additional opportunity to recycle the cash next week, or decide to just let it add to the pile.

As March begins to resemble January more and more, those days of rapid mini-corrections in the 3-5% range may be back. In January those happened every 2 weeks, although as soon as February started they were a thing of the past.

Based on the closing weakness on Friday, despite the losses being cut in half in the final 30 minutes,  I’m not ready to think that March will be anything other than a copy of January. But I do hope that just like January it is limited in time and scope and at least gives way to a nice April.

With a little bit of cash in hand and a fair number of posit
ions set to expire next week as the monthly option cycle comes to its end, normally I would think about the possibility of letting any new positions bypass the coming week and look at some expiration dates using extended options.

However, the market hit of the past 2 weeks isn’t leaving next week’s positions in likelihood of being assigned, At this point I would be very happy to be able to roll them over, but the damage of the past two weeks was fairly significant.

With the market now down about 3% from the February 2015 highs, there’s still plenty of room for more downside, unless March really takes on a January character and sticks to repeating 3% declines in fairly close succession.

For the most part much of next week will be focused on what the FOMC may or may not say. The good news is that an indication that interest rate hikes are really coming sooner or an indication that they’re coming later, just as Yellen suggested just 2 weeks ago, could both be a tonic for what the last two weeks have wrought.

 

 



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:   KO, UAL

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:  BAC

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 cycle:  GME

New STO:  SBGI (4/15/15)

Put contracts expired: none

Put contracts rolled over: none

Long term call contracts sold:  none

Calls Assigned: SNDK, UAL

Calls Expired:  CHK, GDX, HAL, KO

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: NEM (3/10 $0.02), KO (3/12 $0.22), GME (3/13 $0.36)

Ex-dividend Positions Next Week: LVS (3/19 $0.65)

 

 

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



 

 

Option to Profit Week in Review –  March 2 – 6,  2015

NEW POSITIONS/STO	NEW STO	ROLLOVERS	CALLS ASSIGNED/PUTS EXPIRED	CALLS EXPIRED/PUTS ASSIGNED	CLOSED
2 / 2	0	5	1  /  0	0  / 1	0

    

Weekly Up to Date Performance

March 2 – 6,   2015

Just an awful week to begin a month that is, so far, in as much contrast to February as February was to January.

If you don’t recall, January wasn’t a very good month.

New positions beat both the unadjusted and adjusted S&P 500 by 0.5% in a week that the market had no real stories to react to and seemed to trade in a
different vacuum each day, until the very end of the week.

The 2 new positions, despite beating the index, were still 1.1% lower while both the adjusted and unadjusted indexes were 1.6% lower.

Existing positions, however, under-performed the overall market by an usually large 2.0%, in part due to earnings or monthly sales related price drops in such companies as JOY and ANF. Additionally, energy and metals were also weak, undoing some of the previous month’s strength that contributed to out-performance.

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 2.3% higher. That 3.0% difference represents a 133.5% performance differential.

 

The first 3 days of this week traded with unusual swings and very differently from the pre-opening futures that generally serve to set up the tone for the trading day. None of those days had any kind of news to warrant any kind of sizeable gains or losses, nor was there anything to warrant mid-day corrections.

Yet all of those things happened and on a repeating basis.

The only real news for the week came on Friday morning with the release of the Employment Situation Report and at least that was something that you could point your finger at if you were looking to blame something for another Friday plunge.

For most of the week without any real cues there was very little to react toward and the market was essentially very irrational all during the course of the week, with the possible exception of Thursday, which was simply a day with no news and no activity in the markets. Even oil, precious metals and interest rates traded in a steady state fashion on that day, while doing anything but for the remainder of the week.

On Friday, not to say that the market’s reaction to great employment news was irrational, but at least there was something that might paint a picture for the direction ahead or the prevailing mindset going forward.

The “good news is bad news” people made a return after a period of hibernation and they sold off in a big way in the belief that the employment statistics mean that the FOMC interest rate hikes are coming sooner than Janet Yellen had suggested just a week ago.

To me, it seems implausible that Janet Yellen would lead us down an illusory path or would so suddenly find herself changing her tone, yet that’s how the market reacted.

Forget about the anectdotal reports that lots of the new jobs were in the service sector and at the low end of that sector. Whether or not this month’s report presages real expansion or even presages the FOMC ‘s decision to raise rates, it’s still surprising that the market would be surprised by what we all know is coming.

Most of all, and the only thing that matters, this was not a very good week, especially if seeing some of the recent gains from energy and metal positions evaporate.

For the second consecutive week it was an example of how you just can’t anticipate or predict outcomes with any accuracy. What I thought had good chances for assignment turned out to fall by the wayside as the market’s selling accelerated as trading continued.

Fortunately, those positions that were in line to be assigned stayed close enough to their strikes to allow rollover of all of the call positions. 

The one assignment, and not the good kind, was the Gold Miners ETF puts, as gold plummeted today, as it and interest rates went in opposite directions after the morning’s Employment Situation Report.

Seeing how the GDX has been a recent trading standout, I don’t particularly mind taking ownership of shares as the one thing you know about every commodity is that their price cycles are a given. That makes them a little more reliable in serial trades despite their habit of taking large moves on a dime.

Some weeks, especially in January, it seemed that if not trading and re-trading GDX calls there would be nothing going on at all.

Besides being lucky enough to make all of those rollover trades, the other fortuitous thing this was the large number of dividends this week which some time soon will find their way back into the account.

As good as those may sound, they come nowhere close, however, to making up for an overall very bad week.

Starting next week off, just like this week, with less recycled cash than I had expected, it’s likely that the approach will be similar to this week and have caution as a primary characteristic. This week that caution was rewarded by virtue of simply not putting as much at risk and maybe even more caution would have been warranted.

With about 5 positions set to expire next week my focus will be to either see those be assigned or rolled over, possibly looking to bypass the following week, which is the end of the March 2015 option cycle.

Unless there will also be some technical factors in play as support levels on the S&P 500 are being approached, it’s not too likely that the fears about the timing of interest rates will carry through to next week, as there isn’t very much economic data being released that might confirm upward pressure on prices or wages.

Despite that, I’m not overly anxious to dip into the cash reserve as getting ready to begin the coming week.

Sometimes you just need some kind of proof or a sign that it’s safe to come out and play. Mostly that means continuing to get good economic news but not muddling their interpretation or acting as if the impacts of a strengthening dollar and increasing interest rates had never been considered before.

 

 

 

 

 

 

 

 

 

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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:   BAC, CHK

Puts Closed in order to take profits:  none

Calls Rolled over, taking profits, into the next weekly cycle:  GDX, HAL, SNDK

Calls Rolled over, taking profits, into extended weekly cycle:  GPS (4/10)

Calls Rolled over, taking profits, into the monthly cycle: MRO

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

Calls Rolled Up, taking net profits into same cycle:  none

New STO:  none

Put contracts expired: none

Put contracts rolled over: none

Long term call contracts sold:  none

Calls Assigned: UAL

Calls Expired:  none

Puts Assigned:  GDX

Stock positions Closed to take profits:  none

Stock positions Closed to take losses: none

Calls Closed to Take Profits: none

Ex-dividend Positions: HAL (3/2 $0.19), JOY (3/2 $0.20), MOS (3/3 $0.25), BAC (3/4 $0.05), COH (3/4 $0.34), HFC (3/6 $0.32)

Ex-dividend Positions Next Week: NEM (3/10 $0.02), GME (3/13 $0.36)

 

 

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



 

 

Option to Profit Week in Review –  February 23 – 27,  2015

NEW POSITIONS/STO	NEW STO	ROLLOVERS	CALLS ASSIGNED/PUTS EXPIRED	CALLS EXPIRED/PUTS ASSIGNED	CLOSED
5 / 5	0	5	1  /  0	1  / 0	1

    

Weekly Up to Date Performance

February 23 – 27,   2015

Finally, a week with almost a little of everything.

The last few weeks have been good ones for a more varied trading experience.

New positions beat the unadjusted S&P 500 by 2.1% and the adjusted index by 2.2% for the week. That unusually large beat was due to a combination of rollovers, dividends and
decent performance of the shares themselves, despite a late day sell-off in UAL, as compared to the overall market, which was essentially unchanged for the week.

The market was up only 0.3% for the week, closing on a mildly negative note, having been unchanged over the previous 4 days. By contrast, new positions were 1.8% higher for the week.

With only 1 assigned positions this week the positions closed in 2015 are an average of 5.4% higher, while the comparable time adjusted S&P 500 average performance has been 2.5% higher. That 2.9% difference represents a 116.5% performance differential.

 

Other than a brief catalyst from Janet Yellen, this was an exceedingly boring week as far as market news and market reactions.

Even retailer earnings reports and the GDP release did nothing to move markets in either direction as there was almost a complete embargo on anything really newsworthy.

While that brings volatility lower it was still a good week, especially if there was some exposure to those positions that remain volatile.

While stocks have given up the volatility over the past few weeks after having started the first month of the year having a triple digit move or 200 point swing each and every day, the past month has been much less exciting, at least in most stocks.

Meanwhile precious metals and interest rates have been all over the place and if you were among those that established a position in the Gold Miners ETF, either as a covered call or a put sale, you know exactly how volatile that position has been, although it has essentially gone nowhere, but has offered lots of trading opportunities in the underlying option contracts.

Add to that volatility in the energy sector, both on a daily basis and on an intra-day basis.

Just as the energy sector was punishing on the way down, it can be rewarding on the way up. The difference is that the way down was very sudden and came as a complete surprise to nearly everyone. By the time it happened it still took option premiums a long time to catch up.

Lately, however, as energy prices have been stabilizing and in the eyes of many teetering between going higher or just taking a rest before their next plunge, those option premiums have been reflecting that uncertainty and at least offering a little bit of reward in exchange for taking some risk.

There also has to be some uncertainty about what the next week or weeks will bring to stocks.

Whatever hope I had for retailers providing some optimistic earnings and future guidance, that really didn’t materialize this week and to make matters worse the previous quarter’s GDP was revised fairly significantly downward.

To date, that means that whatever extra money people are seeing in their pockets still isn’t showing up in the bottom line or in anyone’s projections for their future bottom lines.

With the important part of earnings season now over you have to wonder what will be the next catalyst higher, as we’ve again become used to seeing new daily highs.

While there turned out to be no catalyst this week it did turn out to be a good week to add some new positions, especially as there were chances to generate some additional revenue with rollovers and a decent number of positions going ex-dividend.

Next week, whatever it may bring, will at least bring an even larger number of ex-dividend positions. At the very least ge
tting those dividends gives the appearance of getting something while you wait for something to happen.

With only a single assignment for the week and the proceeds of the early closure of Western Refining going back into Halliburton, my cash pile won’t be as big as I thought it might be just a day earlier. With a decent number of positions expiring next week and all currently in the range for either rollover or assignment any new purchases will probably look at both weekly expiration dates and the following week, where there are currently no expiring positions.

However, with volatility again so low, there’s little desire to look too far ahead, especially since everything can change in just a day’s worth of trading, especially if some external or international events decide to finally have some influence on our shores.

 

 

 

 

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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:   HAL, MRO,  LXK, SNDK, UAL

Puts Closed in order to take profits:  none

Calls Rolled over, taking profits, into the next weekly cycle:  GDX, GDX (puts), MRO, SNDK, UAL

Calls Rolled over, taking profits, into extended weekly cycle:  none

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 cycle:  none

New STO:  none

Put contracts expired: none

Put contracts rolled over: none

Long term call contracts sold:  none

Calls Assigned: AXP

Calls Expired:  LVS

Puts Assigned:  none

Stock positions Closed to take profits:  WNR

Stock positions Closed to take losses: none

Calls Closed to Take Profits: none

Ex-dividend Positions: SBGI (2/25 $0.16), LXK (2/26 $0.36), SNDK (2/26 $0.30), ANF (2/27 $0.20)

Ex-dividend Positions Next Week: HAL (3/2 $0.18), JOY (3/2 $0.20), MOS (3/3 $0.25), COH (3/4 $0.34), BAC (3/4 $0.05), HFC (3/6 $0.32)

 

 

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