8/15/2008 7:59:33 PM
Summary of Position For August
We entered a half Aug SPX 1170/1160 Put Option Spread on July 22 and received a premium of $100 per spread. Then on July 25 we entered the other half position in an Aug SPX 1185/1175 Put Option Spread and received a premium of $120 per spread.
The combined total of this equates to a net return of $107.72 per $1,000 of margin used or 10.77% after commissions for 4 weeks in the position (using Interactive Brokers commission rates). The return before commissions was 11%. The official CBOE settlement price for the August SPX options was 1294.49.
On August 15 we sold a half position in an SPX Sep 1395(SXYIS)/1405(SXZIA) Call Option Spread for a net credit of $0.60. (This was done through Interactive Brokers, The auto trades didn't get a fill on this occasion)
The premium received is $60 per $1,000 of margin required per spread.
The system remains in Buy mode.
SPX Chart - Bigger Picture
We're at another interesting juncture in the market. The underlying technicals are quietly confident of a continued rally although the candle posted for the week is one of indecision. We could be entering a period of consolidation for the next few months, where we go sidayways between 1325 and 1250.
SPX Chart - Shorter Picture
In the shorter term, we didn't quite make it to 1320 this week, 1313 was the top on Monday, but overall it was a sluggish week and more of a consolidation of the moves higher we've had over the last couple weeks.
The mini uptrend that started a month ago remains intact, but we're also at some overhead resistance and quite frankly, even if the market does get above 1300, the 1325 region poses substantial resistance.
Today's action was very subdued for an options expiry day, but we are in the middle of summer so maybe that was a factor.
For next week a break above 1300 should take us to the 1325 region, failing that we'll test the trend line at 1275 before making another advance. If 1275 fails then the 1250 mark becomes likely. Overall though, the bias remains up in the short term but the triangle pattern above shows a lack of conviction, so we need to be wary.
For next week, support is 1280 - 1260 and resistance is 1305 - 1325.
Finally, I'll reassess which position to enter for Monday and issue an email on Sunday evening.
Just for a laugh, the quote this week is from Bob Newhart, "It's getting harder and harder to differentiate between schizophrenics and people talking on a cell phone. It still brings me up short to walk by somebody who appears to be talking to themselves."
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