7/22/2007 7:20:31 PM
We achieved a return of 11% before commissions this month, a double-digit return in a month is always pleasing.
Well the market went down strongly on Friday and we were unable to get our desired fill on the Aug 1620/1630 Call Spread.
We remain in Sell mode and the suggested trade to be placed for the open of trade on Monday Jul 23 is:
BUY to Open SPX Aug 1625 Call Option (Symbol: SPBHE) and SELL to Open SPX Aug 1615 Call Option (Symbol: SPBHC) for a minimum net credit of $0.55.
This equates to a premium you receive of $55 per $1,000 of margin (before commissions).
The market seems to be in a broad rising channel between 1500 and 1580. The mid channel line has now been broken and suggests that in the short term we'll be visiting the next trend/channel line for support at around 1500. Negative divergences are also present on the RSI and MACD indicators as noted above with the down sloping lines, and this suggests that there may be even greater weakness ahead.
Summary of Position Last Month
For those that are new to the service, we entered a Jul 1430/1420 Put Option Spread on June 20 and received a premium of $40 per spread. Then on June 21 we entered a Jul 1585/1595 Call Option Spread and received a premium of $70 per spread. This equated to a net return of $107 per $1,000 of margin or 10.7% after commissions for one month (using Interactive Brokers commission rates). Looking back over this month, the market had quite a few whipsaws and fake outs, which worked well for us, however, for anyone looking to trade any particular direction, it was a very tough month. The CBOE settlement price for the SPX options was 1551.46 and this was still well within our comfort zone for our sold call strike of 1585.
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