11/14/2007 9:27:13 PM
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Our services' net portfolio gain is 78.26% over 10 months. An 87.89% Annualized Return! For a full break up of this performance, CLICK HERE.
Our system moved into Sell mode during the week, with one week to expiry, we have a buffer of 43.7 points on the put spread and 156.7 points on the call spread.
On October 23rd we sold an SPX Nov 1610(SPBKB)/1620(SPBKD) Call Option Spread for a net credit of $0.40.
On October 29th we sold an SPX Nov 1410(SXZWB)/1400(SXZWT) Put Option Spread for a net credit of $0.40.
(i.e. a total premium received of $80 per $1,000 of margin)
Looking at the longer term on the SPX, we're still in an uptrend and there is reasonable support around the 1450 area.
The SPX broke the 1490 support level I spoke about last week and has made a quick decent to the 1450 region, it may now find a level of support around 1440 and trade between 1440 and 1490 in the near term. At this point our 1410/1400 put spread is still fine, I'm anticipating a little more downward pressure on Monday and after that a bounce into the end of the week. If any action is required I will email you.
The longer term picture of the Nasdaq also shows a healthy uptrend and looks like it's simply taking a breather from having advanced so much in a short period of time.
On the shorter term, the breakout over a week ago has in fact turned out to be a fake out as discussed last week and this now casts doubt on the anticipated Christmas rally. We'll probably get a bounce from the sudden drop but after that, chances are we'll drop further and trade between 1950 and 2050 before it resumes its uptrend, possibly post Christmas.
While I've spoken about the traditional Christmas rally the last few weeks, the rally is mainly of interest for portfolios that only perform from being on the long side. From our perspective it really doesn't matter and that's why this strategy is such a great hedge, we simply trade whichever side our indicators point in order to generate a comfortable monthly cashflow.
Have a great weekend and Feel free to email me directly at email@example.com if you have any feedback or questions.