|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.
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.
(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)
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