Option to Profit
Week in Review
June 22 – 26, 2015
|NEW POSITIONS/STO||NEW STO||ROLLOVERS||CALLS ASSIGNED/PUTS EXPIRED||CALLS EXPIRED/PUTS ASSIGNED||CLOSED||EX-DIVIDEND|
|0 / 0||2||1||1 / 0||3 / 0||0||1|
Weekly Up to Date Performance
Still Another week with no new positions opened and if not for finally a little bit of buyer interest in an otherwise very quiet options market today, it was almost the first week of not executing a single trade.
There continues to be nothing to make one want to commit money to new positions.
As with last week and the week before, whatever surges higher there were, became largely erased as the market showed no ability to consolidate its activity in either direction.
The S&P 500 ended the week 0.4% lower despite a very nice start to begin the week that saw a triple digit gain in the DJIA.
There was, however, an assignment for the week and just a little more cash added to the still too small reserve. The 44 closed lots 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 1.3% higher. That 3.7% difference represents a 283.3% performance differential.
Up until Friday, it was really looking as if the unthinkable was going to happen.
Not that there weren’t attempts to get some trades executed earlier in the week, but the options market has been very, very quiet, other than for names in the news.
Most of the activity has been related to buy outs and takeovers and has been very isolated by sector. Most everything else in the broader market has continued to be weak and the options market has reflected a belief that lots of those stocks weren’t likely to be heading higher in the near term.
That’s made it very difficult to get anything resembling fair prices, especially when looking at rollovers. In those cases the cost of buying back option contracts in order to close a position before opening a new one is just too expensive relative to the pitiful premiums in forward weeks.
The lack of optimism may also be reflected in the less than effusive way IPOs were received this week, as the market wa beginning to see a peak in IPOs and was beginning to lose some appetite for them, perhaps remembering what tends to happen when the market gets into an IPO frenzy stage.
WIth the exception of some GDP news, there wasn’t much of interest that really moved markets this week, but they did move, although as in previous weeks, the market didn’t really go anywhere after it was all said and done.
Most of the news, even the Greek banking crisis news did little to get the market’s attention this week, as it was a week where most attention was directed toward the Supreme Court and the rulings that were handed down this week.
On a societal level it was a very busy week, but on an economic level it was about as quiet as it can get.
With that out of the picture, next week’s holiday shortened week that comes a week before earnings season starts all over again, is likely to be another abysmally quiet one for my trading.
With just a little more in cash reserves, it’s still well below where I’d like to see my cash position, so I’m reluctant to plow those reserves back into the market at a point when there continues to be so much uncertainty, but the bias appears to be negative.
Even Friday’s gain, which was very mild, was misleading, in that half of the DJIA advance came from a single stock. While that was happening, the broader S&P 500 actually fell and added to its weekly loss.
The problem with not re-investing that cash, however, is that the past 3 weeks have generated less premium income than I generally look forward to and the past 2 weeks haven’t had the same number of ex-dividend positions as in the weeks prior.
The only saving grace for this week is that some of those ex-dividend positions from those previous weeks were hitting accounts this week, but it still doesn’t have the same feel to me as actively generating option premium income from trading.
With only 2 positions set to expire next week, at least both are currently in range for either rollovers or assignments, but there can still be some news coming from Greece that could shake things up a bit, as we get ready for Independence Day.
With that in mind, as well as the fact that the Employment Situation Report will be released a day early, due to the holiday, there may also be reason to want to avoid having too much at risk for expiration on that date.
Looking ahead, as quiet as this week was, it’s very likely that next week will be very similar.
Any early strength in the week would be welcome if itt gives any opportunity to get some more of those uncovered positions covered and I would continue looking at longer term options, even as the premiums continue to be so low. Hopefully the combination of the extra time, perhaps a dividend or two and using an out of the money strike may generate some competitive returns while we wait to see what near term direction the market will take.
(Note: Duplicate mention of positions reflects different priced lots):
New Positions Opened: none
Puts Closed in order to take profits: none
Calls Rolled ov
er, 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: GPS (9/118)
Calls Rolled Up, taking net profits into same cycle: none
New STO: KO (9/18), MRO (1/16)
Put contracts expired: none
Put contracts rolled over: none
Long term call contracts sold: none
Calls Assigned: MOS
Calls Expired: BBY, GPS, KMI
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: DOW (6/26 $0.42)
Ex-dividend Positions Next Week: EMC (6/29 $0.11), WFM (6/20 $0.13)
For the coming week the existing positions have lots that still require the sale of contracts: AGQ, ANF, AZN, BBY, CHK, CLF, FCX, GPS, HAL, INTC, JCP, JOY, KMI, LVS, MCP, MOS, RIG, WFM, WLT (See “Weekly Performance” spreadsheet or PDF file)
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