Week in Review – September 14 – 18, 2015


Option to Profit

Week in Review


September 14 – 18, 2015


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Weekly Up to Date Performance

September 14 – 18, 2015

This was a really terrible week, but for the right reasons.

More on that later.

There was only one new position opened this week and thanks to the late week sell-off, it was able to out-perform the market.

That single position was assigned after 3 days of holding and exceeded the performance of the unadjusted S&P 500 by 1.2%, but trailed the adjusted S&P 500 by 0.7%, reflecting the sharp decline following that assignment after Wednesday’s close.

The position was 1.1% higher, while the unadjusted S&P 500 was 0.1% lower and the unadjusted S&P 500 ended the week 1.8% higher.

Existing positions beat the S&P 500 by 0.2% for the week and were actually 0.1% higher for the week.

Beating is good, higher is better, but the differential wasn’t much to write home about.

For the year the 49 closed lots in 2015 continue to outperform the market. They are an average of 4.8% higher, while the comparable time adjusted S&P 500 average performance has been 1.1% higher. That difference represents a 357.4% performance differential. The differential is so big as to be meaningless.

What were the right reasons that made this week’s terrible market not so hard to accept?

It was the first time seeing the market come to an understanding that an increase in the interest rates wasn’t really a bad thing, especially at this early stage of a cycle. That helps to explain market strength earlier in the week, even as overseas markets in Asia continued to be very weak.

It was also the first time that the market was in a position to react to news of no such interest rate increase through a new and more mature lens.

And they didn’t like not getting the rate increase, because they finally came to understand that it’s a growing economy that warrants such an increase and the market is all about growth.

Last week I wrote: “It seems that the market is finally at peace with the probability that a rate increase is getting very near at hand.”

This week definitely showed that to be the case and the good news is that we may finally be back to a stage where it’s the fundamentals that count.

As far as fundamentals go, for my perspective personal fundamentals were awful this week.

With only a single new position opened and no rollovers and no new call positions sold, there wasn’t much in the way of income generation. Although there were a couple of ex-dividend positions, that’s really not enough for an entire week.

The real disappointment, though, was seeing the large losses coming in the days before the end of a monthly cycle’s expiration, as was the case this week.

That ends up adding far too many positions into the “uncovered” category.

Still, as bad as this week was, I’m left more optimistic than I have been for quite a while.

That optimism comes from the belief that investors are going to focus more and more on fundamentals and we’re going to move away from thinking that a handout from the Federal Reserve in the form of zero interest rates is the only thing to keep us afloat.

With the possibility that we are also beginning to distance ourselves from what is going on in China and possibly Japan, as well, that could be really good news.

With earnings set to begin once again in about 3 weeks, we may see an entirely new kind of market persona, which is much more like the market of the past.

If that can be coupled with some increased volatility, maybe settling into the 27 – 32 range, that could be a really nice place to create some additional income, even if the market is getting ready to take a rest for a while and create a new foundation for another leg higher.

If so, that would finally also open the door for more “DOH” trades and generation of some additional premium income for those that may be nimble enough to take counter measures on short notice in the event of a sudden move higher that would see shares otherwise assigned well below cost.

Still, while the S&P 500 is again moving into correction territory and those support levels are again being tested, it would be refreshing to have an environment where fundamentals rule the day.

This week’s details may be seen in the Weekly Performance spreadsheet * or in the PDF file, as well as in the summary below

(Note: Duplicate mention of positions reflects different priced lots):

New Positions Opened:   GE

Puts Closed in order to take profits:  none

Calls Rolled over, 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:  none

Calls Rolled Up, taking net profits into same cyclenone

New STO:  none

Put contracts expired: none

Put contracts rolled over: none

Long term call contracts sold:  none

Calls Assigned: CVC, GE

Calls Expired:  CY, GDX, GPS, HPQ, KO, KSS, MOS, NEM

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 GE (9/17 $0.23), LVS (9/18 $0.65)

Ex-dividend Positions Next Week:   CY (9/22 $0.11)

For the coming week the existing positions have lots that still require the sale of contracts:   AGQ, ANF, AZN, CHK, CLF, COH, CSCO, CY, FAST, FCX, GDX, GM, GPS, HAL, HPQ, INTC, JCP, JOY, KMI, KSS, LVS,  MCPIQ, MOS, NEM, RIG, WFM, WLTGQ (See “Weekly Performance” spreadsheet or PDF file)

* If you don’t have a program to read or modify spreadsheets, you can download the OpenOffice Suite at no cost.