Month: August 2016

Daily Market Update – August 12, 2016 (7:30 AM)

The Week in Review will be posted by 10 PM and the Weekend Update will be posted by Noon on Sunday.

The following trade outcomes are possible today:

Assignments: none

Rollovers: MRO puts

Expirations:   none

The following were ex-dividend this week:   AZN (8/8 $0.44), IP (8/11 $0.44)

Trades, if any, will be attempted to be made prior to 3:30 PM EDT

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Daily Market Update – August 11, 2016 (Close)

This morning’s futures, although only mildly higher, were already showing more of a move than the cumulative absolute value moves in the 3 previous days of this week.

When it was all over, all 3 of the major indexes closed at record highs.

When the morning started there was a chance that the move higher could grow if only retailer earnings that were set to begin in the morning could give some sense of hope that all was well on the consumer side of things.

With 2 big ones before the market’s open being interpreted as having been good news, despite word of 100 store closures at Macy’s and decreased guidance at Kohls, the market never looked back and was even buoyed by a bounce in oil later in the session.

As far as the news of the day goes, those retailers continue next week and oil is a potential issue day in and day out.

After we received reports from 3 key national retailers today, we also get the official retail Sales Report tomorrow morning.

The reasonably strong earnings reports today, even though not fueled by really positive guidance, could still be more meaningful to investors than tomorrow’s official numbers.

Even if earnings aren’t wonderful, if those upcoming retailers start to paint a brighter future for the quarters ahead, that guidance will likely be far more important than anything the government may have to report tomorrow, that will only be backward looking.

Strong guidance would give investors the belief that the FOMC is going to have more of a reason to raise interest rates sooner, rather than needing to wait until December, as is increasingly the consensus.

While yesterday was another in a series of flat days, wouldn’t you know it, the one position that did rally was the one going ex-dividend today?

I did get the opportunity to roll over that position for another month. The goal in that transaction was to get at least a premium as large as the dividend, in the event that the position would still be assigned early.

That was achieved and a bit more, as well, as the additional ROI for the rollover was about 1.3% versus an almost 1% quarterly dividend.

I actually would mind neither the prospect of an early assignment, which didn’t appear to be the case in the morning and was reported by no one as having been the case, or keeping the position alive and just adding to its cumulative ROI, even as the underlying security hasn’t gone very far. 

In this case, if the position does get assigned next month, the 10 month holding will yield an ROI of almost 19%, half of which is from dividends and premiums, while the comparable S&P 500 move was 3.6%, exclusive of dividends.

That’s the way it’s supposed to work, but those opportunities have been rare as the goal had been for shorter term holding periods. However, as markets have increasingly moved the strategy toward longer term holdings, the dual sources of income, dividends and premiums, have become increasingly welcome news.

With the one expiring position for the week that happens to be a short put, I do want to take assignment of shares as the position is ex-dividend on Monday.

Hopefully, if that does happen, there will be a quick and easy opportunity to sell some calls and then exit that new position or even continue rolling those calls over, as had been the case with some other recent new positions, whether short calls or puts.

Today, I actually came close to rolling the puts over as even factoring in the lost dividend, the net premium was pretty go
od
. if that position continues to hover around the strike price, I may try it again tomorrow.

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Daily Market Update – August 11, 2016 (7:30 AM)

This morning’s futures, although only mildly higher, is already showing more of a move than the cumulative absolute value moves in the 3 previous days of this week.

That may become an even greater move as retailer earnings begin to get released this morning and continue after the day’s close to trading.

Those reports will also continue through next week.

After we receive reports from 3 key national retailers today, we also get the official retail Sales Report tomorrow morning.

Strong earnings today, coupled with strong guidance would likely be more meaningful to investors than tomorrow’s official numbers.

Even if earnings aren’t wonderful, if those retailers start to paint a brighter future for the quarters ahead, that guidance will likely be far more important than anything the government may have to report tomorrow, that will only be backward looking.

Strong guidance would give investors the belief that the FOMC is going to have more of a reason to raise interest rates sooner, rather than needing to wait until December, as is increasingly the consensus.

While yesterday was another in a series of flat days, wouldn’t you know it, the one position that did rally was the one going ex-dividend today?

I did get the opportunity to roll over that position for another month. The goal in that transaction was to get at least a premium as large as the dividend, in the event that the position would still be assigned early.

That was achieved and a bit more, as well, as the additional ROI for the rollover was about 1.3% versus an almost 1% quarterly dividend.

I actually would mind neither the prospect of an early assignment, which doesn’t appear to be the case so far this morning or keeping the position alive and just adding to its cumulative ROI, even as the underlying security hasn’t gone very far. 

In this case, if the position does get assigned next month, the 10 month holding will yield an ROI of almost 19%, half of which is from dividends and premiums, while the comparable S&P 500 move was 3.6%, exclusive of dividends.

That’s the way it’s supposed to work, but those opportunities have been rare as the goal had been for shorter term holding periods. However, as markets have increasingly moved the strategy toward longer term holdings, the dual sources of income, dividends and premiums, have become increasingly welcome news.

With the one expiring position for the week that happens to be a short put, I do want to take assignment of shares as the position is ex-dividend on Monday.

Hopefully, if that does happen, there will be a quick and easy opportunity to sell some calls and then exit that new position or even continue rolling those calls over, as had been the case with some other recent new positions, whether short calls or puts.

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Daily Market Update – August 10, 2016 (Close)

Yesterday and Monday both started the week very quietly and the futures this morning seemed as if they were going to carry on with that tradition of the past week.

And once again, they did.

Things may change in a big way if retail earnings start coming in and are surprisingly strong or surprisingly weak. Last week’s Employment Situation Report gave interest rate hawks a little more to believe in, but the GDP was an argument in favor of the other side.

This week, as retailers begin to report and as Retail Sales data is released on Friday, we can either find validation for the hawks or another nail in the coffin for those betting on an interest rate hike coming in 2016, which is rapidly coming to its end.

Otherwise, once the retail reports are in, there won’t be very much left in this earnings season to move markets and so we’re back to an FOMC watch as meandering economic data comes in and everyone gets back to work on fiscal policy once Labor Day has come and gone.

With a single expiring position this week that happens to be a short put position that also goes ex-dividend on Monday, I actually wouldn’t mind being assigned the position, even as the dividend is a paltry one. Because of that dividend, I don’t have too much interest in rolling the position over, unless the net from the rollover is still going to be 1% or higher.

In that case, it may be worth giving up on the dividend and continuing to collect the premiums on the position.

Either way, it would be nice to either milk that position for even more or at least get some cash out of the position through assignment, as long as there’s an opportunity to recycle it somewhere.

Right now, those opportunities seem slight, though.

It’s pretty sad when the most exciting thing for the week may end up being whether to consider rolling over a position that goes ex-dividend tomorrow in order to either get more premium in exchange for early assignment or simply add to the accumulation of premium while still getting that dividend.

But that’s all today was expected to bring and at least in that regard it didn’t disappoint.

With an opportunity, or even a need to roll over that position in International Paper, now I actually hope that it does get assigned early, but I’m not counting on it.

Going forward another month with a new expiration date in exchange for 1.3% in premium in exchange for possibly giving up a 1% dividend would be worth it if assigned tomorrow. Even if not, I wouldn’t mind rolling up more premiums in the position if having to take it beyond the September expiration.

Longer term is becoming the name of the game.

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Daily Market Update – August 10, 2016 (Close)

Yesterday and Monday both started the week very quietly and the futures this morning seem as if they’re going to carry on with that tradition of the past week.

Tings may change in a big way if retail earnings start coming in and are surprisingly strong or surprisingly weak. Last week’s Employment Situation Report gave interest rate hawks a little more to believe in, but the GDP was an argument in favor of the other side.

This week, as retailers begin to report and as Retail Sales data is released on Friday, we can either find validation for the hawks or another nail in the coffin for those betting on an interest rate hike coming in 2016, which is rapidly coming to its end.

Otherwise, once the retail reports are in, there won’t be very much left in this earnings season to move markets and so we’re back to an FOMC watch as meandering economic data comes in and everyone gets back to work on fiscal policy once Labor Day has come and gone.

With a single expiring position this week that happens to be a short put position that also goes ex-dividend on Monday, I actually wouldn’t mind being assigned the position, even as the dividend is a paltry one. Because of that dividend, I don’t have too much interest in rolling the position over, unless the net from the rollover is still going to be 1% or higher.

In that case, it may be worth giving up on the dividend and continuing to collect the premiums on the position.

Either way, it would be nice to either milk that position for even more or at least get some cash out of the position through assignment, as long as there’s an opportunity to recycle it somewhere.

Right now, those opportunities seem slight, though.

It’s pretty sad when the most exciting thing for the week may end up being whether to consider rolling over a position that goes ex-dividend tomorrow in order to either get more premium in exchange for early assignment or simply add to the accumulation of premium while still getting that dividend.

But that’s all today may bring.

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Daily Market Update – August 9, 2016 (Close)

Yesterday started the week very quietly and the futures this morning seemed as if they’re going to carry on with that tradition of the past day.

They did.

Later in the week things may change a bit as retail earnings start coming in and will continue into next week.

Otherwise, just as the paucity of Federal Reserve Governor appearances would indicate, it will be another quiet week on the news front.

Yesterday was interesting in that the previous few days there had seemed to be a conscious re-coupling between energy prices and stocks.

Not so yesterday, though.

Despite a rally in the energy sector, stocks didn’t follow.

Stocks really didn’t do much of anything.

It was one of those days that there wasn’t even a glimmer of a hope that I would get any trade done.

On most days, unless there is a strong shift downward, at least something may look as if there’s an opportunity for a sale of a call on an uncovered position. Not that those trades get made often enough, but at least there’s some consideration of making a trade on something.

Not so yesterday and not so today.

I didn’t send out a single trial balloon trade on either day. There was that little movement across the board.

This morning’s futures weren’t pointing toward anything different, but I was ready and motivated to get something done.

I just wasn’t able.

So now it’s just one day closer to this easily being a repeat of last week, with only a single trade to show for 5 days.

Even if net assets increase during the week I don’t really look at that as a success unless I can wring some cash out of the week and last week was as minimal of a success at doing that as can be the case, unless you also count this week.

Maybe tomorrow?

.

Daily Market Update – August 9, 2016 (7:30 AM)

Yesterday started the week very quietly and the futures this morning seems as if they’re going to carry on with that tradition of the past day.

Later in the week things may change a bit as retail earnings start coming in and will continue into next week.

Otherwise, just as the paucity of Federal Reserve Governor appearances would indicate, it will be another quiet week on the news front.

Yesterday was interesting in that the previous few days there had seemed to be a conscious re-coupling between energy prices and stocks.

Not so yesterday, though.

Despite a rally in the energy sector, stocks didn’t follow.

Stocks really didn’t do much of anything.

It was one of those days that there wasn’t even a glimmer of a hope that I would get any trade done.

On most day, unless there is a strong shift downward, at least something may look as if there’s an opportunity for a sale of a call on an uncovered position. Not that those trades get made often enough, but at least there’s some consideration of making a trade on something.

Not so yesterday.

I didn’t send out a single trial balloon trade. There was that little movement across the board.

This morning’s futures may not be pointing toward anything different, but I’m ready and motivated to get something done.

Otherwise, this could easily be a repeat f last week, with only a single trade to show for 5 days.

Even if net assets increase during the week I don’t really look at that as a success unless I can wring some cash out of the week and last week was as minimal of a success at doing that as can be the case, unless you also count this week.

Maybe tomorrow?

.