HashFlare
HashFlare

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Market Conditions
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Stochastics: 6 (Oversold. Down from 51)
McClellan: -195 (Neutral. Down from +53)
Stocks above their 20 DMA: 23% (Oversold. Down from 64%)

Oversold environment

Or ‘Short-term Extreme pessimism’ I like to call it too.
The best time for Credit Put spreads. Only accentuated with the VIX near 25.
For example, using May options, the 2240/2230 Credit Put spread can be sold for 0.60 credit. That’s 13% below current price 22% below the all-time highs.

Markets retraced almost 6% this week. That’s significant for a week. Even though, in my view, corporate America is healthy. The 200-Day average may be a magnet now, and it has been a long time since we last saw a closing price below it. I will take advantage of it to establish some long-term stock positions or add to existing ones. But that’s beyond the scope of this Options trading oriented article.

The Russell Index:
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HashFlare

A little less weak than the SPX (more room above its 200-day average). That’s why I prefer to sell SPX Credit Put spreads using SPX at the moment as it looks more oversold. Long-term support still lower around 1,470.

Current Portfolio:

The SPY Calls and SVXY Calls expire in December and January of next year. All bullish bets on a market rebound.

Let’s now look at the income plays.

Apr. SPX/SPY 2440/2450/2890/2900 – 290 Elephant
Net Credit: $1,608 and four weeks to expiration.
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Defense line: 2,535 (adjust the Put side). In reality, it is whenever the 2450 Calls reach 30 deltas. 2,535 is just a price estimate. If the adjustment condition is triggered. I’ll adjust using the same April options.

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Apr. RUT/IWM 1450/1460/1670/1680 – 148/168 Elephant
Net Credit: $1,445 and four weeks to expiration
(Click on image to enlarge)

Defense
line: 1,500 (adjust the Put side). Again this is just a price estimate. The real trigger is when the 1460 Puts reach 30 deltas. If it happens, I’ll adjust using April options.

May SPX 2250/2240 Credit Put spread
Net Credit: $1,200. Eight weeks to expiration.
Brand new position established just a few hours ago. Well Out of the Money. Lots of baby-sitting ahead.
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Action Plan for the Week

– I’ll just be baby-sitting positions for possible adjustments of the RUT and SPX April Elephants. Adjustments will be made using April options.

Economic Calendar

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Tuesday: CB Consumer Confidence.
Wednesday: US GDP and Pending Home Sales.
Friday: China’s Manufacturing PMI.

Good luck this week folks,
LT

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options for consistent income with solid risk management
, consider acquiring LTOptions, my options trading system to the last detail.

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