March 29^th 2019

Weekly Recap and Look to Next week

In our March 22^nd outlook for this week we said we would be looking for long opportunities this week as long as 2800 held. It didn’t and we ended up taking a short trade and made a little money.

Overall, this week there has been a lot in indecision which can be difficult to trade but these consolidation periods lead to opportunities in the future.

Butterflys

We have a couple of short butterflys still open, both are about breakeven. We tried to get into some others but did not get filled.

Strangles

Still in the same strangles from last week, weren’t able to hit our close order on any of them this week. All still look good but we might have an earnings problem in a couple of weeks if not of our GTC orders are hit.

Credit Spread – Index

Our NDX credit spread looks great this week. The consolidation week really helped.

Iron Condor – Index

So far this cycle’s Index Iron Condor is looking pretty good. Again, consolidations always help an Iron Condor.

Iron Condor – Probability

We closed three this week. Two for target profit and one for a loss. Overall, this meant we were breakeven because our losses on these tend to be larger than our gains.

The ones that are still opened look pretty good. We also opened a couple of new ones.

Diagonals

Still just in the IBM diagonal, could not get filled on another and just could not find the right opportunity in stocks we like to trade. We rolled the short IBM call to next week and everything is looking really good on the trade.

We did jump into a FB Diagonal just before the close Friday, even thought we said we weren’t going to and we already have a strangle on FB.

TEST TRADING SYSTEMS

SPY

We got two entry signals this week but only took one. We went short and ended up closing the trade the next day for about a 10.65% gain. We still need to review this system. We aren’t making enough to justify the risk at the moment. Yes we are 100% correct so far but long term the way these trades are working out we would have to be about 75% to make these work because of the risk/reward.

Long Straddle

This is another system we are testing out. We typically don’t like to buy options, especially if the probabilities are against us. These trades showed about a 44% chance of success when we entered them. We are trading them like a group of trades instead of individually. Right now we are trading 4 stocks per group. The first 2 weeks the group was positive. This week the group is negative. Not unsurprising since time decay is working against.

That being said, the strategy requires we hold to expiration. Mentally we are thinking about a 50% gain or loss stop.

Delta

Delta this week is Negative 56. This is about neutral as far as we are concerned.

Next Week

As this week has progressed a new support line has appeared on the daily and weekly chart which we will be watching very closely next week. We think this trend line will hold and will be tradable to the long side.

So, we are looking long again next week as we watch for pull backs to the trend line or candles which look like good entry points.