Big Picture:

This will be a somewhat abbreviated market commentary because I need to head to work soon.  Links for the first two posts of the “How Should I Invest Series” are below.  The series is intended to be a very basic look at some of the big picture concepts in investing:

How Should I Invest Part 1 – Stay Away From Dirty Clowns

How Should I Invest Part 2 – The Most Powerful Force In Investing

There’s a saying that goes, “This too shall pass.”  That saying sums up the week for my trading.  This week there was a big break break both in Real Estate and Long Bonds, which hurt the ETF Rotation Systems.  The positions that I’ve been holding for a while have a large open profit that got a little bit smaller, but the new positions I took at the end of January are underwater.  Over time I have confidence that the systems will pull through and even though it isn’t fun to lose money, I’m not worried about the systems.

The options trades I have open are doing okayish after the move higher in equities this week.  I also sold a couple of weekly $SPX verticals into the close on Thursday afternoon that look good for now.

The Weekly Stats:

 

ETF Rotation System Positions:

All of the ETF Rotation System positions took a hit this week, but the Long Term U.S. Treasury was hit hard ($TLT -5.29%).  Despite the big hits, Real Estate and the Long Bond are still the stop ranked markets for the systems.

Click here to see a copy of the December 2014 Market Momentum Newsletter that covers the systems in more detail.

Options . . .

$RUT Iron Condor:

The RUT Iron Condor is down a small amount of money on the call side, but there isn’t anything to be done about it yet.  The short call delta has decreased from -.10 to -.135 with the move up.  I’m not planning to do anything about the call side until it hits the high teens to 20.  The position has 52 DTE as of today.

$RUT Butterfly:

The $RUT Butterfly was adjusted this week when $RUT hit the 1200 level.  I adjusted by adding another Butterfly and buying an $IWM call to offset the negative delta.  Even though the position is losing a little bit of money right now, there is very little price risk and the greeks look good.  The position has 40 days to expiration and Theta is going to start kicking in more quickly.

$SPX Weekly Verticals:

On Thursday afternoon I sold a couple of $SPX weekly options verticals during the run up into the close.  I sold one in my IRA and another in my regular account.  Both positions look good after the sell off on Friday afternoon.

Trades This Week:

RUT – Bought to open 1130/1180/1230 Put Butterfly for 10.40 (adjustment)

IWM – Bought to open March 2015 117 Call for 4.67 (to hedge delta)

SPX – Sold to open Feb2 2015 2100/2105 call vertical for a .60 credit

SPX – Sold to open Feb2 2015 2105/2110 vertical for a .45 credit

SLV – Sold to close 60 shares at 16.39 (to free up margin)

ETF, Options, & Forex Inventory:

IYR – Long 32 Shares from 76.7699

TLT – Long 18 Shares from 138.50

SCHH – Long 41 Shares from 34.009

SCHH – Long 72 Shares from 38.73

SCHH – Long 4 Shares from 42.28

RWO – Long 92 Shares from 48.49

RWO – Long 5 Shares from 50.92

TLO – Long 63 Shares from 78.94

GLD – Long 18 Shares from 118.99

RUT – 1110/1160/1210 March 2015 Put Butterfly bought for a 9.63 debit

RUT – 1130/1180/1230 March 2015 Put Butterfly bought for a 10.40 debit

IWM – March 2015 120 Call bought for a 1.87 debit (Butterfly Hedge)

IWM – March 2015 117 Call bought for a 4.67 debit (Butterfly Hedge)

RUT – 1030/1040/1290/1300 Mar5 2015 Iron Condor sold for 1.60 credit

SPX – Feb2 2015 2100/2105 call vertical sold for a .60 credit

SPX – Feb2 2015 2105/2110 vertical sold for a .45 credit

Looking ahead:

I’m hoping next week the markets take it a little easier on the ETF Rotation systems.  I’m not sure that I believe the move higher in the S&P 500 this week and that, combined with good location, is why I sold the weekly call spreads.  The market has been flailing about in a relatively tight range for a while now and at some point it’s going to want to move somewhere.  Will that happen this week?  We’ll need to wait and see.

Have a good rest of the weekend and thanks for reading.  Sadly, I’m off to work.

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