|NEW POSITIONS/STO||NEW STO||ROLLOVERS||CALLS ASSIGNED/PUTS EXPIRED||CALLS EXPIRED/PUTS ASSIGNED||CLOSED|
|1 / 1||2||2||5 / 0||6 / 0||0|
Weekly Up to Date Performance
December 15 – 19, 2014
This was another in a string of weeks that oil was the headline story, but this week it got lots of competition for attention and, for now, at least, it lost its ability to drag the market into the mud along with it.
There was only a single new position this week and despite doing well it couldn’t compete with a market that was 3.4% higher, erasing almost the entire loss from the previous week.
The single new position was 1.9%higher, as compared to the 3.4% gain in both the the unadjusted and adjusted S&P 500.
As opposed to the previous week that had no assignments this week, marking the end of the monthly cycle had 5 assignments. The 199 Closed positions for the year have finished 3.7% higher, as compared to 2.1% for the S&P 500 for the comparable holding periods. That 1.6% advantage represents a 75.1% difference in return.
This was a fascinating week, just not one that offered too many opportunities to trade. Although the week actually closed on a whimper, it was anything but that, as we saw lots of big moves, sometimes on an intra-day basis and lots of stories that got everyone’s attention.
The one thing that was clear was that if oil stays at its current levels, or even just nearby, the market looks as if it is done over-reacting to the moves, especially if the moves are lower.
There is just too much good news at hand, and more to come.
While oil led the market for most of the week there was finally some evidence of de-coupling on Thursday as oil headed lower and the market exploded to a 400 point gain. But the same was noted today as oil moved nicely higher on Friday and yet the market was asleep for most of the entire trading session, until catching some buying in the closing hour. But even with that last hour flourish the market showed none of the reaction to changing oil prices that had marked the previous few weeks.
Next week will likely be a very quiet trading week, as the market will be open for only 3 1/2 days and Friday’s trading, the day after Christmas, will probably be very, very slow, despite what may end up being a busier than usual week as far as news stories may go.
With a nice number of assignments this week I am anxious to do more trading than was done this week, which turned out to be a nice one to watch some beaten down positions recover, without putting new capital at risk.
The additional trading that I would like to do would still be in line with the sale of more calls on uncovered positions, rather than opening too many new positions, despite the replenishment of cash reserves. It still remains those trades and the ability to execute new ones on a regular basis that serves as the primary mechanism to extract income in an attempt to enhance returns.
Along with the objective of raising cash, I’ve been anxious for a while to reduce the total number of holdings, so I’m not entirely anxious to replace every position that does get assigned.
Given the news from the FOMC and the lifting of trader concern regarding the imminent rise in interest rates and some stability in oil prices, there may still be some time for the “Santa Clause Rally” that everyone has had good reason to expect.
A little more strength in energy shares and there may be more reward on the risk-reward spectrum to warrant considering DOH Trades, with less fear of being on the wrong side of price gaps higher.
This year, there’s especially good reason to believe that a Santa Clause Rally may still be ahead because there’s also finally the realization that decreased energy prices can only be good for the economy, even if not entirely good for the energy sector.
The fact that the market has been very responsive to GDP reports all through the year offers reason to believe that when the upcoming report is released it will provide evidence of much stronger than originally projected growth and much of that growth will be at the hands of increased consumer spending.
With earnings season set to start in less than a month there is already the chance to start seeing some improvements in both the top line and the bottom line and the very real possibility of multiple expansion, which is what will take the broader market higher, as sooner or later stock buy backs will have run their course.
All of that makes me hopeful for the next few weeks and beyond, as 2015 is now just right around the corner.
With only a small number of positions set to expire next week, any new purchases for the week will probably look at both the weekly and expanded weekly expirations. As long as the volatility can remain at or above current levels there may not be too much to lose by looking at trying to keep the expiration dates diversified, as has been the case for the past few weeks.
Otherwise, it’s hard to imagine that the coming week will have even a fraction of the interesting news stories that came our way this week.
Those stories may have been varied, but they did demonstrate a lot of resilience contained in this market. It was at the precipice of going beyond another in a string of mini-corrections over the past 32 months and challenging the 10% decline level that was almost seen just 2 months ago.
It resisted doing so and we closed the week just shy of another all-time high.
Not a bad way to close out the year.
This week’s details may be seen in the Weekly Performance spreadsheet * or in the PDF file, as well as 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: BX (1/22/15)
Calls Rolled over, taking profits, into the monthly cycle: none
Calls Rolled Over, taking profits, into a future monthly cycle: SBGI
Calls Rolled Up, taking net profits into same cycle: none
New STO: DOW (/17/15), LULU (1/17/15)
Put contracts expired: none
Put contracts rolled over: none
Long term call contracts sold: none
Calls Assigned: EBAY, FAST, GE, K, TGT
Calls Expired: AZN, GDX, JOY, LXK, MAT, SBGI
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 (12/18 $0.23), LVS (12/16 $0.50)
Ex-dividend Positions Next Week: none
For the coming week the existing positions have lots that still require the sale of contracts: AGQ, ANF, AZN, BP, CHK, CLF, COH, DOW, FCX, GDX, GME, HAL, HFC, .JCP, JOY, LVS, MAT, MCP, MOS, NEM, RIG, SBGI, TMUS, WFM, WLT (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.