5/17/2008 10:19:48 AM
10.5% gains from our last position!
Our Advantage Credit Spread service just produced 3 double digit returns in the last 4 months. That's 41% profit in 4 months. Read on to learn how to get a free trial to this service.
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The net portfolio gain for 2007 was 107.8%! For a full break up of this performance, CLICK HERE.
Summary of Position For May
We entered a May SPX 1460/1470 Call Option Spread on April 18 and received a premium of $80 per spread. Then on April 22 we entered a half position in a May SPX 1255/1245 Put Option Spread and received a premium of $50 per spread. The combined total of this equates to a net return of $101.58 per $1,000 of margin used or 10.16% after commissions for 4 weeks in the position (using Interactive Brokers commission rates). The return before commissions was 10.5%. The official CBOE settlement price for the May SPX options was 1425.70.
The half position Put didn't quite work out as planned for May as the market held its strength for longer than anticipated. In any event, we ended up with our third double digit return out of the last four months, and that's something to be thankful for.
On May 16th we sold a half position in an SPX June 1295(SZPRS)/1285(SZPRQ) Put Option Spread for a net credit of $0.45. (Please note, we didn't get filled on the Call side).
The premium received is $45 per $1,000 of margin required per spread.
Think or Swim tried to get the trades by trying to do all 4 legs together and didn't get a fill. Watch your email on Sunday evening for a new trade suggestion.
The market remains in Buy mode.
SPX Chart - Bigger Picture
We're at a very interesting juncture now, we're pretty much right on the 200 day moving average and there is stiff resistance above. Having said that, if the crowd believe that a down turn is likely, then market has an uncanny ability to do the opposite of what is expected. If we do rise from here, it is likely to encourage the fund managers to add to their positions and that would most likely send us toward the 1450 level. This also happens to be the 61.8% Fibonacci retracement level (1454) and that's the best case scenario for the medium term in my opinion.
SPX Chart - Shorter Picture
In the shorter term, it seems we are still part of a rising wedge formation and the break down from this time last week was a false one. The momentum is up from here and we could get another week or so out of this run. However, I still maintain that the underlying technicals are not supportive of this rise and so a pull back of some sort is likely in the near term. A pull back to around the 1360 level would be a healthy move to give the uptrend more stability.
For next week, support is 1415 - 1400 and resistance is 1430 - 1450.
The quote this week is from Mike Tyson, "Everybody's got plans... until they get hit."
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