2/15/2008 6:30:04 PM
Our services' net portfolio gain for 2007 was 107.8%! For a full break up of this performance, CLICK HERE.
Summary of Position Last Month
We entered a Feb 1280/1270 Put Option Spread on January 17 and received a premium of $150 per spread. This equates to a net return of $147.72 per $1,000 of margin or 14.77% after commissions for one month (using Interactive Brokers commission rates). The CBOE settlement price for the February SPX options was 1347.20.
While it was a tentative month with some wild swings, in the end the volatility was contained within a trading range between about 1300 and 1400, which had our position expire safely out of the money.
After going through our worst performance last month, this month we had our best performance on record. Life works in mysterious ways and I suppose as the saying goes, "it's always darkest before the dawn".
On February 15th we sold an SPX Mar 1200(SZPOT)/1190(SPTOR) Put Option Spread for a net credit of $0.80.
(i.e. a total premium received of $80 per $1,000 of margin)
Our system remains in Buy mode.
SPX Chart - Bigger Picture
From the bigger picture perspective, the sideways consolidation pattern between 1320 and 1380 is continuing.
SPX Chart - Shorter Picture
In the shorter term, the symmetrical triangle (discussed last week) seems to be shaping up very nicely for a break out one way or the other. Support remains around 1320 although 1340 is minor support now and resistance is around 1400 with minor resistances at 1360 and 1380.
This past week the upper and lower trend lines on the symmetrical triangle held, which should set up an explosive break out. For next week, a close above 1360 will be positive and a close below 1340 will be negative for the market. With only 20 points to move and getting tighter each day, there's likely be some fireworks next week and we are biased for an upside break out.
From the perspective of our new position for March, we have a 150 point buffer from any downside moves in the short term, with some significant support points underneath also.
The quote this week is from Nelson Mandela, "The greatest glory in living lies not in never falling, but in rising every time we fall."
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