I like to review a chart of T2118 each week. The McClellan Summation Index is the sum of all of the daily values of the McClellan Oscillator. I find this indicator helpful to gauge the intermediate direction of the market. This chart would indicate some downside.
T2118 - McClellan Summation Index
I’m finding it very difficult to open any new short put positions. Puts are cheap right now. I’ve been increasing the expiration dates in order to get a decent premium.
Here is a weekly chart of the DJI to put it into a longer-term perspective. I would anticipate some selling here in the short-term, but what I anticipate doesn’t matter. This melt-up could continue.
DJI Weekly Chart
Sell to open AKS March 13 Puts. My order filled right before close and I didn’t get a chance to post the trade yesterday. This trade was in my Roth. I made the same trade in my cash account a couple weeks ago. AKS finally broke out of that band between 12-14. Lots of supply in the 18-20 area.
AKS Daily/Weekly Chart
Sell to open HK March 15 Puts. Rising 50 and 100 day SMA. Support at 14-15. Anticipating Natural Gas rebound in 2011.
HK Daily/Weekly Chart
Sell to open BX March 12 Puts. Support at 12 but lots of supply at 17.
BX Daily and Weekly Chart
Sell to open MTG Feb 2011 9 Puts. This trade was in my Roth. I’m also short the March 7 puts in my cash account from a trade last month. This is a daily (top) and weekly chart.
MTG Daily and Weekly Chart
On 2/4 I rolled SLW Feb 15 puts to March 12.50 for roughly the cost of commissions. I was hitting my pain threshold that day and this was my trade furthest in the money – at the time. Alas, looking at this chart now I might have been OK holding through expiration.
SLW-Daily
On 2/5 I rolled FEED Feb 5 puts to March 5 puts for a credit. The problem selling puts on these 5 dollar stocks is the lack of strike prices. I’m just moving these out further to capture some more time premium.
FEED-Daily
I’ve rolled about a third of my February inventory to March now. I rolled IAG and HEAT for a loss and in hindsight I wish I would have gone further out in expiration to get more premium. Whenever I make an adjustment I need to try to roll these for a credit or breakeven at a minimum.
If we get some support next week I should still have an OK month as far as put selling and covered calls are concerned.
I’m pulling these charts from Finviz because I’m writing this on my netbook. I hope they turn out OK.
Sell to open MRVL March 17 puts before the close today. This is a small position in my IRA and gives me some exposure to semiconductors.
Marvell Technology Group Ltd. is a fabless semiconductor provider of application-specific standard products. The Company develops complex system-on-a-chip (SoC) devices using its technology portfolio of intellectual property in the areas of analog, mixed-signal, digital signal processing and embedded ARM-based microprocessor integrated circuits. Its product portfolio includes devices for data storage, enterprise-class Ethernet data switching, Ethernet physical-layer transceivers (PHY), handheld cellular, Ethernet-based wireless networking, personal area networking, Ethernet-based personal computer (PC) connectivity, control plane communications controllers, video-image processing and power management solutions. Its products serve diverse applications used in carrier, metropolitan, enterprise and PC-client data communications and storage systems. In addition, the Company serves the consumer electronics market for the convergence of voice, video and data applications.
MRVL-Daily
Sell to open Ultra Financials ProShares (UYG) March 6.00 covered calls. All the moving averages have flattened out on UYG so I’m writing some calls to capture some time decay. UYG is below the 50 and 100 day MA as well. I might consider converting this to a short strangle by selling some March 5 puts. I’ll see what tomorrow brings. UYG/XLF didn’t seem to drawn down nearly as much as the other indexes last week.
UYG Daily
What a week. It always comes down so much faster than it goes up. You have to be willing to accept these draw-downs and be prepared to make trade adjustments as the markets warrant.
I made two adjustments this week to re-balance my inventory and avoid too many assignments. I like to spread these adjustments out over time in case the market can find support. I only want to make the adjustment if it is absolutely necessary.
On 1/27 I rolled the IAMGOLD Corp. (IAG) puts I wrote forward and down to March 12.50. I decided to take a loss on this as it was breaking down so quickly and the next support was in the 12.50-13.00 area which will also be the 200-day MA.
IAG-Daily
On 1/29 I rolled the SmartHeat (HEAT) puts forward to March and down to the 10 strike. I took a small loss on the HEAT adjustment. There is trendline support near 10.80.
HEAT-Daily