Traders Corner   22 comments

Nearly everything about the S&P 500 looks a lot like it did yesterday: Overbought/oversold technicals are neutral, momentum technicals are bearish, and the futures are on the positive side of flat. However, the S&P 500 did close below the 20 day moving average yesterday, so it will open with two strong upside resistance levels right above it. I would give the bears the advantage today.

The S&P 500 levels to watch today:

UPSIDE: 1862-1863 (3 data points and the 20 day moving average), 1867-1877 (12 data points and February’s high), 1881-1883 (4 data points and the all-time high), and 1886 (top of the Bollinger Bands).
LAST CLOSE: 1857, inside the 1857-1858 (2 data points) range.
DOWNSIDE: 1849-1854 (5 data points and January’s high and December’s high), 1839-1842 (3 data points), 1837 (bottom of the Bollinger Bands), 1834 (March 3rd’s low), 1832 (50 day moving average), 1815 (100 day moving average), 1775 (October’s high), 1773 (150 day moving average), 1770 (January’s low), 1767 (December’s low), 1745 (November’s low), and 1744 (200 day moving average).

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22 responses to “Traders Corner

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  1. I had a lot of options that expired last week. Here’s the final line on the called out positions.
    1) PRAN 1-24 @ 9.00. sold 9’s @ 1.85. Expired worthless. 2-24 March 9’s @ 1.15. Basis now 6.00. Called out 3-21 @ 9.00. Profit 3.00 50%

    2) GTAT 2-27 @ 14.68 3-3 sold March 15’s @ 75. Basis 13.93. Called out 3-21 @ 15.00. Profit 1.07 7.7%
    GTAT 3-6 @ 16.67 sold March 17’s @ 80. Basis 15.87 Called out 3-21 @ 17.00. Profit 1.13 7.1%

    3) KNDI 1-16 @14.69 1-30 sold Feb 15’s @ 50. Expired worthless. 2-24 sold March 25’s @ 1.35. Basis now 12.84. Called out 3-21 @ 15.00. Profit 2.16 16.8%

    I have more PRAN, KNDI, and EDZ options that expired worthless. I’ll post updates on those as I resell calls. Covered calls continue to work well in this flat market.

    • Trader,
      Would you look at GTAT or UCO now for covered calls? I was called out of a UCO covered call position on Friday with an 8% return. I do not have a good feel for what UCO might do from here so wondering if I should diversify my covered call strategy (have another tranche of UCO in the money covered calls expiring in April) to another stock or two.
      Thanks,

      Robb

      • Robb, I’m not trading UCO/SCO at the moment. I’ve shifted those funds to GTAT. Better returns without a big increase in risk. I continue to hit my goal of 5% or better a month so I’ll stick with it until it doesn’t work. I’ll buy GTAT again as soon as I figure out where I’m at. After being gone a week and ignoring the market, I have a lot of catching up. Congratulations on the UCO profit.

    • Trader – some very satisfactory results for you. Hope it helped pay for recent trip.

      • Thank you. And, my wife did well in the casino. I don’t play much. I prefer the odds in the market. 🙂

    • Trader – just to understand your math on pran for example. It seems to me you double count the $3 (unless I misunderstand). You bought pran at $9. You twice sold calls at a total of three dollars. You then got called out at $9. So at the end of the day, you made $3 for every $9 you invested. That would be a 33% return, correct? How do you get 50%?

      • Trader – I looked it up on Wikipedia and your calculation is the standard way to calculate at return. It seems a bit funny to me, my analogy would be dividends I get on a stock. If I buy a stock for $20, then sell a year later for $24. Suppose I also got $1 of dividends. I would calculate return as 5/20 = 25% as I got $4 of capital gains and $1 of dividends. The covered call approach would use the dividend to reduce my basis to $19 and say I got 5/19ths for my return. Maybe a glass half full or half empty question, no right answer.

      • Marshall, you beat me to the answer. With covered calls, you always reduce your cost by the premium collected. In this case I collected 3.00 reducing my cost to 6.00. Sold for 9.00 giving me a 3.00 profit on a cost of 6.00 = 50%. When I first started using covered calls I had the same problem with the calculation. It is different but once you figure it out, it does make sense.

  2. I added FXP at $71.15. I will sell it at $72 today, or carry it into tomorrow. China’s a mess.

  3. I had one gtat option expire and one that got called final line
    GTAT 3-22 @ 19 for .35 expired new cost is 18.45. Just sold a new apr 19 call for .70 cents and if I get called out my total profit with both would be about 9%
    GTAT 3-22 @ 18 for .28 got called. cost was 16.94 after the premium. profit was 6.25% for 3 days.

    Thanks for the coaching trader?

  4. I added SPXU at $56.69, will sell it at $57.26 or best price later.

  5. GTAT is starting to show some weakness. I may wait until tomorrow to see if it bounces back. I don’t expect a big drop unless the market starts to make a major move to the downside. Even if it does move lower, I may still buy and change strategy a bit. Sell short term in the money calls. This will reduce my return if called out but will give me a much larger return on my money if it does drop and I am not called out. As always, have to be flexible and adjust to what the market will give you.

  6. I took a look at the daily and weekly charts on the SPY. Still don’t see any weakness. Looks like a flat market for now.

  7. Latin American etf’s have been up nicely this past week, start of a trend?

    • Ojunker,
      From a macro perspective, I see no reason for it. Mexico, maybe, but not the rest of Latin America.

      Just glancing over a few stocks from “south of the border”, they looked like they were hitting bottom support about a week ago, and they bounced. I suspect this may be a short-term technical move.

  8. Bought BLDP @ 4.74. Have a previous position at 6.07. Average is 5.41

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