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01/27/11 BookingAlpha Trading & Market Update

|Includes: IWM, SPDR S&P 500 Trust ETF (SPY)

01/27/11 BookingAlpha Trading & Market Update:

A new short term Iron Condor was opened on IWM today using weekly options.  The options spread was opened on the heels of the existing Iron Condor expiring tomorrow and I am anticipating full profit on the expiring trade – approximately a +17.65% gain for the 8 day trade. 


The new IWM condor spread was opened with even wider strikes than the expiring spread providing an even larger margin of safety.  Strong resistance lies below the short call strike as well as very solid support existing above the short put strike provides a strong level of confidence in the position.  While I do anticipate a weakening market over the next few weeks, I see nothing in the very short term that should move IWM outside the range of today’s spread.


A short term spread was attempted on AAPL today but was unable to fill.  The market was very thin when I issued the open order but thought I would give it a try anyway.  After a while the market price of the spread started moving away from my open order price so I pulled the plug and canceled the order.  Nothing ventured nothing gained.


The SPY spread expiring tomorrow is sitting $0.01 below the short call strike.  The put side of the iron condor spread is set to expire worthless for full profit tomorrow so it can be left alone to expire.  However, the call side is too close to gamble on Friday’s closing price and I expect pinning (gravitating to a specific strike, SPY $130 in this case) to occur after analyzing the option order flow and current market price behavior.


The market is encountering extreme resistance at SPY $130 as expected and it peeked above it today only to immediately be pushed back down.  I don’t normally like letting the underlying get this close to the short strike of a credit spread.  However, in this case, the market is acting very tired and SPY $130 poses extremely strong resistance for a multitude of reasons:  technical, psychological, and fundamental.  Therefore, with the items mentioned, and such little time left until expiration, it was prudent to allow the underlying to churn as it has been so close to the strike.  As well, attractive adjustments “up and out” are available and considering the toppy market action, it made sense to hold pat today. 


If there is any weakness in the market Friday I will let the spread ride but I would want to see the price holding below $129.60 or less to do so.  A credit of $0.18 was received to enter the trade so depending on how the first few hours of trade go, I may close the calls for even or maybe a few cents profit if either opportunity exists to do so.  In the event of a strong move beyond SPY $130, I will roll the calls “up and out” to next week’s expiration strikes for an increased credit (a roll to the Feb 4th 131/133 strikes is available for a net credit of $0.09 as of today’s last trade prices).


Communication Issues:

A few of you heave communicated issues receiving alerts and other info in a timely fashion.  THANK YOU for brining this to my attention.  I have been working very closely with Aweber, my mailing list administrator, to ensure proper delivery of messages.  The sending of the messages does not appear to be the problem.  Evidently, the communication between mail servers on the net is where the delays are occurring.  Unfortunately, that is something I, nor Aweber, have any influence or control over. 


In response, I am evaluating a number of measures to combat this inconvenience and should have something rolled out in the coming days.  Thank you for your feedback and information so I can proactively stay in front of issue like this.  Thank you also for your understanding and patience as I ascertain what will be the best measures to put in place to eliminate the potential problem.


Currently In Process:  I am currently drafting my year end letter to clients and subscribers and should have it released by this weekend.  The communication will cover many topics including: Recent trading challenges and successes diagnosis and action plan, trading strategy, service enhancements and structure and a BookingAlpha Capital update.


Stay tuned and happy trading!