Category Archives: Daily Market Update

Daily Market Update – April 8, 2014 (Close)

First of all, sorry for sending the rollover of Verizon Trading Alert so late yesterday.

As shares traded much higher in the latter part of the afternoon there was just no logical trade to be made. That changed in the final 20 minutes as shares started coming down a little from their day’s highs and an opportunity came to get some more premium and likely retain the dividend, although there were complicating considerations.

If you ever wanted to see what a “flight to safety” was all about, all you had to do was pay attention to Verizon in yesterday’s trading.

When the market started to further deteriorate in the early afternoon, making it begin to appear as if the day would be a lost cause and maybe a forerunner to something worse, Verizon did an about face at 12:25 PM.

It was probably no coincidence that today was its ex-dividend date, but shares soared well past their “threshold” value, that would have made early assignment of the April 11, 2014 $47.50 calls unlikely.

I was ambivalent about the prospects of rolling over the contract in order to retain the healthy dividend, especially since there was no $47.50 strike the following week and the week after was earnings week.

A quick calculation showed that the difference was an ROI of about 1.5%, based on the extra premium and keeping the dividend.

Since earnings are April 24th and the contract expires on April 25th, there’s also a chance that I’ll be looking to roll that contract over early, as well to mitigate earnings related risk.

However, what was especially interesting was that AT&T, which also went ex-dividend today, didn’t follow the same path. For a brief time in the mid-afternoon, it also started going higher as the market faltered, but then went back on a selling path.

The diverging behaviors yesterday probably sends some kind of message, but those messages typically have shorter and shorter half lives these days. Lately, even the fears of market corrections have very short half lives and deservedly so, because reality has borne out the fact they they are shallow and short lived of late.

Yesterday was not a very good day, but again, it was a day without much evidence of real panic, although the movement into Verizon may have been representative of an undercurrent of fear.

While the movement into safety wasn’t too much of a surprise, the real surprise was that there were some people that didn’t make the rollover trade on Verizon and somehow weren’t assigned.

The greatest likelihood is that was related to the fact that option contract holders have until 5:30 PM to decide whether to exercise or not. For those that look at such ness after he market closed yesterday and it’s possible that convinced some contract holders that there was enough of a risk with shares opening even lower this morning that they were happy to just take their chances on the contracts, rather than taking the liability of a potential loss on shares.

So while some people were making those kinds of decisions after the closing bell, during trading hours on the other hand, it did appear as if there were some relative bargains to be had. While there is so much focus on the fall of Momentum stocks, it is hard to understand, on a fundamental basis, why so many other stocks would get taken along for the ride.

Ultimately, if there is a ride to be had, the sad truth is that almost everything gets taken along, but while so many are trying so hard to draw parallels to other bubbles, it just doesn’t seem that way.

While there may be risk ahead and while it may be a good idea to keep some cash on the side, it just doesn’t feel like the 15-20% kind of correction that some are calling for.

With 6 new purchases yesterday, I didn’t know how much more willing I would be this week to add to those positions and sink deeper into cash reserves, although some market stability, as we often see on Tuesdays, did prompt some more activity and also got a couple of new call contracts written on existing positions and on top of that, getting a chance to roll out to some future weeks.

Small victories.

For now, I would be content to let yesterday’s and today’s new positions be the only ones added this week and would be more than happy to see them go by the end of the week and hopefully help to continue that cycle of life that is the cash reserve, which makes all things possible.

Tomorrow brings another in an endless series of FOMC minute releases and so we can all sit and watch and see whether the market just takes an arbitrary direction yet again if nothing new is added into the economic mix.

Daily Market Update – April 8, 2014 (9:30 AM)

First of all, sorry for sending the rollover of Verizon Trading Alert so late yesterday.

As shares traded much higher in the latter part of the afternoon there was just no logical trade to be made. That changed in the final 20 minutes as shares started coming down a little from their day’s highs and an opportunity came to get some more premium and likely retain the dividend, although there were complicating considerations.

If you ever wanted to see what a “flight to safety” was all about, all you had to do was pay attention to Verizon in yesterday’s trading.

When the market started to further deteriorate in the early afternoon, making it begin to appear as if the day would be a lost cause and maybe a forerunner to something worse, Verizon did an about face at 12:25 PM.

It was probably no coincidence that today was its ex-dividend date, but shares soared well past their “threshold” value, that would have made early assignment of the April 11, 2014 $47.50 calls unlikely.

I was ambivalent about the prospects of rolling over the contract in order to retain the healthy dividend, especially since there was no $47.50 strike the following week and the week after was earnings week.

A quick calculation showed that the difference was an ROI of about 1.5%, based on the extra premium and keeping the dividend.

Since earnings are April 24th and the contract expires on April 25th, there’s also a chance that I’ll be looking to roll that contract over early, as well to mitigate earnings related risk.

However, what was especially interesting was that AT&T, which also went ex-dividend today, didn’t follow the same path. For a brief time in the mid-afternoon, it also started going higher as the market faltered, but then went back on a selling path.

The diverging behaviors yesterday probably sends some kind of message, but those messages typically have shorter and shorter half lives these days. Lately, even the fears of market corrections have very short half lives and deservedly so, because reality has borne out the fact they they are shallow and short lived of late.

Yesterday was not a very good day, but again, it was a day without much evidence of real panic, although the movement into Verizon may have been representative of an undercurrent of fear.

On the other hand, it did appear as if there were some relative bargains to be had. While there is so much focus on the fall of Momentum stocks, it is hard to understand, on a fundamental basis, why so many other stocks would get taken along for the ride.

Ultimately, if there is a ride to be had, the sad truth is that almost everything gets taken along, but while so many are trying so hard to draw parallels to other bubbles, it just doesn’t seem that way.

While there may be risk ahead and while it may be a good idea to keep some cash on the side, it just doesn’t feel like the 15-20% kind of correction that some are calling for.

With 6 new purchases yesterday, I don’t know how much more willing I will be this week to add to those positions and sink deeper into cash reserves, although some market stability, as we often see on Tuesdays, might prompt some more activity.

For now, I would be content to let those new positions be the only ones added this week and would be more than happy to see them go by the end of the week and hopefully help to continue that cycle of life that is the cash reserve, which makes all things possible.









Daily Market Update – April 7, 2014 (Close)

Another weekend of nothing really happening to be of sufficient reason to move the markets to start the week. Nonetheless, the early impression was that there would be some very mild follow through to Friday’s very unexpected sell-off.

That would be wrong.

What also was wrong was the throng of voices who predicted, as the market was hitting it’s lows for the day, that the market would move even further lower going into the close. They were looking to see a test of the 1830 level on the S&P 500, which would have required about another 15 point drop, or about another 120 points on the DJIA.

Instead, things did tighten up a bit and for a very brief while even looked as if a triple digit loss would be erased.

With the turnaround in fortunes on Friday I felt very fortunate to have seen most of the anticipated assignments occur and have more cash on hand than when the week started, especially after having to dip into reserves to buy anything last week following only one assignment the prior week.

It’s far better to have the cash unencumbered by stock ownership when the market appears headed lower than having to go into reserves to put even more at risk. Recycling cash from assignments just doesn’t seem to psychologically carry the same level of risk, although it certainly does in reality,  where it counts.

While happy to have the cash, on the other hand, I was disappointed that some of the rollovers I felt fairly certain might get done, perhaps even turn into assignments, instead expired, leaving more uncovered positions that need to be looked after.

Still, not a bad way to start a week that begins with some added uncertainty that may be compounded as earnings begin anew this week and we get to see whether the weather has already been fully discounted in reporting for the past quarter.

Deep down you know that for some companies the bad weather excuse was simply an excuse. Some will take the opportunity with the current earnings reports to guide higher coming off a lower quarter and see their stocks rise and others will have to admit that there is something fundamentally wrong and not the weather at all. They will see their stocks drop.

Good luck trying to figure out which company will take which route.

Earnings season always requires the added attention to when the reports will be delivered. For those having been buy and hold investors it was predominantly earnings that made you wonder why you didn’t take profits sooner or made you wonder why you sold your shares so early. Rarely, if you were a long term holder, did earnings reports consistently move any individual stock in the same direction. One quarter’s nice advance may have been followed by another, but rarely a third and with it evaporation of those unrealized profits.

I used to hate earnings season. Now, it just means a little more work and trying to either avoid some positions or position yourself for whatever news may come your way and hope that whatever that news will be, it will be within reason.

That may be a little more challenging if there is any erosion in the market itself.

With cash near 40% to start the week the temptation to go shopping is definitely there. With a decent number of positions already having contracts expiring this Friday I would like to see any new purchases look at the possibility of going more forward, but that’s been easier to say lately than to do, as the premiums have been very low. I’ve been wanting to diversify in time for a few weeks now and haven’t had much luck in doing so. Friday’s drop did drive volatility a little higher so maybe there will be a better opportunity to do so this week.

What was interesting was that for some deep in the money strike levels for various stocks the premiums were in contango. That doesn’t happen very often and suggests that the options market was pricing in price drops going forward. Conceivably, someone looking to rollover a position at the same strike level would only have been able to do so at a net debit.

That’s not a very powerful motivator.

As with any market drop, especially after setting record highs, it’s only natural to wonder whether the drop was simply a blip or the start of something more omenous.

For the Momentum stocks that get so much attention the “omenous” seems to have already started.

Just look at the charts of SolarCity, Netflix, Amazon and LinkedIn, all from about March 19-20, 2014.

This morning that’s what I’ll likely be doing. Looking.

I’d like to see a little bit more of a sell-off before adding new positions, although some have taken enough of a decline, with no really obvious reason that it may be difficult to resist the opportunities.

It’s the age old battle of “Fear versus greed.” Only the week is new.

What surprised me is just how many new positions I did decide to open. The sell-off didn’t feel really terribly bad.

The only thing that did feel bad was watching everyone sell their stocks and rotate into what are thought to be safe and high yielding positions. Unfortunately, one of those was Verizon, which goes ex-dividend tomorrow. At about 12:25 PM it reversed its direction, going from well outside the possibility of being assigned early to likelihood of that happening. While I wanted to do the rollover to capture the dividend there just weren’t any good trades to be made, as it is one of those dividend arbitrage stocks that I referred to the other day. Trying to buy back the shares would have ended up being no different from offering to pay full value for the dividend the more deeply it was in the money.

About 15 minutes before the closing bell shares took a dip and there was an opportunity to get some scant premium through a rollover. I was, however, ambivalent about the trade as the April 25th contract expiration is a day after earnings are announced and I generally don’t like to be in that kind of position.

I did want the dividend, though.

In this case, it’s FOMO (fear of missing out) versus greed, and those two are really one and the same.







Daily Market Update – April 7, 2014 (9:00 AM)

Another weekend of nothing really happening to be of sufficient reason to move the markets to start the week. Nonetheless, the early impression is that there’s some very mild follow through to Friday’s very unexpected sell-off.

With the turnaround in fortunes on Friday I felt very fortunate to have seen most of the anticipated assignments occur and have more cash on hand than when the week started, especially after having to dip into reserves to buy anything last week following only one assignment the prior week.

It’s far better to have the cash unencumbered by stock ownership when the market appears headed lower than having to go into reserves to put even more at risk. Recycling cash from assignments just doesn’t seem to psychologically carry the same level of risk, although it certainly does in reality,  where it counts.

While happy to have the cash, on the other hand, I was disappointed that some of the rollovers I felt fairly certain might get done, perhaps even turn into assignments, instead expired, leaving more uncovered positions that need to be looked after.

Still, not a bad way to start a week that begins with some added uncertainty that may be compounded as earnings begin anew this week and we get to see whether the weather has already been fully discounted in reporting for the past quarter.

Deep down you know that for some companies the bad weather excuse was simply an excuse. Some will take the opportunity with the current earnings reports to guide higher coming off a lower quarter and see their stocks rise and others will have to admit that there is something fundamentally wrong and not the weather at all. They will see their stocks drop.

Good luck trying to figure out which company will take which route.

Earnings season always requires the added attention to when the reports will be delivered. For those having been buy and hold investors it was predominantly earnings that made you wonder why you didn’t take profits sooner or made you wonder why you sold your shares so early. Rarely, if you were a long term holder, did earnings reports consistently move any individual stock in the same direction. One quarter’s nice advance may have been followed by another, but rarely a third and with it evaporation of those unrealized profits.

I used to hate earnings season. Now, it just means a little more work and trying to either avoid some positions or position yourself for whatever news may come your way and hope that whatever that news will be, it will be within reason.

That may be a little more challenging if there is any erosion in the market itself.

With cash near 40% to start the week the temptation to go shopping is definitely there. With a decent number of positions already having contracts expiring this Friday I would like to see any new purchases look at the possibility of going more forward, but that’s been easier to say lately than to do, as the premiums have been very low. I’ve been wanting to diversify in time for a few weeks now and haven’t had much luck in doing so. Friday’s drop did drive volatility a little higher so maybe there will be a better opportunity to do so this week.

What was interesting was that for some deep in the money strike levels for various stocks the premiums were in contango. That doesn’t happen very often and suggests that the options market was pricing in price drops going forward. Conceivably, someone looking to rollover a position at the same strike level would only have been able to do so at a net debit.

That’s not a very powerful motivator.

As with any market drop, especially after setting record highs, it’s only natural to wonder whether the drop was simply a blip or the start of something more omenous.

For the Momentum stocks that get so much attention the “omenous” seems to have already started.

Just look at the charts of SolarCity, Netflix, Amazon and LinkedIn, all from about March 19-20, 2014.

This morning that’s what I’ll likely be doing. Looking.

I’d like to see a little bit more of a sell-off before adding new positions, although some have taken enough of a decline, with no really obvious reason that it may be difficult to resist the opportunities.

It’s the age old battle of “Fear versus greed.” Only the week is new.







Daily Market Update – April 4, 2014 (9:00 AM)

The Week in Review is now posted by 6 PM and the Weekend Update will be posted by noon on Sunday.

Daily Market Update – April 4, 2014 (9:00 AM)

The Week in Review will be posted by 6 PM and the Weekend Update will be posted by noon on Sunday.

Today’s possible outcomes include:

Assignment: APC, BBY, CHK, CMCSA, COH, GM, MRO

Rollover:  EBAY, FCX, HFC, MA

Expiration:  APOL (puts), C, FDO, LULU

Trades, if any will be attempted to be made prior to 3:30 PM {EDT)

Daily Market Update – April 3, 2014 (Close)

This morning the only story was the press conference being given by the head of the European Central Bank, Mario Draghi. He is the counterpart of Janet Yellen and in the past when he has had something dovish to say his words had buoyed our markets.

A couple of years ago he was adamant about how the ECB would be an aggressive player and not allow the kind of fiscal crises within the EU that many of us thought might cascade through the EU as Greece and Spain and other stories were unfolding.

That was a day when our markets skyrocketed.

Not so today, at least not in the pre-open trading, which is as flat as markets can come, as the DJIA is knocking on the door to set its first new record of the year, having been left behind by the S&P 500.

And not so the rest of the day either, as we just traded in a narrow range all day with a slightly negative bias. The broader market was worse than the DJIA and the NASDAQ was absolutely abysmal today, way out of proportion to the rest of the market.

As with most Thursdays my thoughts were predominantly on how to extricate and escape positions so that the coming week is one that has new opportunity.

One position that won’t need extrication is Anadarko. After a series of DOH trades, it looks like it will be assigned tomorrow at $87, despite a purchase price of $89.42. Yet it will end up with an ROI of about 2.2%.

While I knew that Anadarko was going to appear in court tomorrow regarding its Tronox environmental damages case, the gap between the government and Anadarko was so great, nearly $24 billion, that it was hard to imagine that there would be word of an agreement, especially since there was more than money involved. There was also the idea of being able to run from responsibility through the bankruptcy courts, as GM may be in a position to do, as well.

I guess the government preferred not to test that in the courts.

With a huge surge in the mid-afternoon on the rumor now it’s time to see if there is a “sell on the news” kind of wave ready to hit. If so, there may be reason to roll that position over in an attempt to add to the gains. But even what any reasonable person may consider to be a huge fine after any agreement may simply be looked upon as an incredible savings, not to mention the costs involved in the ongoing litigation.Reportedly, the agreement is for a payment of $5 billion.

If the goal is some combination of generating cash and growing assets it’s important to keep rolling over existing positions and having assignment of others. Thursdays and especially Fridays are the days when those things are hoped to happen.

Unfortunately, due to the low volatility the expirations aren’t as staggered as I would have liked them to be. The premiums for forward weeks are often so low that there is some risk with tying down assets for those time frames.

Instead, this week, for example, feels more like a monthly cycle ending week, while the actual cycle ending week has only two positions currently set to expire.

Even though I’ve started each of the past few weeks looking to diversify more on the basis of time that hasn’t always been the case in practice as some of those low forward week premiums have done a good job of sending me elsewhere.

With tomorrow’s Employment Situation Report at hand, the unveiling of news is always a risk factor to keep in mind. That’s even though that particular report has found itself to have a strong association with an advancing market, but you just can’t take anything for granted.

Where possible, I’ll try to look for rollover opportunities today, although I tend not to do too many on Thursdays, with last week being an outlier kind of week.

The factor most involved is price, in that with forward week volatility being lower than current week volatility, it can be relatively expensive to close some option positions and therefore, relatively unrewarding to open new ones.

That balance usually changes as time value begins to run out the closer and closer we get to the closing bell on Friday.

With so many positions set to expire tomorrow it has the makings of a hectic day unless some of that load can be shifted to today.

All in all, these are good problems to have.

Daily Market Update – April 3, 2014 (9:15 AM)

This morning the only story was the press conference being given by the head of the European Central Bank, Mario Draghi. He is the counterpart of Janet Yellen and in the past when he has had something dovish to say his words had buoyed our markets.

A couple of years ago he was adamant about how the ECB would be an aggressive player and not allow the kind of fiscal crises within the EU that many of us thought might cascade through the EU as Greece and Spain and other stories were unfolding.

That was a day when our markets skyrocketed.

Not so today, at least not in the pre-open trading, which is as flat as markets can come, as the DJIA is knocking on the door to set its first new record of the year, having been left behind by the S&P 500.

As with most Thursdays my thoughts are predominantly on how to extricate and escape positions so that the coming week is one that has new opportunity.

If the goal is some combination of generating cash and growing assets it’s important to keep rolling over existing positions and having assignment of others. Thursdays and especially Fridays are the days when those things are hoped to happen.

Unfortunately, due to the low volatility the expirations aren’t as staggered as I would have liked them to be. The premiums for forward weeks are often so low that there is some risk with tying down assets for those time frames.

Instead, this week, for example, feels more like a monthly cycle ending week, while the actual cycle ending week has only two positions currently set to expire.

Even though I’ve started each of the past few weeks looking to diversify more on the basis of time that hasn’t always been the case in practice as some of those low forward week premiums have done a good job of sending me elsewhere.

With tomorrow’s Employment Situation Report at hand, the unveiling of news is always a risk factor to keep in mind. That’s even though that particular report has found itself to have a strong association with an advancing market, but you just can’t take anything for granted.

Where possible, I’ll try to look for rollover opportunities today, although I tend not to do too many on Thursdays, with last week being an outlier kind of week.

The factor most involved is price, in that with forward week volatility being lower than current week volatility, it can be relatively expensive to close some option positions and therefore, relatively unrewarding to open new ones.

That balance usually changes as time value begins to run out the closer and closer we get to the closing bell on Friday.

With so many positions set to expire tomorrow it has the makings of a hectic day unless some of that load can be shifted to today.

All in all, these are good problems to have.

Note: If you haven’t seen it, I posted an article that looked at the rollover trade executed in Bristol Myers Squibb yesterday, dissecting out the rationale for having done so in an effort to retain the dividend.

Daily Market Update – April 2, 2014 (Close)

This morning the futures gave up some of their early gain, which was very muted, to begin with, as ADP released its jobs report.

After years of the report being held back because it wasn’t ready for prime time, it’s still not entirely clear how much the ADP report portends for the Employment Situation Report that comes later in the week.

Lately that hasn’t mattered because the market has almost always gone higher with the release of the Employment Situation Report and has gone higher for the entire week of the report, as well. So far, this week the market is already up 1.5% after just two days, so there’s lots of cushion to keep the latter pattern continuing by the time the week is ready to close its books.

The statistical case, however, is stronger for the Friday outcome than for the weekly outcome, although it’s not something that I plan to test this week.

Expectations for Friday’s report are pretty high and this morning’s ADP report was nothing terribly exciting, but it did suggest that weather was no longer at play in the economy, although that may not be the case once earnings season re-starts in just a week, as the quarter being reported is certain to show the influence of unusually bad weather everywhere.

As with so many things when expectations are high it’s so easy to set yourself up for disappointment. But as far as those employment numbers have gone in the past 20 months, even disappointment has largely been met with a higher moving market.

To a large degree that’s because of the perverse mindset that had become established where bad news was good. In this case bad news about employment was interpreted as meaning continued Quantitative Easing, which itself was widely believed to be the root cause for the market’s appreciation.

With Janet Yellen’s confirmed dovish tone this week it’s likely that disappointment in this week’s report won’t find a mate in a market decline.

If the report had been issued just two week’s ago after Yellen’s words were interpreted by some to have been hawkish, any disappointment would likely have been met by a significant market decline. But this time around the fears just aren’t there and instead there’s the belief that any disappointment may be met with less tapering and by consequence, more easing.

So what to do?

For now, despite only 3 new positions this week, I’m content to watch shares go higher, if that’s what they need to do. It would be even better if they would take my shares, especially those uncovered, along for the ride. But, I’m still not ready to chase. When the market gets to a point that it climbs 1.5% or more for the week it’s pretty hard to keep up if using a covered call strategy.

The good thing is that the market doesn’t usually do that week in and week out, although 2013 seemed that way.

This year has been different, despite closing at another new high yesterday. The path higher has been very different and a much better one for the sale of covered options.

Of course, after having said that this morning the day ended with yet another new high in the S&P 500 and the DJIA just missed posting its first new high for 2014.

While I expected today to be a slow trading day, I don’t think that will be the case for the final two days of the week and am hopeful of having a good combination of rollovers and assignments. While I would love to see another week such as last week when a fair number of rollovers could be done on Thursday, thereby making Friday less hectic, I don’t think that will be the case this week.

Still, if I had to choose, I’d take hectic over boring and especially over sitting in desperation and unable to make trades because of a sinking market on expiration Friday.

I expected yesterday to be a slow day, as well, and was a little surprised by the activity that ensued, so who knew what today may have had in store? With money still in hand any respite in the move higher, especially in positions that I can get a week and a half premium by using April 11 expirations may be very enticing.

I’m only human, so will see if they can be resisted if they happen to pop up.

As it would turn out most of that money is still right where it belongs and will now likely stay safe until next week as preperations for a busy couple of days ahead will begin.

Note: If you haven’t seen it, I posted an article that looked at the rollover trade executed in Bristol Myers Squibb yesterday, dissecting out the rationale for having done so in an effort to retain the dividend.

Daily Market Update – April 2, 2014 (9:00 AM)

This morning the futures gave up some of their early gain, which was very muted, to begin with, as ADP released its jobs report.

After years of the report being held back because it wasn’t ready for prime time, it’s still not entirely clear how much the ADP report portends for the Employment Situation Report that comes later in the week.

Lately that hasn’t mattered because the market has almost always gone higher with the release of the Employment Situation Report and has gone higher for the entire week of the report, as well. So far, this week the market is already up 1.5% after just two days, so there’s lots of cushion to keep the latter pattern continuing by the time the week is ready to close its books.

The statistical case, however, is stronger for the Friday outcome than for the weekly outcome, although it’s not something that I plan to test this week.

Expectations for Friday’s report are pretty high and this morning’s ADP report was nothing terribly exciting, but it did suggest that weather was no longer at play in the economy, although that may not be the case once earnings season re-starts in just a week, as the quarter being reported is certain to show the influence of unusually bad weather everywhere.

As with so many things when expectations are high it’s so easy to set yourself up for disappointment. Bit as far as those employment numbers have gone in the past 20 months, even disappointment has largely been met with a higher moving market.

To a large degree that’s because of the perverse mindset that had become established where bad news was good. In this case bad news about employment was interpreted as meaning continued Quantitative Easing, which itself was widely believed to be the root cause for the market’s appreciation.

With Janet Yellen’s confirmed dovish tone this week it’s likely that disappointment in this week’s report won’t find a mate in a market decline.

If the report had been issued just two week’s ago after Yellen’s words were interpreted by some to have been hawkish, any disappointment would likely have been met by a significant market decline. But this time around the fears just aren’t there and instead there’s the belief that any disappointment may be met with less tapering and by consequence, more easing.

So what to do?

For now, despite only 3 new positions this week, I’m content to watch shares go higher, if that’s what they need to do. It would be even better if they would take my shares, especially those uncovered, along for the ride. But, I’m still not ready to chase. When the market gets to a point that it climbs 1.5% or more for the week it’s pretty hard to keep up if using a covered call strategy.

The good thing is that the market doesn’t usually do that week in and week out, although 2013 seemed that way.

This year has been different, despite closing at another new high yesterday. The path higher has been very different and a much better one for the sale of covered options.

While I expect today to be a slow trading day, I don’t think that will be the case for the final two days of the week and am hopeful of having a good combination of rollovers and assignments.

I expected yesterday to be a slow day, as well, and was a little surprised by the activity that ensued, so who knows what today may yet bring? With money still in hand any respite in the move higher, especially in positions that I can get a week and a half premium by using April 11 expirations may be very enticing.

I’m only human, so will see if they can be resisted if they happen to pop up.

Daily Market Update – April 1, 2014 (Close)

This morning the futures are off to the same kind of start that we had yesterday.

Trading was pointing slightly higher and suggested a mildly stronger opening. That alone would have been nice except for the fact that lately these kind of positive openings have had a hard time maintaining themselves.

What no one expected, however, was that during some prepared comments and appearances later in the day Janet Yellen would remove any question about whether she is dovish or not.

With a long body of work and official positions, when she was initially considered as a possible successor to Ben Bernanke, she couldn’t escape the moniker “dove.” Given that long and documented history, it’s surprising that anyone would have any doubts about where her heart and intellect stood.

But somehow markets still found a reason to get worried when she may have mis-spoken during her first press conference as Federal Reserve Chairperson and the whispers were that she wasn’t anywhere near as dovish as we all thought. If you believe that our market rally has been closely tied to an accommodative Federal Reserve than you had good reason to worry, but still not good reason to be worried.

As a result the market plunged and then quickly reversed when someone must have realized that it would be unlikely if she suddenly changed a lifetime of opinions.

She seemingly finally put those fears to rest yesterday as she did what Federal Reserve Chairs before her had never done. She acted like a politician, photo opportunities and all, during a highly visible and orchestrated visit that was supposed to reflect the need to maintain and create jobs. 

You couldn’t possibly have been more direct in getting a message across and it really was unlike anything her predecessors had done or said before, preferring to cloak their thoughts in various layers of obfuscation.

What was nice was that the boost given to the market that now is comforted to know that they won’t be abandoned by the Federal Reserve, even while tapering is proceeding, is that the gain lasted throughout the entire trading session and didn’t fade after the first hour of trading.

I don’t know if there will be another unexpected catalyst this morning, but I hope not, as I would like to get at least a few more new purchases done without wondering whether something has gone up too much and would I be chasing the shares if I bought them.

Yesterday, much of what was on the drawing board would have required chasing and that’s usually a certain formula for disappointment. Since there’s never a shortage of unexpected disappointment, there’s probably little need to add some expected disappointment to the mix.

While yesterday would have turned out to have been a good day to buy early, as the opening gain was mild before Yellen’s comments, I think that this morning will continue the strategy of sitting back and just seeing what kind of legs the morning’s open will have.

Hopefully some of those opportunities will appear and perhaps will be in positions with expanded options choices.

Ultimately, today would turn out to be very different from so many recent days that have preceded it in that the market simply had a nice modest gain at the open and just marched in place all through the day.

While the expectation is that this week will be a net positive, since it is an Employment Situation Report week, a little diversification in expirations would still be nice, in the event that the week falls short and leaves expired contracts behind.

As usually is the case, the reality may end up being very different from the theory. Ultimately, whatever looks good is good enough for me.

Daily Market Update – April 1, 2014 (9:00 AM)

This morning the futures are off to the same kind of start that we had yesterday.

Trading was pointing slightly higher and suggested a mildly stronger opening. That alone would have been nice except for the fact that lately these kind of positive openings have had a hard time maintaining themselves.

What no one expected, however, was that during some prepared comments and appearances later in the day Janet Yellen would remove any question about whether she is dovish or not.

With a long body of work and official positions, when she was initially considered as a possible successor to Ben Bernanke, she couldn’t escape the moniker “dove.” Given that long and documented history, it’s surprising that anyone would have any doubts about where her heart and intellect stood.

But somehow markets still found a reason to get worried when she may have mis-spoken during her first press conference as Federal Reserve Chairperson and the whispers were that she wasn’t anywhere near as dovish as we all thought. If you believe that our market rally has been closely tied to an accommodative Federal Reserve than you had good reason to worry, but still not good reason to be worried.

As a result the market plunged and then quickly reversed when someone must have realized that it would be unlikely if she suddenly changed a lifetime of opinions.

She seemingly finally put those fears to rest yesterday as she did what Federal Reserve Chairs before her had never done. She acted like a politician, photo opportunities and all, during a highly visible and orchestrated visit that was supposed to reflect the need to maintain and create jobs. 

You couldn’t possibly have been more direct in getting a message across and it really was unlike anything her predecessors had done or said before, preferring to cloak their thoughts in various layers of obfuscation.

What was nice was that the boost given to the market that now is comforted to know that they won’t be abandoned by the Federal Reserve, even while tapering is proceeding, is that the gain lasted throughout the entire trading session and didn’t fade after the first hour of trading.

I don’t know if there will be another unexpected catalyst this morning, but I hope not, as I would like to get at least a few more new purchases done without wondering whether something has gone up too much and would I be chasing the shares if I bought them.

Yesterday, much of what was on the drawing board would have required chasing and that’s usually a certain formula for disappointment. Since there’s never a shortage of unexpected disappointment, there’s probably little need to add some expected disappointment to the mix.

While yesterday would have turned out to have been a good day to buy early, as the opening gain was mild before Yellen’s comments, I think that this morning will continue the strategy of sitting back and just seeing what kind of legs the morning’s open will have.

Hopefully some of those opportunities will appear and perhaps will be in positions with expanded options choices.

While the expectation is that this week will be a net positive, since it is an Employment Situation Report week, a little diversification in expirations would still be nice, in the event that the week falls short and leaves expired contracts behind.

As usually is the case, the reality may end up being very different from the theory. Ultimately, whatever looks good is good enough for me..

Daily Market Update – March 31, 2014 (Close)

Nothing much happened over the weekend and so the markets continue with their non-committal trading in the pre-open to begin this week. That’s a pattern that has been going on for a while, even though as the days have unfolded there have been large, but usually alternating directional moves, including on intra-day bases.

Today was one of those days, but at least this time the cause was readily identifiable.

And better yet, it was higher and never even made a serious attempt at reversing itself. No nervousness, no profit taking. Just everyone going along for the ride.

It was a very dovish sounding Federal Reserve Chairman Janet Yellen, who during the course of a scheduled presentation made it clear that the Federal Reserve was going nowhere and would be a continued partner in assuring an economic recovery.

Otherwise we would have been held hostage to another weekend of no news and nothing to convince the markets of the need to move anywhere.

While Secretary of State Kerry did have an unscheduled and lengthy meeting with his Russian counterpart on Sunday, it seemed that the results of that meeting were the source of any non-committal sentiment this morning. I listened to the press conference and wasn’t really certain of what had been said and certainly there was no suggestion of accomplishment nor failure of those discussions, that could have served as catalysts for this morning.

Faced with lots of positions set to expire this week and coupled with a dearth of assignments last week, I’m a little more reluctant than usual to dip into reserves in order to open new positions. That money is there for real and screaming opportunities and there aren’t many of those, although their beginnings are becoming more evident, despite some advances in  last Friday’s trading. Sitting near all time highs, even with a slight hint of optimism to start the week isn’t enough of a motivator to dig too deeply, at least until seeing some evidence of stability and not the early positive opens that gave way to late morning selling, as we’ve been seeing lately.

Although this is also an Employment Situation Report week and that usually means a net positive for the weekly performance, it’s difficult to take that information and use it as a counter to common sense.

With so many expirations set for this week, this seems to be another week to consider looking for those opportunities that have expanded weekly options in an effort to diversify expiration dates.

As with last week I would like to see additional uncovered positions get their coverage and add to the week’s income stream. Where appropriate, that mean mean more DOH trades, as they have helped of late in having existing positions outperform the weekly market. If your goal is additional weekly premium income then it’s worth the additional attention that’s needed and the aggravation that may ensue when those shares mat suddenly spike. As long as they don’t do so immediately before expiration there’s always hope and even then there may be some.

This morning I planned to continue the strategy of sitting back a bit and watching to see how sentiment develops and where it may take us. As it turned out it took us higher and never looked back.

With cash reserves up to 37%, I was willing to get down to about 25%, which would have meant only as many as 4 tor 6 new positions for the week. However, with the market jumping quickly and early there weren’t too many opportunities to grab much. But having rolled over a nice number of positions last week I’ve already met income objectives for this week, so there wasn’t not as much additional reason to extend the portfolio, certainly not in order to chase income.

Sometimes that’s a luxury to begin the week, but you can’t necessarily blame anyone for wanting even more

Daily Market Update – March 31, 2014 (8:30 AM)

Nothing much happened over the weekend and so the markets continue with their non-committal trading in the pre-open to begin this week. That’s a pattern that has been going on for a while, even though as the days have unfolded there have been large, but usually alternating directional moves, including on intra-day bases.

While Secretary of State Kerry did have an unscheduled and lengthy meeting with his Russian counterpart on Sunday, it seems that the results of that meeting were the source of any non-committal sentiment this morning. I listened to the press conference and wasn’t really certain of what had been said and certainly there was no suggestion of accomplishment nor failure of those discussions, that could have served as catalysts for this morning.

Faced with lots of positions set to expire this week and coupled with a dearth of assignments last week, I’m a little more reluctant than usual to dip into reserves in order to open new positions. That money is there for real and screaming opportunities and there aren’t many of those, although their beginnings are becoming more evident, despite some advances in  last Friday’s trading. Sitting near all time highs, even with a slight hint of optimism to start the week isn’t enough of a motivator to dig too deeply, at least until seeing some evidence of stability and not the early positive opens that gave way to late morning selling, as we’ve been seeing lately.

Although this is also an Employment Situation Report week and that usually means a net positive for the weekly performance, it’s difficult to take that information and use it as a counter to common sense.

WIih so many expirations set for this week, this seems to be another week to consider looking for those opportunities that have expanded weekly options in an effort to diversify expiration dates.

As with last week I would like to see additional uncovered positions get their coverage and add to the week’s income stream. Where appropriate, that mean mean more DOH trades, as they have helped of late in having existing positions outperform the weekly market. If your goal is additional weekly premium income then it’s worth the additional attention that’s needed and the aggravation that may ensue when those shares mat suddenly spike. As long as they don’t do so immediately before expiration there’s always hope and even then there may be some.

This morning I plan to continue the strategy of sitting back a bit and watching to see how sentiment develops and where it may take us.

With cash reserves up to 37%, I’m willing to get down to about 25%, which may mean only as many as 4 tor 6 new positions for the week. Having rolled over a nice number of positions last week I’ve already met income objectives for this week, so there’s not as much additional reason to extend the portfolio, certainly not in order to chase income.

Sometimes that’s a luxury to begin the week, but you can’t necessarily blame anyone for wanting even more