Options – week of Jan. 11, 2016

Last week

Week ofOpenHighLowClose
Dec. 28-152051.252075.002030.252035.75
Jan. 4-162037.752043.501910.001911.50

Commentary for last week

The SP500 index had the worst first week of the year in history. The price declined about 6.09% in a single week.

China was blamed as the cause of a broad market decline decline that spread around the world. But actually it is time for the bull market to have a correction after rallying for six years. The bus is too full.

Based on SPY closing price, we have a long-term selling signal. That means the Bear market is beginning.

Last week’s trades

ESH6 Jan. 8, 2016 60-minute bars

ESH6 Jan. 8, 2016 60-minute bars

Last week’s trades commanded unusually rich premiums, especially early in the week. Traders smelled a decline and were looking for Puts to hedge long positions.  We sold Puts with strikes at 1920 and 1900 at decent prices.

Friday afternoon we covered all our positions for a few pennies each, primarily because we we wanted to leave for the day and didn’t want to leave a position open.

It was a good break, because the 1920 Puts got caught in the late afternoon crash and ended up about 9 point in the money. But all our trades were profitable in the end.

This week

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