11 a.m. New York time

I’ve posted the analysis of my newly entered short bear call spread on SPY.

10:30 a.m. New York time

By my Elliott wave analysis of the chart, the S&P 500 has begun its 3rd wave of a downtrend that began March 3. The corrective 2nd wave that ended today ended near a Fibonacci level of 38%. (See the Private Trader Live post of Saturday.) Under this scenario, the 3rd wave is likely to be longer than the 1st wave, which ended Friday, because the 3rd wave is never shorter than both the 1st and the 5th. Generally, the 3rd is the longest.

The 1st wave was 631.27 on the S&P 500, so the 3rd wave under the Elliott wave rules will have a minimum downside target of 1769.90 on the S&P 500, and most like significantly lower than that. If the index fails to hit that target, then the 5th wave must be long more than 631.27 long.

(See my brief explanation of Elliott wave analysisposted February 29.)

I have entered a new short bear call spread position on SPY, the exchange-traded fund that tracks the S&P 500. I shall post the analysis shortly.

I also bought more shares of SDS, the inverse and double exchange-traded fund that moves the opposite of SPY, and at double the distance. The entry debit was $37.72 per share.

By Tim Bovee, Portland, Oregon, March 16, 2020

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5:20 p.m. New York time

As I read the chart we are now in an upward movement that corrects a portion of the decline from March 3. Some likely end points of the correction on the SPY chart, using Fibonacci numbers, are $288 (62% retracement), $280 (50%), and $273 (38%).

In Elliott wave terminology the correction would most likely take the form of a zig-zag: up-down-up more.

My bear holdings all expire April 17, so based on the chart analysis, I shall hold what I have and wait a bit before entering new positions.

I have finished updating the analyses for short iron condor options spreads with results. They all expire next Friday. The symbols, with links, are XLB, XLE, XLI, XLP and XLV.

By Tim Bovee, Portland, Oregon, March 14, 2020

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3:20 p.m. New York time

Not that I’m superstitious, but Friday the 13th does seem like the perfect day to clean out losing trades, entered before the crash, that expire next week. So appropriate for a day dedicated to the revelries of vampires and werewolves and things that go bump in the night.

I exited five short iron condor positions expiring after the closing bell on March 20 — next Friday. They are XLB, XLE, XLI, XLP and XLV. I shall update with results — all losses — over the weekend.

Two positions, my short iron condors on SMH and XLK, had short in-the-money puts exercised, and I ended up with shares in my account, which I sold, doing partial exits on those two symbols. I’ll total up the damage after the positions expire entirely.

I also rid myself of put wing of my short iron condor position on QQQ, leaving a nearly valueless bear call spread. I’ll leave the results calculation on this as well until expiration.

By Tim Bovee, Portland, Oregon, March 13, 2020

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SPDR S&P 500 ETF Trust (SPY)

Update 3/18/2020: I’ve exited my short bear call spread options position, lot 7, on SPY for a $0.71 debit per contract/share, a profit of $0.71, with shares trading at $240.35, down $11.30 from their entry level. The position earned 50% of maximum potential profit.

The day after I entered the position, SPY peaked, and then began a rapid decline. The implied volatility rank was 83.6% at exit, down 26.5 percentage points.

Shares fell by 4.5% over six days, or a -19% annual rate. The options position produced a 100% return for a +6,083% annual rate.

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I have entered a short bear call spread on SPY, using options that trade for the last time 36 days hence, on April 17. The premium is a $1.42 credit and the stock at the time of entry was priced at $251.69.

The position is profitable below $285.58.

The implied volatility rank (IVR) stands at 110.1%.

In terms of Elliott wave analysis, the position was opened during Minor wave 3 to the downside.

Premium:	$1.42	Expire OTM
SPY-bear call spread	Strike	Odds	Delta
Calls
Long	293.00	90.0%	12
Break-even	285.58	87.5%	16
Short	287.00	85.0%	20

The premium is 47.3% of the width of the position’s wing.

The profit zone covers a 13.5% move to the upside and an unlimited move to the downside of the entry price.

The risk/reward ratio is 3.2:1, with maximum risk of $458 and maximum reward of $142 per contract.

By Tim Bovee, Portland, Oregon, March 12, 2020

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SPDR S&P 500 ETF Trust (SPY)

Update 3/18/2020: I exited my short bear call spread position on SPY for 52.1% of maximum potential profit, for $0.68 per contract/share, a profit of $0.74, with the stock trading at $244.92, down $10.60 from the entry price. 

SPY hit a peak the day after I entered the position and then declined quickly. The implied volatility rank was 86.5% at exit, down 17.9 percentage points from entry.

Shares declined by 4.2% over six days, or a -18% annual rate. The options position produced a 105.96% return for a +6,620% annual rate.

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I have entered a short bear call spread on SPY, using options that trade for the last time 36 days hence, on April 17. The premium is a $1.42 credit and the stock at the time of entry was priced at $255.56

The position is profitable below $288.58.

The implied volatility rank (IVR) stands at 104.4%.

In terms of Elliott wave analysis, the position was opened during Minor wave 3 to the downside.

Premium:	$1.42	Expire OTM
SPY-bear call spread	Strike	Odds	Delta
Calls
Long	296.00	90.0%	11
Break-even	288.58	87.5%	16
Short	290.00	85.0%	20

The premium is 47.3% of the width of the position’s wing.

The profit zone covers a 12.9% move to the upside and an unlimited move to the downside of the entry price.

The risk/reward ratio is 3.2:1, with maximum risk of $458 and maximum reward of $142 per contract.

By Tim Bovee, Portland, Oregon, March 12, 2020

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3:30 p.m. New York time

I’ve updated the analysis of SPY lot 5 with results.

3:20 p.m. New York time

I’ve exited ny short bear call options spread on SPY, called lot 5 — to distinguish from the many other SPY options positions I’m doing. Results shortly.

10:55 p.m. New York time

I’ve posted two analyses of short bear call spread options positions I entered this morning, SPY lot 6 and SPY lot 7.

10:15 a.m. New York time

The S&P 500 opened below its March 9 low, eliminating the risk that, using Elliott wave terminology, the reversal that ensured was the beginning of a Minor-wave 4 upside correction. I’m counting the continuing downward move as a continuation of the Minor wave 3 impulse wave.

I have entered new short bear call options spread positions on the exchange-traded fund SPY, which tracks the S&P 500, and have also re-entered SDS, an inverse ETF that goes up, double, when SPY goes down, and vice versa.

I’ll post analysis of the two options positions shortly.

As for the stocks, I entered SDS for a debit of $36.55 per share.

My trading was blocked for 15 minutes because the market hit a circuit breaker — again. So the options position in one account (SPY lot 6) was pre-circuit breaker, and in another account (lot 7) was post-circuit breaker. Same entry credit but different strike prices.

By Tim Bovee, Portland, Oregon, March 12, 2020

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3:15 p.m. New York time

SPY, tracking the S&P 500, remains above its low of this decline at $270.27. No trades, given the ambiguity.

By Tim Bovee, Portland, Oregon, March 11, 2020

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3 p.m. New York time

The markets haven’t declared themselves yet, and so I’m deferring entering new bear call spread trades until there’s greater clarity. If SPY (tracking the S&P 500) resumes its downward course, then I see it as a continuation of wave 3 to the downside, and will place trades. If it continues the net sideways path that we’re seeing today, then I shall conclude that we’re in the Minor 4th wave within the Intermediate 1st wave that began February 19. I don’t plan to trade the 4th wave and shall sit it out until the 5th comes along.

12:15 p.m. New York time

I shall begin the day with an Elliott wave analysis of the S&P 500 chart (SPX). As everyone knows, Monday saw an intense decline followed this morning by a bounce and a retreat.

I have only one short bear call options spread position at present, and need to add another so I can continue to capture Minor wave 3 to the downside. Yet, the bounce the troubling, since if it means an upward correction, that cause losses to my bear plays.

Everything is in motion, nothing is for certain, and analysts draw conclusions at their peril. None the less, let’s try to at least think of the possibilities.

The bounce this morning was 4.2%, and the drop back has moved below yesterday’s low. Before the drop back I was inclined to see the bounce as possibly being the beginning of a wave 4 correction to the upside, ending the 3rd wave down that began March 4.

However, within Intermediate wave 1, that would make Minor wave 3 shorter than the Minor 1st wave, creating an assumption that the future wave 5 would be shorter still. It requires a truncation of Intermediate wave 1 that seems contrary to the power of its decline.

So I’m inclined at this point to see the bounce as just another smaller wave within the continuing 3rd wave decline. I’ll watch things for awhile, and then add more bearish spreads if the SPX chart is playing out as I think it will.

By Tim Bovee, Portland, Oregon, March 10, 2020

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SPDR S&P 500 ETF Trust (SPY)

Note: This post was originally, and incorrectly, labeled as lot 6. “Lot 5” is correct.

Update 3/12/2020: I have exited my short bear call options spread, three days after entry, for a $0.49 debit per contract share, a $0.94 profit, as shares were trading for $252.11 per share, down $23.50 from the entry level. The exit came at 64.7% of maximum potential profit.

After I entered the position, SPY did a mini-bump to the upside before continuing its downward movement. The implied volatility rank at the close was 113.8%, 23.9 percentage points higher than at entry.

Shares declined by 8.5% over three days, for a -1,037% annual rate. The options position produced a 189.2% return for an annual rate of +23,2340%.

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I have entered a short bear call spread on SPY, using options that trade for the last time 39 days hence, on April 17. The premium is a $1.43 credit and the stock at the time of entry was priced at $276.41

The position is profitable below $300.57.

The implied volatility rank (IVR) stands at 89.8%.

The entry came after a 7-1/2% price drop at the opening. From my Elliott wave analysis, I expect that the present Minor 3rd wave will continue down within an Intermediate 3rd wave.

Premium:	$1.43	Expire OTM
SPY-bear call spread	Strike	Odds	Delta
Calls
Long	307.00	90.0%	13
Break-even	300.57	87.5%	17
Short	302.00	85.0%	20

The premium is 57.2% of the width of the position’s wing.

The profit zone covers an 8.7% move to the upside and an unlimited move to the downside of the entry price.

The risk/reward ratio is 2.5:1, with maximum risk of $357 and maximum reward of $143 per contract.

By Tim Bovee, Portland, Oregon, March 9, 2020

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3:40 p.m. New York time

I’ve exited my shares position in SDS for a $32.19 credit, up $3.23 from the entry price, producing a return of 11.2% over three days, or a +1,357% annual rate.

2:35 p.m. New York time

What I originally labeled as lot 6 of my SPY positions this year should have been numbered lot 5. I’ve corrected this post and the analysis post.

11:15 a.m. New York time

I’ve updated my SPY Analysis (lot 4) posting with results and also posted an analysis for today’s entry, SPY (lot 5).

10:30 a.m. New York time

The markets opened with a powerful push to the downside, almost immediately triggering one of the market circuit breakers that halted trading for 15 minutes.

By my count, the S&P 500 is in the Minor 3rd wave of an Intermediate 3rd wave, which tends to be a powerful combination.

My trades during this phase of the new bear market are limited to short bear call spread positions on SPY, an exchange-traded fund that tracks the S&P 500 index. My options holdings are spread across several brokerage accounts.

I exited my holdings from one account, SPY Lot 4, that I had entered last Thursday, and I entered a new position in another account, SPY Lot 5, after the market resumed trading. All of this within the first half hour after the opening bell.

I plan no further trades today. I’ll defer until tomorrow, or later, trades using the funds from Lot 4 to create a SPY Lot 5 position.

I shall post the results from the Lot 4 exit and analysis of the Lot 6 entry later this morning.

All of the SPYs so far expire April 17. I also have eight short iron condor positions that I entered before the February 19 market downtrend began. They expire March 17 and are poised to lose the maximum possible. They require no action this week but will next week.

By Tim Bovee, Portland, Oregon, March 9, 2020

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