Market Summary
The June 12th Couch Potato Market Summary mentioned "...It has become easier to build a case for claiming stocks have found a short-term bottom... most of the main indexes have remained above their support level as defined by their 50-week SMA's...Volatility is still high but has pulled back from recent 52-week highs ... Traders are taking in stride negative financial news and the market appears to have drawn a line in the sand concerning how low prices will go. The market may continue trading range-bound for a while, but eventually it will break out to the upside or downside..." This analysis is still valid, though it may take a while to validate the recent upside "break-out".

SPY Position Update
SPY closed $111.73 on Friday – the entire position is approx $2,500 in the black
SPY is priced ABOVE its current 14-day EMA (see SPY chart down below)
SPY is trading ABOVE to its 20-day Bollinger Band SMA (see SPY chart)
SPY is still BELOW its 50-day simple moving average (see SPY chart)
SPY is ABOVE its 200-day simple moving average (see SPY chart)
Relative Strength Indicator (RSI) is neutral (See SPY chart)
Moving Average Convergence/Divergence (MACD) is bearish but turning bullish (See SPY chart)

SPY Bear Call Spread
This spread is approx. $1,300 in the black - the June 7th Couch Potato recommended closing out $115 strike short call for an approx. $1,250 profit and stated "... we are maintaining the $120 long calls... The ideal scenario is for stocks to bounce off support to recent highs allowing us to sell another June Quarterly strike call; plus after the June Quarterly options expire we hope to sell July calls against these same long calls that we have in play... The 200-day SMA appears to be the demarcation point and if prices approach this level we will evaluate selling calls again..." We got our ideal scenario and were able to execute our trading plan. (see tables below)

SPY Bull Put Spread(s)
These spreads are approx. $1,100 in the black (see tables below)
The regular (Reg) June expiration put spread expired worthless and we retained the entire premium
The June Quarterly (Qty) expiration bull put $104 strike price short put delta is -.0763 (92% probability this position will be profitable)
If prices pull back to the support level (approx. $104) we will consider selling July expiration put spreads to generate more premiums

SPY Risk Analysis
As mentioned above the June option expiration put spread expired and the June quarterly bull put at this point has a high probability of being profitable. Prices broke through short-term resistance defined as the 200-day SMA. Stocks have been advancing on light volume but it still counts as this has been the best two-week period since November. If the recent two week trend continues it may threaten our $114 strike short call.

DIA Position Update
DIA closed at $104.49 on Friday – the entire position is approx. $2,000 in the black
DIA is priced ABOVE its current 14-day EMA (see DIA chart down below)
DIA is trading ABOVE its 20-day Bollinger Band SMA (see DIA chart)
DIA is BELOW its 50-day simple moving average (see DIA chart)
DIA is priced ABOVE its 200-day simple moving average (see DIA chart)
Relative Strength Indicator (RSI) is neutral (See DIA chart)
Moving Average Convergence/Divergence (MACD) is bearish put turning bullish (See DIA chart)

DIA Bear Call Spread
This spread is approx. $1,000 in the black - the June 7th Couch Potato recommended closing out $107 strike short call for an approx. $1,000 profit and mentioned "... we are maintaining the $112 long calls... The ideal scenario is for stocks to bounce off support to recent highs allowing us to sell another June Quarterly strike call; plus after the June Quarterly options expire we hope to sell July calls against these same long calls that we have in play... The 200-day SMA appears to be the demarcation point and if prices approach this level we will evaluate selling calls again..." We got our ideal scenario and were able to execute our trading plan. (see tables below)

DIA Bull Put Spread
These spreads are approx. $1,000 in the black (see tables below)
The regular (Reg) June expiration put spread expired worthless and we retained the entire premium
The June Quarterly (Qty) expiration bull put $104 strike price short put delta is -.0558 (94% probability this position will be profitable)
If prices pull back to the support level (approx. $97) we will consider selling July expiration put spreads to generate more premiums

DIA Risk Analysis
Similar to the SPY Risk Analysis above, the June option expiration put spread expired and at this point the June quarterly bull put has a high probability of being profitable. Prices broke through short-term resistance defined as the 200-day SMA and if the recent two week trend continues it may threaten our $106 strike short call.

Exit Plan
The rules for exiting the SPY and DIA credit spreads are:

Anytime the market maker is willing to accept a limit price of less than .11 on one of our short strikes, buy back all the short contracts and sell the long positions on the same spread. However, if it is a few days prior to the expiration date, we may be able to hold out for a .05 bid.

If one of our short strikes is penetrated (closing price above our short call or below the short put) AND after market close, if the delta associated with one of the short strikes is .65 or higher, we will look to close out this spread (buy the short contracts, sell the long) and roll it out to another short strike price. Unless this is option expiration week, do not panic and rush to close the trade, many times the market will reverse itself and remove the sense of urgency. If one of our short strikes has been violated and there is no price reversal, we cut our losses and live to fight another day.

Final Comment
Our recent trading strategy is getting good results so far - "legging into" the bear-call part of our iron condor when prices are near resistance or if near support, leg into the bull-put spread; also we are entering a smaller number of contracts on each trade. This strategy helps to deal with the still high market volatility and provides a level of protection when prices gap up or down after initiating a trade. Previously we discussed how for the past few months profiting from market neutral trades similar to the iron condor has been challenging, especially when entering the position on a single trade. No trading plan is without risks, but taking into account market conditions, our objective is to minimize potential threats – the minor "tweaks" to our trading are providing the results we want.

Gregory Clay

Couch Potato Trader Disclaimer
All results reported in this section are hypothetical. While the numbers represented here may have been achieved or beaten by our readers, we make no representation that any individual investor achieved these exact results. The tracking for the plays listed in this section uses closing prices for the day the newsletter is published and it is not meant to imply that any reader actually received those prices (though many often do) or participated in these recommendations (even though many do). The portfolio represented here is hypothetical and for investment education purposes only. It is only an illustration of what type of gains a knowledgeable trader might receive utilizing these strategies. If you don't get close to these results, guess what. It isn't the fault of the strategies.