As displayed below, the American Association of Individual Investors (AAII) survey sentiment has shifted strongly towards the bulls. The current bearish percentage is the lowest since this past May, just before the highest stock prices of the year. The AAII survey is considered a reliable contra-indicator and with the current overbought conditions along with the winding down of earnings announcements, technical and fundamental indicators don't support much higher near term stock prices. Possible Fed intervention shadowing the markets will probably restrain any price pullback â€“ range bound trading is probably the best near term bet.
SPY Position Update
SPY closed at $140.84 on Friday â€“ the August position is approx $100 in the red
The August 1st Couch Potato published an August expiration month SPY bear call spread
The call spread is approx. $100 in the red (see tables below)
$141 strike price short call delta is .4743 (53% probability this position will be profitable)
SPY Risk Analysis
August options expire this upcoming Friday â€“ unless prices pull back we will probably have to adjust the call spread as the SPY is consolidating right at the $141 short strike.
TLT Position Update ---------------------------------------------------------
TLT closed at $125.70 on Friday â€“ the August position is approx $1,100 in the black
The August 9th Couch Potato published a September expiration month TLT bull put spread (see tables below) . However prices gapped higher the next day and the trade as published was not available.
The July 16th Couch Potato published an August expiration month TLT bear call spread
On August 8th we suggested closing out the call spread for an approx. $1,100 gain (see tables below)
TLT Risk Analysis
As mentioned above we closed out the TLT call spread and didn't open a put spread, therefore we have no money on the table for August.
GLD Position Update ---------------------------------------------------------
GLD closed at $157.18 on Friday â€“ the August position is approx. $1,600 in the black
The July 17th Couch Potato published an August expiration month GLD bear call spread
The call spread is approx. $400 in the black (see tables below)
$160 strike price short call delta is .1996 (80% probability this position will be profitable)
The July 17th Couch Potato published an August expiration GLD put spread
The put spread is approx. $1,200 in the black (see tables below)
$148 strike price short put delta is -.0202 (98% probability this position will be profitable)
GLD Risk Analysis
Gold prices have been trending higher over the past week; therefore we will be looking for the opportunity to exit the GLD call spread prior to Friday option expiration as the risk is the trend continuing and threatening the $160 strike price short call.
As mentioned above August options expire on Friday and we will be doing trade alerts to exit the remaining August positions. As mentioned above we anticipate adjusting the SPY call spread, also we need to keep a tight reign on the GLD short call.
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.