Market Summary
The October 7th Couch Potato stated "... The best bet is for stocks to trade range-bound during earnings season and then move out of the range as traders speculate on what the Fed will announce at their next meeting in early December. The blue boxes in the SPX chart below highlight the S&P 500 index during the recent first and second quarter earning seasons. Notice that on both occasions' stocks remained in a trading range and moved out of the range as earnings season ended. In fact, stocks have already been range-bound since the second week of September..." The September 30th Couch Potato suggested "...The best bet is to expect prices to settle into a trading range with resistance at the recent 52-week highs..." The updated SPX chart below confirms the analysis above is still valid. The blue box surrounding S&P 500 index price action during the current 3rd quarter earning season outlines the trading range that has been in place since the beginning of September. This week begins a blitz of earnings announcements and unless there are major surprises the best bet is for index prices to continue vacillating up and down within their respective trading ranges.

The October 7th Couch Potato also mentioned "... The P&F chart supports the analysis above suggesting a near term trading range. We will probably get alternating columns of a few 'X's and 'O's until prices break out of the range..." The updated S&P 500 Index P&F chart below confirms our analysis as we have alternating uptrends (column of X's) and downtrends (column of O's).

SPY Position Update -------------------------------------------------------------
SPY closed at $143.39 on Friday

The October 17th Couch Potato published a November expiration SPY call spread
The call spread is approx. $800 in the black (see tables below)
$150 strike price short call delta is .1550 (84% probability this position will be profitable)

The October 11th Couch Potato published a November expiration SPY put spread
The put spread is approx. $200 in the black (see tables below)
$138 strike price short put delta is -.2198 (78% probability this position will be profitable)

SPY Risk Analysis
At this point the risk is the S&P 500 index following through on Friday's price crash and threatening our $138 strike price SPY short put.

TLT Position Update -------------------------------------------------------------
TLT closed at $121.74 on Friday – the October position closed approx. $2,000 in the black

The October 1st Couch Potato published an October expiration TLT bear call spread
On October 7th we suggested closing out the call spread for an approx. $1,000 gain (see tables below)

The September 20th Couch Potato published an October expiration TLT put spread
On October 11th we suggested closing out the put spread for an approx. $1,000 gain (see tables below)

The October 11th Couch Potato published a November expiration TLT call spread
The call spread is approx. $600 in the black (see tables below)
$128 strike price short call delta is .1296 (87% probability this position will be profitable)

TLT Risk Analysis
We have closed out our October TLT credit spreads with gains and have not yet executed a November TLT put spread. Therefore the only risk is treasury bonds recovering and threatening our November $128 strike price short call.

GLD Position Update -----------------------------------------------------------
GLD closed at $166.97 on Friday – the October position closed approx. $2,100 in the black

The September 20th Couch Potato published an October expiration GLD bear call spread
On October 10th we suggested closing out the call spread for an approx. $1,000 gain (see tables below)

The September 20th Couch Potato published an October expiration GLD put spread
On October 17th we suggested closing out the put spread for an approx. $1,100 gain (see tables below)

The October 11th Couch Potato published a November expiration GLD put spread (see table below) The put spread is approx. $1,000 in the red (see tables below)
$165 strike price short put delta is -.3712 (63% probability this position will be profitable)

GLD Risk Analysis
We have closed out our October GLD credit spreads with gains and have not yet had the opportunity to open a November call spread. Gold is crashing and threatening our November $165 strike price short put.

Exit Plan
Anytime the market maker is willing to accept a limit price of less than .10 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 week or so prior to the expiration date, we may be able to hold out for a .05 (or less) bid.

If one of our short strikes is penetrated (closing price above a short call or below the short put) AND the delta rises to .65 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.

Happy Trading

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.