Thursday, April 14, 2011

Overall Market Meter Rating Remains "Slightly Bullish"

Each month during options expiration week, the Covered Calls Advisor re-calculates each of the current values for the nine factors used to determine the "Overall Market Meter" rating. These nine factors can be categorized into macroeconomic (the first 3 indicators in the chart below), momentum (next 2 indicators in the chart), value (next 3 indicators), and growth (the last indicator). As shown in the chart below, the new Overall Market Meter Average rating (blue bar at the bottom of the chart) remains unchanged at "Slightly Bullish":
















The current Market Meter Average of 4.22 is higher than the 3.89 of last month, but nevertheless remains at Slightly Bullish (Note: the range for Slightly Bullish is from 3.5 to 4.5) for establishing covered calls investing positions for the next options expiration month of May 2011.

As shown in the right sidebar, the covered calls investing strategy corresponding to this overall Slightly Bullish sentiment is to "on-average sell 2% out-of-the-money covered calls for the nearest expiration month." So with the April 2011 options expiration this week, newly established positions for May2011 expiration will be established in accordance with this guideline.

Your comments or questions regarding this post are welcomed. Please click on the "comments" link below or email me at the address shown in the upper-right sidebar.

Regards and Godspeed,
Jeff

2 comments:

  1. Just found your site, very interesting.

    Q: I sold June 49 (2.30) and 50 (1.75) calls for MRO which was at ca 48.50 early this week. Protection against drop of USO etc. Now up over 51.50 +
    Per you criteria, would you suggest that not to roll up the June 49 / 50 until MRO price > 53.9 / 55 respectively ? Is this an optimum solution ... or should I consider rolling up now to

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  2. Gary,

    Yes. Based on my roll-up rules, I would wait to see if MRO rises further. If it reaches the $54.75 to $55.25 range, then I would tend to close out the June $50 strike and roll-up to the $55 strike at that time.

    You could consider rolling up to the $52.50 strike if MRO rises to $52.25 to $52.75 range, but from my experience, that is somewhat more active trading than is desirable.

    Jeff

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