Weekly Range:
- Open 133.02
- High 137.89
- Low 130.39
- Close 137.33
- Point Change +1.94
- % Change from last week close +1.43%
MNX remained just about unchanged last week - good for wasting away the premium of the sold options. VXN traded below its recent range, setting up for more decline ahead or a bounce back into its range. With 20 days left until expiry, it is unlikely that I will be able to place any more short May MNX trades, especially with the decrease in volatility. However, due to the VXN decrease, I will start looking for June puts to sell in order to capture higher premiums. As mentioned in my previous post, in order to sell puts 25-30% otm and receive adequate premium, I will need to sell them more than 30 days out. June options have 55 days until expiry, so if I wanted to sell 25% otm, I could sell the 102.5 for .60 or so, but remember there is more time in the trade for the index to decrease and come closer to the short strike. However, the lower VXN is indicating a decrease in volatility, so theoretically the index should be less likely to fluctuate so widely. Also, the 104 level marked the March low, so that should provide support. As I have been predicting for many MNX points now, I still expect a pullback in this market advance - if timed correctly this may provide increased premium in puts I may want to sell. Also, by selling an option for .60, I could always unwind the trade for .20 - .25 if I felt that I should. This way I could capture more than half the premium I took in and not have to wait until expiry to keep the full premium.
