The Week Ahead: The employed, unemployed, and much, much more

The employment report will be released Friday at 8:30 a.m. New York time, including the statistic loved best by headline writers across the country, the unemployment rate. Employment is a key element in the Federal Open Market Committee's decision-making about whether or tight to raise interest rates.

The private-sector payroll company will provide a sneak preview to the official numbers, the ADP employment report, released Wednesday at 8:15 a.m.

Three other potential market-movers will hit screens in the run-up to Friday's grande finale: Personal income and outlays, from which the savings rate is calculated, on Monday at 8:30 a.m.; the Institute of Supply Management manufacturing index, also on Monday, at 10 a.m.; and international trade on Wednesday at 8:30 a.m.

Busy busy. I expect an interesting week.

Leading indicators (in descending order of importance):

The interest rate spread between 10-year Treasuries and the federal funds rate, reported continually during market hours.

The M2 money supply, at 4:30 p.m. Thursday.

The average hourly workweek in manufacturing from the employment report, at 8:30 a.m. Friday.

Manufacturers' new orders for consumer goods and materials from the factor orders report, at 10 a.m. Tuesday.

Vendor performance, or the deliveries times index, from the ISM manufacturing survey, at 10 a.m. Monday.

The S&P 500 index, reported continually during market hours.

Average weekly initial jobless claims, at 8:30 a.m. Thursday. 

Manufacturers' new orders for non-defense capital goods, from the factor orders report, at 10 a.m. Tuesday.

Items of interest, arranged by day:

Monday: Personal income and outlays at 8:30 a.m., the PMI manufacturing index at 9:45 a.m. and the ISM manufacturing index and construction spending, both at 10 a.m.

Tuesday: Motor vehicle sales throughout the day and factory orders at 10 a.m.
Wednesday.

Wednesday: The ADP employment report at 8:15 a.m., international trade at 8:30 a.m., the ISM non-manufacturing index at 10 a.m.,  petroleum inventories at 10:30 a.m. and the Federal Reserve Beige Book at 2 p.m.

Thursday: Jobless claims and productivity and costs, both at 8:30 a.m., and the money supply at 4:30 p.m.

Friday: The employment report at 9:30 a.m.

I also keep an eye on the Baltic Dry Index, updated daily, and the 5-year implied inflation rate based on U.S. Treasury yields, which presently stands at 1.62%.

Treasury Debt

Bills

• 4-week: Announcement Monday 11 a.m., auction Tuesday 11:30 a.m., settlement Thursday
• 3-month: Auction Monday 11:30 a.m., announcement Thursday 11 a.m.
• 6-month: Auction Monday 11:30 a.m., announcement Thursday 11 a.m.

Notes

• 3-year: Announcement Thursday 11 a.m.
• 10-year: Announcement Thursday 11 a.m.

Bonds

• 30-year: Announcement Thursday 11 a.m.

TIPS

• None

Fedsters

Two Federal Reserve princelings, both members of the Federal Open Market Committee, give potentially market-impacting policy addresses during the week.

Fed Vice Chairman Stanley Fischer speaks about "Lessons form the Financial Crisis" at the American Bankers Association International Monetary Conference in Toronto, on Monday at 9:30 a.m.

Fed Gov. Lael Brainard delves into the core concerns of the markets, today, tomorrow and always: "U.S. Economic Outlook and Monetary Policy". He delivers his remarks on Tuesday at 10 a.m. at the Center for Strategic and International Studies in Washington.

Other FOMC members at the podium are Chicago Fed Pres. Charles Evens on Wednesday, Fed Gov. Daniel Tarullo on Thursday and New York Fed Pres. William Dudley on Friday.

Two FOMC alternates speak: Boston Fed Pres. Eric Rosengren on Monday and St. Louis Fed Pres. James Bullard on Wednesday.

Analytical universe

This week I shall be analyzing new bull and bear signals among 489 large-cap stocks and exchange-traded funds.

Trading calendar

By my rules for shorter-term trades of Monthly options, I'm trading July options and later for the short legs of vertical, diagonal and calendar spreads and covered calls, and for all legs of butterfly spreads and iron condors. I'm trading September options and later for single calls and puts as well as straddles. Shares and Weekly options, of course, are good at any time.

Good trading.

-- Tim Bovee, Portland, Oregon, May 31, 2015

References

My trading rules can be read here.

Alerts

Two social media feeds provide notification whenever something new is posted.

• On Twitter, Follow Tim Bovee: https://twitter.com/TimBovee
• On Facebook, Like Private Trader: https://www.facebook.com/PrivateTrader

License



All content on Tim Bovee, Private Trader by Tim Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.

Monday's Prospects

On Friday, May 29:

Of 489 large-cap stocks and exchange-traded funds in my analytical universe, 19 broke beyond their 20-day price channels, four to the upside and 15 to the downside.

No symbols with high odds of success survived initial screening.High-odds symbols are candidates for directional trades.

One symbol with low odds of success survived initial screening, having broken out to the downside. Low-odds symbols are candidates for non-directional trades.

Provisionally, there is one prospect for a trade coinciding with an earnings announcements under my Volatility Rules. The liquidity is slightly low, and I shall note my final decision about further analysis in Monday's Agenda post.

I shall do further analysis on Monday, June 1.

Earnings season begins July 8, with peak announcements lasting for three weeks. Under the exclusion rule that forbids me from opening new positions in stocks within 30 days of an earnings announcement, in month before the season begins increasing numbers of symbols will be removed from my prospective trades list during initial screening. The rule doesn't apply to trades under my Volatility Rules.

First-round survivors

High-odds Bull (none)

High-odds Bear (none)

Low-odds Bull (none)

Low-odds Bear FXI

Potential trades under my Volatility Rules, keyed to events

The dates are those of the events, all of them earns announcements. Events prior to the opening bell are marked "am", during the trading day "mid", and after the closing bell "pm".

Monday pm (none)

Tuesday am MDT

Methodology

The stocks in my analytical universe all have analyst coverage through the stock-ranking company Zacks Investment Research. Not all of the exchange-traded funds are so covered.

I screen the symbols for historical odds of a profitable signal in the direction of the breakout for the past 12 months.

For symbols whose odds of success are in the top or bottom thirds, I next screen for suitability of the options grid and the the absence of an earnings announcement within the next 30 days.

-- Tim Bovee, Portland, Oregon, May 30, 2015

References

My trading rules can be read here.

Alerts

Two social media feeds provide notification whenever something new is posted.

• On Twitter: Follow Tim Bovee: https://twitter.com/TimBovee
• On Facebook, Like Private Trader: https://www.facebook.com/PrivateTrader

Disclaimer

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.

License



All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.Tss s ss'ss

Saturday's Outcomes

Saturday is the day the MAY5 Weeklys series of options expires. I had one position, a short iron condor option spread on AAL, that made it to expiration, thereby producing the maximum possible profit.

-- Tim Bovee, Portland, Oregon, May 30, 2015

References

My volatility trading rules can be read here.

Alerts

Two social media feeds provide notification whenever something new is posted.

• On Twitter: Follow Tim Bovee: https://twitter.com/TimBovee
• On Facebook, Like Private Trader: https://www.facebook.com/PrivateTrader

Disclaimer

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.

License



All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.Tss s ss'ss

GM Analysis

The automaker General Motors Co. (GM), headquartered in Detroit, Michigan, sent a bull signal in Thursday's trading. GM's bull signals have low historical odds of success, making it a prospective direction-neutral trade.

I shall use the JUN1 Weeklys series of options, which trades for the last time !0 days hence, on June 5.

[GM in Wikipedia]

GM

GM has given five bull signals in the past year, with a 20% success rate. The one successful signal produced a 1.6% profit over four days. The four unsuccessful trades on average each lost 2.6% over 20 days.

Ranges

Click on chart to enlarge.

GM at 11:05 a.m. New York time, 30 days hourly bars

Implied volatility stands at 20.2%. Volatility dropped below 21% on May 7, to levels never before seen since the company's reorganization under federal direction in 2009. The present level is 1.4 times the VIX, a measure of volatility of the S&P 500 index.

Ranges implied by options and the chart

Week	SD1 68.2%	SD2 95%	Chart
Upper	37.24	38.25	37.45
Lower	35.22	34.21	34.51
Gain/loss	2.8%	5.6%

Implied volatility 1 and 2 standard deviations; chart support and resistance
The Trade

The by-the-book construction places the short calls at $37 and the short puts at $37.50, close to full coverage. However, that gives me a risk/reward ratio of 3:1 if I make the iron condor 50 cents wide, or 4.9:1 with a one dollar width. I don't find either risk level to be acceptable.

The problem lies with the calls options. The $37 calls have an 80.6% chance of expiring out of the money for maximum profit. The next strike down, the $36.50, have a $62.8% chance, which lower than the 70% I normally aim for.

Decision for My Account

I'm declining to trade GM. The options grid won't allow me to construct a position with sufficient reward to make up for the risk. That's not uncommon when implied volatility is low, and it is radically low in the case of GM compared to its historical levels.

-- Tim Bovee, Portland, Oregon, May 29, 2015

References

My volatility trading rules can be read here.

Alerts

Two social media feeds provide notification whenever something new is posted.

• On Twitter, Follow Tim Bovee: https://twitter.com/TimBovee
• On Facebook, Like Private Trader: https://www.facebook.com/PrivateTrader

Disclaimer

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.

License



All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.

Friday's Agenda

The one symbol on the agenda today, GM with a low odds bull signal, is trading above the 20-day price channel.

In low-odds world, where the best bet is on failure, trading higher is a non-confirmation.

However, the price is dropping intra-day, and so I shall fudge the guidelines a bit and post an analysis of GM as a direction-neutral trade before closing bell.

-- Tim Bovee, Portland, Oregon, May 29, 2015

References

My volatility trading rules can be read here.

Alerts

Two social media feeds provide notification whenever something new is posted.

• On Twitter: Follow Tim Bovee: https://twitter.com/TimBovee
• On Facebook, Like Private Trader: https://www.facebook.com/PrivateTrader

Disclaimer

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.

License



All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.Tss s ss'ss

Friday's Prospects

On Thursday, May 28:

Of 518 large-cap stocks and exchange-traded funds in my analytical universe, 12 broke beyond their 20-day price channels, five to the upside and seven to the downside.

No symbols with high odds of success survived initial screening. High-odds symbols are candidates for directional trades.

One symbol with low odds of success survived initial screening, having broken out to the upside. Low-odds symbols are candidates for non-directional trades.

There are no prospects for trades coinciding with earnings announcements under my Volatility Rules.

I shall do further analysis on Friday, May 29.

Earnings season begins July 8, with peak announcements lasting for three weeks. Under the exclusion rule that forbids me from opening new positions in stocks within 30 days of an earnings announcement, in month before the season begins increasing numbers of symbols will be removed from my prospective trades list during initial screening. The rule doesn't apply to trades under my Volatility Rules.

First-round survivors

High-odds Bull (none)

High-odds Bear (none)

Low-odds Bull GM

Low-odds Bear (none)

Potential trades under my Volatility Rules, keyed to events

The dates are those of the events, all of them earns announcements. Events prior to the opening bell are marked "am", during the trading day "mid", and after the closing bell "pm".

Friday pm (none)

Monday am (none)

Methodology

The stocks in my analytical universe all have analyst coverage through the stock-ranking company Zacks Investment Research. Not all of the exchange-traded funds are so covered.

I screen the symbols for historical odds of a profitable signal in the direction of the breakout for the past 12 months.

For symbols whose odds of success are in the top or bottom thirds, I next screen for suitability of the options grid and the the absence of an earnings announcement within the next 30 days.

-- Tim Bovee, Portland, Oregon, May 28, 2015

References

My trading rules can be read here.

Alerts

Two social media feeds provide notification whenever something new is posted.

• On Twitter: Follow Tim Bovee: https://twitter.com/TimBovee
• On Facebook, Like Private Trader: https://www.facebook.com/PrivateTrader

Disclaimer

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.

License



All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.Tss s ss'ss

Thursday's Agenda

QQQ, with a potential bull signal having high historical odds of success, was the only prospect for a trade today. It failed to confirm the signal, leaving me with nothing for further analysis today.

Under my trading system, a bull signal occurs when a price closes above its 20-day price channel. However, it must confirmed. For a high-odds signal, that means the price must continue to trade above that breakout point the next day.

QQQ's price dropped back within the channel, so no confirmation.

For a symbol with low odds of success, confirmation would mean retreating back within the channel, but that doesn't apply here.

Another important point: A signal isn't complete until it is confirmed. Therefore, the odds of success are calculated only on confirmed signals. Unconfirmed signals such as QQQ's today don't affect the odds.

-- Tim Bovee, Portland, Oregon, May 28, 2015

References

My volatility trading rules can be read here.

Alerts

Two social media feeds provide notification whenever something new is posted.

• On Twitter: Follow Tim Bovee: https://twitter.com/TimBovee
• On Facebook, Like Private Trader: https://www.facebook.com/PrivateTrader

Disclaimer

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.

License



All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.Tss s ss'ss

Thursday's Prospects

On Wednesday, May 27:

Of 518 large-cap stocks and exchange-traded funds in my analytical universe, 12 broke beyond their 20-day price channels, eight to the upside and four to the downside.

One symbol with high odds of success survived initial screening,  having broken out to the upside. High-odds symbols are candidates for directional trades.

No symbols with low odds of success survived initial screening. Low-odds symbols are candidates for non-directional trades.

There are no prospects for trades coinciding with earnings announcements.

I shall do further analysis on Thursday, May 28.

Earnings season begins July 8, with peak announcements lasting for three weeks. Under the exclusion rule that forbids me from opening new positions in stocks within 30 days of an earnings announcement, in month before the season begins increasing numbers of symbols will be removed from my prospective trades list during initial screening. The rule doesn't apply to trades under my Volatility Rules.

First-round survivors

High-odds Bull QQQ

High-odds Bear (none)

Low-odds Bull (none)

Low-odds Bear (none)

Potential trades under my Volatility Rules, keyed to events

The dates are those of the events, all of them earns announcements. Events prior to the opening bell are marked "am", during the trading day "mid", and after the closing bell "pm".

Thursday pm (none)

Friday am (none)

Methodology

The stocks in my analytical universe all have analyst coverage through the stock-ranking company Zacks Investment Research. Not all of the exchange-traded funds are so covered.

I screen the symbols for historical odds of a profitable signal in the direction of the breakout for the past 12 months.

For symbols whose odds of success are in the top or bottom thirds, I next screen for suitability of the options grid and the the absence of an earnings announcement within the next 30 days.

-- Tim Bovee, Portland, Oregon, May 27, 2015

References

My trading rules can be read here.

Alerts

Two social media feeds provide notification whenever something new is posted.

• On Twitter: Follow Tim Bovee: https://twitter.com/TimBovee
• On Facebook, Like Private Trader: https://www.facebook.com/PrivateTrader

Disclaimer

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.

License



All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.Tss s ss'ss

Wednesday's Outcomes

I'm breaking off early because of a scheduling conflict. Here's how my day has gone:

I exited KORS for a massive loss and BABA for a smaller one.

I opened positions in COST, which publishes earnings tonight, and DAL, which was based on a trading signal.

-- Tim Bovee, Portland, Oregon, May 27, 2015

References

My volatility trading rules can be read here.

Alerts

Two social media feeds provide notification whenever something new is posted.

• On Twitter: Follow Tim Bovee: https://twitter.com/TimBovee
• On Facebook, Like Private Trader: https://www.facebook.com/PrivateTrader

Disclaimer

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.

License



All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.Tss s ss'ss

DAL Analysis

Update June 4, 2015: With less than two days left to trade before expiration, DAL slipped just below the lower boundary of the profit zone. I exited quickly, and profitably.

Shares rose by 2.4% over eight days, or a +109% annual rate. The options position produced a 16.7% yield on debit, for a +760% annual rate.

---

Delta Air Lines. Inc. (DAL), headquartered in Atlanta, Georgia, broke below its 20-day price channel on Tuesday and confirmed the bear signal the next day. The stock has low historical odds of successful bear signals, making it a candidate for a non-directional trade.

I shall use the JUN1 Weeklys series of options, which trades for the last time nine days hence, on June 5.

[DAL in Wikipedia]

DAL

DAL has sent four bear signals in the past year, with a success rate of only 25%. The one successful signal produced a 1.2% yield over 29 days. The three unsuccessful signals on average produced a 7.0% loss over 15 days.

Ranges

Click on chart to enlarge.

DAL at 11 a.m. New York time, 90 days 2-hour bars

Implied volatility stands at 36.3%, which is 2.7 times the VIX, a measure of volatility of the S&P 500 index. DAL’s volatility stands at the top of its most recent rise.

Ranges implied by options and the chart

Week	SD1 68.2%	SD2 95%	Chart
Upper	45.45	47.90	47.98
Lower	40.55	38.10	41.02
Gain/loss	5.7%	11.4%

Implied volatility 1 and 2 standard deviations; chart support and resistance
The Trade

I've skewed the range a bit to the downside to account for the bearishness in the general market.

Iron condor short the $44 calls and long the $45 calls,
short the $41 puts and long the $40 puts
sold for a credit and expiring June 6
Probability of expiring out-of-the-money

JUN1	Strike	OTM
Upper	44	66.3%
Lower	41	75.1%

The risk/reward ratio stands at 1.3:1. The premium is $0.42 ($0.27 for the calls and $0.15 for the puts), with the stock at $42.95.

Decision for My Account

I've opened a position in DAL as described above.

-- Tim Bovee, Portland, Oregon, May 27, 2015

References

My volatility trading rules can be read here.


Alerts

Two social media feeds provide notification whenever something new is posted.

• On Twitter, Follow Tim Bovee: https://twitter.com/TimBovee
• On Facebook, Like Private Trader: https://www.facebook.com/PrivateTrader

Disclaimer

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.

License



All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.

COST Analysis

Update 6/4/2015: As expiration approached, COST was moving swiftly toward the lower boundary of the profit zone. I exited my position in order to preserve my gains.

Shares declined  by 2.6% over seven days, or a -136.8% annual rate. The options position produced a 56.4% yield on debit, for a +2,941% annual rate.

---

The big-box discount chain Costco Wholesale Corp. (COST), headquartered in Issaquah, Washington, publishes earnings on Wednesday after the closing bell.

I shall use the JUN1 Weeklys series of options, which trades for the last time nine days hence, on June 5.

[COST in Wikipedia]

COST

Ranges

Click on chart to enlarge.

COST at 10:35 a.m. New York time, 90 days 2-hour bars

Implied volatility stands at 19.5%, which is 1.4 times the VIX, a measure of volatility of the S&P 500 index. COST’s volatility stands in the 76th percentile of its most recent rise.

Ranges implied by options and the chart

Week	SD1 68.2%	SD2 95%	Chart
Upper	148.39	152.81	154.23
Lower	139.57	135.15	138.91
Gain/loss	3.1%	6.1%

Implied volatility 1 and 2 standard deviations; chart support and resistance
The Trade

I've skewed the zone of profitability somewhat to the downside in order to account for the general bearish tone of the market, leaving $138 at the top of the one standard deviation range unprofitable. Moreover, 43 cents of the downside is also beyond the profit zone.

It's not an optimal position. However, I ought to get a bump from the collapse in volatility after the earnings announcement, and volatility itself, while high relative to its own past, is in absolute terms somewhat on the low side, which ought to help the chance that the price will stay within the profit zone.

Iron condor short the $147 calls and long the $149 calls,
short the $140 puts and long the $138 puts
sold for a credit and expiring June 6
Probability of expiring out-of-the-money

JUN1	Strike	OTM
Upper	147	70.3%
Lower	140	76%

The risk/reward ratio stands at 1.4:1. The premium is $0.78 ($0.50 for the calls and $0.28 for the puts), with the stock at $144.42.

Decision for My Account

I've opened a position as described above.

-- Tim Bovee, Portland, Oregon, May 27, 2015

References

My volatility trading rules can be read here.


Alerts

Two social media feeds provide notification whenever something new is posted.

• On Twitter, Follow Tim Bovee: https://twitter.com/TimBovee
• On Facebook, Like Private Trader: https://www.facebook.com/PrivateTrader

Disclaimer

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.

License



All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.

Wednesday's Agenda

The lone symbol to survive my screening of Tuesday's markets, DAL, has moved back within its 20-day price channel after breaking out into a bear signal. The pullback confirms DAL as a potential non-directional trade, since it has low historical odds a its bull signals being winners. I shall post an analysis today.

I had noted COST as a potential earnings play, but only provisionally, because of low open interest on the options series I planned to use. The liquidity of those  options has increased, and I shall post an analysis today.

-- Tim Bovee, Portland, Oregon, May 27, 2015

References

My volatility trading rules can be read here.

Alerts

Two social media feeds provide notification whenever something new is posted.

• On Twitter: Follow Tim Bovee: https://twitter.com/TimBovee
• On Facebook, Like Private Trader: https://www.facebook.com/PrivateTrader

Disclaimer

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.

License



All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.Tss s ss'ss

Wednesday's Prospects

On Tuesday, May 26:

Of 518 large-cap stocks and exchange-traded funds in my analytical universe, 21 broke beyond their 20-day price channels, !all to the downside.

No symbols with high odds of success survived initial screening. High-odds symbols are candidates for directional trades.

One symbol with low odds of success survived initial screening, having broken out to the downside. Low-odds symbols are candidates for non-directional trades.

Provisionally, there is one prospect for a trade coinciding with an earnings announcement under my Volatility Rules. The symbol's liquidity is marginal at best, and if I decide against a trade on Wednesday, I'll make note of the decision in my Wednesday's Agenda post.

I shall do further analysis on Wednesday, May 27.

Earnings season begins July 8, with peak announcements lasting for three weeks. Under the exclusion rule that forbids me from opening new positions in stocks within 30 days of an earnings announcement, in month before the season begins increasing numbers of symbols will be removed from my prospective trades list during initial screening. The rule doesn't apply to trades under my Volatility Rules.

First-round survivors

High-odds Bull (none)

High-odds Bear (none)

Low-odds Bull (none)

Low-odds Bear DAL

Potential trades under my Volatility Rules, keyed to events

The dates are those of the events, all of them earns announcements. Events prior to the opening bell are marked "am", during the trading day "mid", and after the closing bell "pm".

Wednesday pm COST

Thursday am (none)

Methodology

The stocks in my analytical universe all have analyst coverage through the stock-ranking company Zacks Investment Research. Not all of the exchange-traded funds are so covered.

I screen the symbols for historical odds of a profitable signal in the direction of the breakout for the past 12 months.

For symbols whose odds of success are in the top or bottom thirds, I next screen for suitability of the options grid and the the absence of an earnings announcement within the next 30 days.

-- Tim Bovee, Portland, Oregon, May 26, 2015

References

My trading rules can be read here.

Alerts

Two social media feeds provide notification whenever something new is posted.

• On Twitter: Follow Tim Bovee: https://twitter.com/TimBovee
• On Facebook, Like Private Trader: https://www.facebook.com/PrivateTrader

Disclaimer

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.

License



All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.Tss s ss'ss

Tuesday's Outcomes

Here's how my day went:

I exited two earnings plays profitably: BBY and HPQ.

I entered a new earnings play on KORS.

-- Tim Bovee, Portland, Oregon, May 26, 2015

References

My volatility trading rules can be read here.

Alerts

Two social media feeds provide notification whenever something new is posted.

• On Twitter: Follow Tim Bovee: https://twitter.com/TimBovee
• On Facebook, Like Private Trader: https://www.facebook.com/PrivateTrader

Disclaimer

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.

License



All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.Tss s ss'ss

KORS Analysis

Update 5/27/2015: KORS took the greatest fall in its history after earnings were published. With no reasonable hope of improvement between now and expiration at the end of the week, I took the loss and moved on.

The decline was well below the two standard deviation range, which encompassed 95% of expected trades. I think we can fairly all the event a Black Swan.

Shares declined by 20.9% over one day, or a -7,640% annual rate. The options position produced a 113.3% loss on debit, for a -41,367% annual rate.

---

The women's sportswear fashion design house and retail chain Michael Kors Holdings Ltd. (KORS), headquartered in London, publishes earnings on Wednesday prior to the opening bell.

I shall use the MAY5 Weeklys series of options, which trades for the last time three days hence, on May 29.

[KORS in Wikipedia]

KORS

Ranges

Click on chart to enlarge.

KORS at 10:40 a.m. New York time, 30 days hourly bars

The stock price peaked in February 2014 at $101.04 and has been on a steady decline ever since. Given that steady fall, the selection of a resistance level is somewhat arbitrary.

Implied volatility stands at 42.6%, which is 3.1 times the VIX, a measure of volatility of the S&P 500 index. KORS’s volatility stands in the 98th percentile of its most recent rise.

Ranges implied by options and the chart

Week	SD1 68.2%	SD2 95%	Chart
Upper	62.82	65.23	63.31
Lower	57.98	55.57	59.88
Gain/loss	4.0%	8.0%

Implied volatility 1 and 2 standard deviations; chart support and resistance
The Trade

Iron condor short the $63.50 calls and long the $65 calls,
short the $57 puts and long the $55.50 puts
sold for a credit and expiring May 30
Probability of expiring out-of-the-money

MAY5	Strike	OTM
Upper	63.5	71.0%
Lower	57	70.5%

A rare position where the reward is greater than the risk; the risk/reward ratio stands at 0.9:1. The premium is $0.75 ($0.36 for the calls and $0.39 for the puts).

Decision for My Account

I've opened a position in KORS as described above.

-- Tim Bovee, Portland, Oregon, May 26, 2015

References

My volatility trading rules can be read here.


Alerts

Two social media feeds provide notification whenever something new is posted.

• On Twitter, Follow Tim Bovee: https://twitter.com/TimBovee
• On Facebook, Like Private Trader: https://www.facebook.com/PrivateTrader

Disclaimer

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.

License



All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.

Tuesday's Prospects

Prior to the closing bell I shall post an analysis of KORS coinciding with the company's earnings announcement.

-- Tim Bovee, Portland, Oregon, May 26, 2015

References

My volatility trading rules can be read here.

Alerts

Two social media feeds provide notification whenever something new is posted.

• On Twitter: Follow Tim Bovee: https://twitter.com/TimBovee
• On Facebook, Like Private Trader: https://www.facebook.com/PrivateTrader

Disclaimer

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.

License



All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.Tss s ss'ss

The Week Ahead: GDP, durable goods, new homes

Markets in the  United States are closed on Monday for the Memorial Day holiday. Monday is a bank holiday in London. Tokyo and Sydney are open for business.

The second release of the first-quarter gross domestic product will be published Friday at 8:30 a.m. New York time. In the first release last April, GDP rose at an annual rate of 0.2%, slowing significantly from the prior quarter's 2.2% rate of increase.

Two other potential market movers will punctuate the week, on Tuesday: Durable goods orders at 8:30 a.m. and new home sales at 10 a.m.

Leading indicators (in descending order of importance):

The interest rate spread between 10-year Treasuries and the federal funds rate, reported continually during market hours.

The M2 money supply, at 4:30 p.m. Thursday.

The S&P 500 index, reported continually during market hours.

Average weekly initial jobless claims, at 8:30 a.m. Thursday. 

The index of consumer expectations from the Reuters/University of Michigan consumer sentiment report, at 10 a.m. Friday.

Other items of interest:

Tuesday: The S&P Case-Shiller home price index tracking prices in 20 metropolitan areas at 9 a.m., the Conference Board consumer confidence at 10 a.m. and the Dallas Federal Reserve manufacturing survey at 10:30 a.m.

Thursday:  The National Association of Realtors pending home sales index at 10 a.m. and the Energy Information Administration petroleum inventories at 11 a.m.

Friday: The Institute of Supply Management's Chicago purchasing managers index at 9:45 a.m.

I also keep an eye on the Baltic Dry Index, updated daily, and the 5-year implied inflation rate based on U.S. Treasury yields, which presently stands at 1.43%.

Treasury Debt

Bills

• 4-week: Announcement Tuesday 11 a.m., auction Wednesday 11:30 a.m., settlement Thursday
• 3-month: Auction Tuesday 11:30 a.m., announcement Thursday 11 a.m.
• 6-month: Auction Tuesday 11:30 a.m., announcement Thursday 11 a.m.
• 52-week: Announcement Wednesday 11:30 a.m., settlement Thursday.

Notes

• 2-year: Auction Tuesday 1 p.m.
• 2-year floating rate: Auction Wednesday 1 p.m.
• 5-year: Auction Wednesday 1 p.m.
• 7-year: Auction Thursday 1 p.m.

Bonds

• None.

TIPS

• None.

Fedsters

Fed Vice Chairman Stanley Fischer, a member of the Federal Open Market Committee, speaks in Tel Aviv, Israel on Tuesday at 12:30 p.m. New York time, at a conference honoring Professor Haim Ben-Shahar. Fischer's subject: "The Federal Reserve and the Global Economy".

Other FOMC members taking to the podium are Richmond Fed Pres. Jeffrey Lacker on Tuesday and San Francisco Fed Pres. John Williams on Thursday.

An FOMC alternate, Cleveland Fed Pres. Loretta Mester, speaks Monday in Reykjavik, Iceland.

One other of the Fed glitterati, Minneapolis Fed Pres. Narayana Kocherlakota, who is unassociated with the FOMC this year, delivers a speech on Thursday.

Analytical universe

This week I shall be analyzing new bull and bear signals among 518 large-cap stocks and exchange-traded funds.

Trading calendar

By my rules for shorter-term trades of Monthly options, I'm trading June options and later for the short legs of vertical, diagonal and calendar spreads and covered calls, and for all legs of butterfly spreads and iron condors. I'm trading September options and later for single calls and puts as well as straddles. Shares and Weekly options, of course, are good at any time.

Good trading.

-- Tim Bovee, Portland, Oregon, May 24, 2015

References

My trading rules can be read here.

Alerts

Two social media feeds provide notification whenever something new is posted.

• On Twitter, Follow Tim Bovee: https://twitter.com/TimBovee
• On Facebook, Like Private Trader: https://www.facebook.com/PrivateTrader

License



All content on Tim Bovee, Private Trader by Tim Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.