SPY Bull Put Expiration and Insurance Purchases

Around July 8, SPY fell below $205, threatening the short strike of $202. Along with the threats for the XLE bull put spreads in the portfolio, I decided to purchase some insurance to mitigate some risks. I analyzed the SPY chart and felt there might be a short term descending triangle pattern as shown below. Thus I bought 2 SPY Aug21 $198 put for $2.74 triggered at SPY below $205.06.

I used a spreadsheet to calculate my entry, stop and target points, as well as the reward to risk ration as shown below. In the end, this pattern failed and I sold the put at $1.2 after SPY gapped up on July 13. The insurance loss was $174 x 2 = $348. Thus the July SPY position had a minor loss $12 (=348 - 6 x 56) after SPY puts expired worthless yesterday.

Short Stock	Price
ATR	2.19
Swing low/Breakout	205.28
Resistance	208.02
Trade Trigger - Below prior day low by 10% ATR	205.061
Entry limit order - Buy stop limit at 10% ATR below trigger	204.842
Initial Stop - Sell stop market is higher value of (1) 0.1 ATR above resistance, (2) Trigger price + ATR	208.239
Price to set break-even stop - equal Entry limit - (Initial Stop -Buy stop limit) - Drop new BE stop after a new swing high of 5 days+ is made	201.445
Target - Lower horizontal support - Range % within down trend line in last 5 weeks - Sell half & Trailing another half at 0.1 ATR above prior swing high or break-even - Sell last half at new target based on new pattern or larger time pattern (whichever is closer)	198.5263
Reward/Risk ratio - Must be greater than 2	1.8592028

In the meantime, the XLE was also moving against my position after my adjustment last time. Since I have a larger position on XLE, I felt safer to insure for this position in order to reduce risk. It looked to me that USO was falling faster than XLE. So I decided to use USO put for the insurance to trade its low base break down pattern. My order was triggered on Friday as USO fell below $16.97. I bought 4 USO Aug21 $18 puts for $1.36. I plan to sell the puts if USO rises above $17.97 by setting a GTC conditional order for stop loss. My other trade management rules are shown in the table below. If XLE continues to show weakness, I might have to add more insurance to limit overall risks. Due to the high level of risked capital for XLE, I’m withholding any new entries in case I need additional capital for another round of adjustment.

Short Stock	Price
ATR	0.58
Swing low/Breakout	17.03
Resistance	17.91
Trade Trigger - Below prior day low by 10% ATR	16.972
Entry limit order - Buy stop limit at 10% ATR below trigger	16.914
Initial Stop - Sell stop market is higher value of (1) 0.1 ATR above resistance, (2) Trigger price + ATR	17.968
Price to set break-even stop - equal Entry limit - (Initial Stop -Buy stop limit) - Drop new BE stop after a new swing high of 5 days+ is made	15.86
Target - Lower horizontal support - Range % within down trend line in last 5 weeks - Sell half & Trailing another half at 0.1 ATR above prior swing high or break-even - Sell last half at new target based on new pattern or larger time pattern (whichever is closer)	14.08381
Reward/Risk ratio - Must be greater than 2	2.6851898

Are there any ETF's remaining to be heated as SPY breaking into new highs

With the red hot market today, are there anything left with good potential for long term investment but not too overbought? I found two ETF's that looked interesting: USO (Crude oil) & DXJ (Japanese stock market). Both of them have smaller correlations with the US stock market performance.

With energy stocks performing well and US dollar falling, I don't think USO will keep dropping, particularly if Chinese economy remains healthy. My guess of the weak USO is due to the improved prospects of peace in middle east (Iran). I read one article stating oil price could drop 20% or more if Iran's oil is available. That may lead USO to $29 level from current $36.45, a $7.00 drop. At current option price, it will take about 1 year of selling call options for around $0.40 premiums to break-even, if one enters USO from selling puts with a break-even price of around $35.00. With the outline shown in the study, it's probably worth try to sell some puts on USO soon if USO price rises next day.

DXJ chart looks similar to that of EWJ which follows the Japanese stock market index I believe. I choose DXJ because it's of higher price with more option strikes. My understanding is that they have an export driven economy which benefit from falling yen FXY: It's beneficial for the Japanese market if US dollar UUP behaves stronger than FXY. The low interest rate environment in Japan should be reflected in the rising of Japanese bond GJBL. As shown in the 2nd page of the study, Japanese bound ETF JGBL is currently outperforming US Bond. So it looks to me that Japanese market may continue to perform well since it shot up about one year ago when the current Japanese prime minister adopted a new economic policy to pump even more money into its already heavy debt economy.