A WHOLE NEW WORLD...
Recently, I read some news that people have refused to go back to office to work. I don't blame them as for almost 2 years into the pandemic, we are asking for a change again now right when they start to be accustomed to the flexibility of being able to work from home and make the same earnings.
For most who have worked from home especially those with children find it more fulfilling relationship and well worth time spent during this time, unless your child is driving you nuts and you can't wait to get out of the house. But I guess for all, it is ok and you get a notion that there is really more in life than doing a 9-5 thing. The only reason is of course the financial fulfilment in a job and if not because of that you would rather stay home and do the stuff you love.
For many, it was also during this time they saw much more opportunities to earn an income without even getting out of the house. 1st is of course, the current job which moved out from office to home creating a new dimension that they can get the same done whether in or out of office. 2nd is because of the time saved to commute to work, they can get much more work done within the day and free themselves with more time to do other things. Some people took a second job, some people took up trading and some even took up their hobbies and turned it into a side business. While these started small, a lot of these transformed into a full blown income stream which had matched or even surpassed their 9-5 salary. Hence, perspective have changed if a traditional 9-5 job is something which they still want to pursue and when the Bosses asked then to go back into office, they start to think twice and some even thrown in the towel and continued to enjoy their new freedom without sacrificing financially.
Have the past 2 years changed your perspective in life? has it shown you what is your priority in life? Have you found new financial opportunities or known any which will help you in the next years? I hope it did because it will definitely be a "Whole New World" for you and your family, a better and brighter one.
SPX
SPX retraced slightly by 57 points during the week as it failed to breach the 4600 level, forming a strong resistance level. Nevertheless, we also see that the 200 MA level forms a strong support level as the last 3 days it has been trading around this range.
As much as the market wants to gear upwards to higher highs, the market sentiment on the bears is still strong. VIX moved up 1.55 points for the week, with the highest peak for the week 5.16 points up, a whopping 26% increased in volatility.
As said, this is in a week that there was not much bad news flows. Don't mean to be a pessimist but a really bad news will send the market tumbling for safety. As said, if you are in long positions, catch your profits quick and protect it at all times.
This week, we expect SPX to be rangebound between 4400 (around 50MA) and 4600 levels (last week's high).
NDX
NDX closed 14327, right at the 14300 support level which we mentioned last week. It is now at a cross road. A critical bull and bear fight. Because if it falls below this level, the next down level is way back to 13000! if it goes up, the next resistance is at 15200 level, the 200 MA.
I could say, the tug of war would likely continue in the next weeks with the lowest at 13000 and highest 16,000.
Nasdaq futures opened slightly green on Sunday evening after a heavy sell down towards close last Friday.
ON NEUTRAL GROUNDS....
One thing smart about the Chinese government is when it should be taking sides. When the whole world seems to be supporting the oppressed, they would not stick its neck out to support the oppressor, however good friends they may seem before this. They sent out a message you are on your own buddy!
The same thing in trading. At times, we do not know whether we want to support the bulls or the bears. The market is filled with uncertainties that things can go south or can even shoot to the roof when the skies are clear. But such situation does not mean that you need to go on the sides to wait. Because in Options, you can trade both ways at the same time and even profit if the market does not go anywhere. How, we call this Neural Strategies. One of the simplest form of defined risk neutral strategy is an Iron Condor. Basically, it is merely a Bull Put Spread + A Bear Call Spread added together. We win if the price within expiry stays within the short call and the short put. We benefit from time decay when prices moves within this range till expiry.
Exit normally when we achieve 50% of profit target and cut loss at 100% of the premium received. Probability of profit would be around 70-80% if we trade at Delta 20 strikes on both put and call. Risk to reward is 1:3 no more than 1:4. Entry when IV is high and stocks/index IV Rank above 20.
Below some backtesting of Iron Condors around Delta 20 assuming entry on 10 February around 45 DTE ie. 14 April DTE. The prices on 8 April, 1 week before expiry and the P/L positions below. Almost all positions are positive, average returns 31% for 38 days. Considering, VIX has traded at high of 38 and lows of 18, a 20 points market volatility difference and you can still make 31% returns on this strategy is actually really awesome!
TRADERS TALK
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DISCLOSURES
Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options: https://www.theocc.com/components/docs/riskstoc.pdf
MYstyework is an Online Financial Literacy Educator and materials provided is solely by MYstylework and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, transaction or investment strategy is suitable for any person. Trading securities can involve high risk and the loss of any funds invested. MYstylework, through its contents, does not provide investment or financial advice or make investment recommendations. Investment information provided may not be appropriate for all investors, and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. MYstylework is not in the business of transacting securities trades or an investment adviser.
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