Options Trading Newsletter - Issue #135 [CIVILISATION... (Options Today - Iron Condor on QQQ)]
CIVILISATION... [Option Today - Iron Condor on QQQ]
CIVILISATION… [Options Today - Iron Condor on QQQ)]
We are in the 21st Century now and yet our civilisation behave like we are still living in the past. Despite the wealth of history and lessons learnt from past wars, It’s sad to see that people still does not give value to “life”. Whether it is for power, greed, religion, vengeance… the notion that we must resolve conflict by killing the other is a painful reality that some people are still living in a barbaric manner.
History has shown us countless examples of the horrific effects of wars and yet we find ourselves facing fresh conflicts that threaten to plunge us back into darkness. The recent war between Israel-Hamas is yet a bitter fight that rocked the world even when the other (Russian-Ukraine) had not even ended. It’s not our intention to pass judgement on who is right or wrong, but it is our duty to assert that if the path of "war” exist, it won’t be long that we are locked in a deadly spiral.
Let’s not forget the lessons from history where wars have left scars on humanity that continues to haunt us, let alone for those who have personally experience one which have led to death of a loved one. Let those be memories and not any more people who have to live through such ordeal.
Let’s all hope for peace regardless of origin, race or borders. After all, we all live in the same little world. If you do not share it together and live in harmony, there’s no way that we can split it apart as that will just result in destruction. Until a day where we can have the ability to find another frontier beyond earth, we must learn to coexist peacefully on this planet, for this is the only home we have.
Lets pray for all those affected by war and hope peace will soon prevail for all.
“Make Love, Not War”
SPX (4327)
The market doesn’t care… even with the geopolitical conflict brewing in the Middle East, the market went up 19 points (0.45%), in fact even higher till Wednesday before the pullback end of the week. Save for oil, which shot up by 5.9% for the week arising from this.
Does it mean we can go bullish on the market? Not really. We still see weakness in the market as it can’t breach above the daily price gap 4375-4401. Until the price breaches above 4400 level, we may still see a sideway market between 4400 to 4200.
The market pulled back after Thursday’s announcement of CPI, as the CPI came in higher than expected at 3.7% vs 3.6%. Lucky however, Core CPI remained as per forecast at 0.3%, as otherwise, it could have done more damage to the market. The probability of the rates staying put on Nov 1 went down by 2%. We can continue to monitor this to gauge the market sentiments on rates.
Trade range for the week is 4250 to 4400.
The TNX went down by 3.2% this week, giving a pump on the Bond market. TLT went up by over 3% last week. TNX and TLT has an inverse correlation.
GLD has got it’s shine this week, rallying over 5% this week, just like oil (liquid gold). Yes, the support at 168 did hold strong and with the excuse of save heaven assets due to the geopolitical issues, that gave a big bump up. But we see some resistance at 185 levels if the trend up continues.
Recall last week we said earlier that we were assigned for our strangle trades at 177? Yes, these all went back above our assigned prices. As the push down and push up was way too fast, we still stayed out of further strangle plays for now. Although, it still proves that we can still get out of a losing trade by trade management, it’s still not our target to get into losing trade and getout of it through management 😂.
NDX (14995)
With rates in question again, NDX stopped advancing and made a pullback from the week’s high pre CPI. There’s not much data release for the week, save for retail sales on Tuesday and Unemployment Claim on Thursday.
However, earnings season has started again and the first bank release by JPM was quite positive. Nevertheless, we look more on the other corporate sector which relies more on consumer and corporate spendings rather than those related to interest which is clearly rising till 3rd quarter of 2024. As most corporates were less bullish last quarter, a higher than expected results would again give a push up for the market.
More bank earnings are expected this week, First Bank on Monday and BAC on Tuesday. NFLX and TSLA is expected on Wednesday after close.
The NDX weekly have 2 key points to monitor, the resistance level of 15618 and support level of 14432. With NDX in the middle of this range, it’s not a bad idea to go into a neutral play for this week.
Trading range for the week is between 14750 to 15550.
HANG SENG INDEX (17813)
HSI sold off together with the US market after CPI announcement. The sentiment is still bearish for the HSI market as any rallies were quickly sold off. We need to see HSI break back above 18000 level before going long on HSI.
OPTIONS TODAY [IRON CONDOR ON QQQ]
VIS spiked up to 20 last week. The increase in volatility is good for premium selling. The 5 Days IV Change for QQQ also increased by 1.7% with the IV Rank now at 29.2.
Price wise, just like NDX, QQQ ($365.28) is now sitting in the middle of the resistance (381) and support level (351). This is a good spot for a neutral position and use time factor to let the price move up or down and hit the support/resistance levels and gets bounced off by the time the trade is nearing expiry.
Going directional now is too uncertain with the ongoing geopolitical conflict in Middle East which may bring the market lower in case any major country steps into the conflict or the lingering 1 November Fed Fund Meeting which may either bring the market to either side. So at best, we play along with direction either side and let the support and resistance level reverse the direction by itself when hit.
Trade Entry (Nov 17 expiry)
To reduce the risk, we reduce the width of the Iron Condor to #3 wide by adjusting a bit the strikes.
Sell a Put at 348 (Delta 25) and Buy a Put at 345 - premium $0.53
Sell a Call at 381 (Delta 23) and Buy a Call at 384 - premium $0.79
Total premium collected is $1.32 with a Max Loss of $1.68
(Adjust as appropriate during market opening today)
Trade Management
No real trade management required but just let the trade playout its time. Exit when we reach 50% of the profit target.
OPTIONS TODAY [PAST TRADES - EARNINGS PLAY ON AAPL]
AAPL Earnings Play - We loss on the direction of the trade but won on the strategy used as AAPL went back to 180 last week. Our trade management got us out of the trade generating some profits at the end of the day.
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