Options Trading Newsletter - Issue #107
Weekends are too short...
Weekends are too short…
Before you know it, you are back to the grinding board. Don’t you find weekend too short? Why don’t they put 5 days weekends and 2 days work, that would be really nice…😊
Conventionally, we have been doing this for donkey years and it seems too long to wait till retirement to have 5 days off or even 7 days off because by that time, we would be too old and frail to enjoy it. Why not now?
With availability of AI, perhaps some of our work can be automated, or even replaced! If your work gets easier, your pay will be cut and if you are replaced, then that’s bad because you will stop generating income and you will be begging to work for 7 days a week.
You see we are all in a dilemma, when we need to work, we don’t want to work and when we don’t need to work, we want to work…why? When you work, you may feel tired and the only motivation is the paycheck and when you don’t need to work you don’t get the paycheck. I think this is what’s happening most of the time. Few people get accomplishment in their job unless they are paid excessively that they never need to worry about money. For those who are not in this category, learning to trade may be one good way to lighten the financial burden or even a way to replace your 5 days work week. If your targets are not too high, making $100 a day trading is possible.
We don’t normally day trade (buy and sell on same day) but just did to see if we put in some hours a day, if we can make some decent money with a small capital, around $10,000. Of course you can! With the right knowledge and risk management, it’s not that difficult, we shared some results over the past weeks. It takes a bit of time and patience and if you like it, it sure beats 5 days a week routine. Maybe with day trading, you could get off work, in some minutes or half the normal time, if your daily targets are achieved. Like I said, the best skill I got was to learn how to trade the markets and not really a university degree that put me on the desk 9-5, 5 days a week! 😉
SPX (4109)
Breaking all possible resistance last week, 4000, 4100 and it’s all a breeze. SPX had rallied whole 3 weeks now as they put the banking failures behind them as the market expects that the Fed will pause the rate hikes in May and would start to reduce rates as soon as 2023 as opposed to earlier forecast of 2024. That gave the bulls the power to rally in the past weeks.
Are we there yet? Depends, as we have yet to see higher highs in the weekly charts. If we breach the next level of 4195, then it’s highly likely that the bulls will maintain control for a while. The bonds pricing is already starting to price this as we see that it moved higher in the last weeks.
The next deciding factor would be CPI coming 12 April will be a booster for the market or a continuing anchor for a sideway market.
The trading range for the week is between 4000 and 4200.
NDX (13181)
Are we in a bull run? Because NDX has gone up 26% from its October low. Last week, we saw that it had strongly breached 12880 level, the previous high with an extremely bullish weekly pinbar. No double top formation so far, it looks good. Wait for this week to see the price action if it can stay above 12880 level and if that forms a support line for the NDX.
NDX is leading the way for a market reversal as the rate hike expectation is already been put to history and QE is expected to start within 2023 itself. It lead the market to a bear market and now it is leading it back to a bull run perhaps. Lets see.
The trading range for the week is between 12750 and 13600.
HANG SENG INDEX (20400)
For 3 weeks, HSI inched higher and now cleared it’s head above the 20,000 mark, which looks positive for the index. This Thursday, the Caixin Services PMI is going to be announced. A positive results would push the market higher in April.
Separately, last week we saw some big tech announcing business splits and spin offs in Alibaba and JD which was taken positively by the market. We could expect more to come as it seems that corporates are probably expected to reduce from a large conglomerate into separate smaller organizations within a niche sector.
ARE WE ON TARGET, FOR FREE PETROL?
In the past several months since October 2022, we have been covering many oil play trades which worked well so far. As the markets continued to be volatile, we moved some of our trades to more predictable and safer plays which we shared all of them either through our Weekly Options Newsletter, Quick Bites Newsletter, Traders Talk or even Mr Chew’s Tik Tok platform. These include VIX Plays, GLD IV Plays and Oil IC Neutral Plays. If you set just these predictable plays in your trading plan alone, generating some fixed monthly income on these is not too bad with some small capital, could really help to fight inflation in a way.
The ongoing XOP trade which we shared about a month ago should be going well now as today OPEC announced production cuts which should be positive for oil prices. As we said earlier, although oil price was falling and so did most of the oil and gas related stocks, we should not panic even though the Bull Put Spreads of our Iron Condor leg has gone ITM for some weeks and we should continue to keep that leg of the trade for it to comeback OTM. With a push in oil prices up, we should see some rally ahead on XOP. We have legged out of the Bear Call Spread of the Iron Condor earlier with almost max profits, ($0.03 left when we closed it) and the movement up, would only benefit us now and we can probably exit earlier, if we decide to. (18 more days to expiry).
Our other Iron Condor on XLE was closed fully last Friday, with almost max profits. Legged out of Call Spread Side on 13 March, $0.06 and Closed Bull Put Spread $0.01 on expiry day, which means, net premium earned was $0.85 per contract. This is more than enough to cover for March and April petrol consumption, not to say we have other trades ongoing for XOP and even XOM.
Last week, we gave heads up on VIX play possible setting up again with volatility expected to spike on 12 April on CPI and VIX prices now is coming down with the rally. Also, what we covered last week another IV Play in GLD possibly setting up for the same event.
How to use this in your trading plan?
Use predictable price movements in commodities which we can use time to our advantage for the prices of commodities to move around within a band to set-up monthly regular trades that will earn us daily income through theta decay using neutral strategies such as an Iron Condor.😉
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TIKTOK VIDEOS
Understanding IV - Part 1 - Understanding IV relation to options premium and how to read different measurement of IVs.
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Understanding IV- Part 2 - How to use IV to trade GLD ETF.
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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.
Weekends are way to short. I am not excited about my job at all next week. It pays the bills. But excited to trade again!
Rolled puts up? your short strike is -118, mine still at -121 with no adjustments.
did you roll your calls down because it's very likely to go ITM with a POP in prices up today. our short call strike spread was -152C/+155C which we closed that leg out earlier. Be careful on your trade as your 12% gains will evaporate very quickly after today :( . the price trend will reverse bullish, that's why i did not adjust anything and let it go down ITM on put side and when it reverse on oversold, i get out or it nears expiry by then.