WHAT IS THE WORTH OF MONEY?
Have you ever asked yourself this question?
I just finished watching the final chapter of Squid Game and this question pondered in my mind. In the games each of them had their "Purpose" for the money and some will do anything including killing others to get to the money. The show is depicting it on the extreme side (ie. killing to get it) but in the real world it may be working hard to get it.
Just like any of us, we are striving our best to achieve success and the rewards in monetary terms, whether it is in your career or even your business. In pursuit of this, your objective may be as simple as earning a living, to buy a new house, a new car, putting up an education fund or saving for your retirement. These are the goals which we are striving to achieve and this is the "Worth of Money". Which are the things that "money" can get you as some of the examples I mentioned earlier.
In the game Player 456 won (Spoiler.....😛) and do you know the purpose Player 456 entered the game? It was to get the money for her ailing mother's medical bill. And when he returned with 45.6 billion WON prize money, he saw his mother had already passed away. And when that happened the 45.6 billion was no longer worth anything to him because the "Purpose" was gone. He did not spend a single cent from that prize because he no longer needed the money.
So what do this tell us? Money is not worth anything unless you have a purpose for it. And in order for us to strive to achieve success we first need to have a PURPOSE and then work towards achieving the monetary success to fulfill our PURPOSE. This is what drives us forward and without this it is likely we will drift around in circles.
Focus on your PURPOSE and achievement is just a step away with each step forward....
MARKET UPDATE
SPX - All Time High 4560...
Breaking past EMA50
SPX reach ATH once again at 4560
If you compare all the other retracements this year, the current one is the most cluttered. The market is indecisive whether it should just bounce back up or down. It had to go through 3 clear bounces before it hits back above the previous ATH.
And when it reached ATH, it has to show a small but constipated red bar. You can see that last Friday, within minutes after it reached ATH at 4560, SPX dropped down 64 points but managed to recover this towards closing.
SPX has gone up 7 consecutive days strongly and the red candle broke the streak. It may well look into some profit taking in many of the stocks which has risen during this period before it can go further up. A retracement of 50 to 100 points would be something good for the market before it move up again for the next round of higher high and higher low upswings.
times SPX went on a 3 day up streak and finally breached the 50 EMA mark to breach the previous high of 4465 during end September.
However, if you look at the price action, it still looks as if it is still sitting on the high side of a sideway pattern which started in End of September. It would be crucial if the trend can continue to breakout above the previous high and then go higher beyond the 4465 level.
The next threshold to break after this is 4546. The earnings season has also started and this may well be a catalyst for the market to go higher. The major banks has already made better than forecast results which is a good start to create a more positive market sentiment.
NDX
NDX inched higher but closed red last Friday
NDX closed lower on Friday at 15355 slightly below the previous retracement high of 15357. Just like SPX, the strong rebounce for the week seemed to tire off end of the week. Which could see it continuing towards the next week as the earnings effects for some of the stocks last week had not only affected its own stocks but similar stocks in the same business immediately after the announcement. One example is SNAP's 26% massive drop had affected stocks like Facebook and Twitter. Having been in the same space and similar revenue model relying on advertisement spending being affected by changes in the way how users can update their ad view tracking in the new IOS updates.
Besides that shortages in the chips has also affected the earnings of companies like Intel, which had more than a 3 standard deviation move after earnings shaving off 11+% of its stock price. This may not bone well for other companies such as Apple who are also facing chips shortages which is affecting its production output. Apple is expected to announce earnings on 28 October.
On the other side, AMZN had also sold off almost 100 points on Friday. The shortage of labour and also supply chain issues may result in difficulties fulfilling orders during the year end shopping peak season.
It is still going to be a challenging week ahead for Nasdaq and it is not all clear skies ahead towards the year end.
On the other side of the world, the past 2 weeks steep surge of the Chinese stocks has seen it reaching its top as most of the stocks has seen some retracement in the last 2 days of the week. Next week the movements may be mixed with some bull and bear putting up a good fight and lets see who comes out as winners.
CSP PORTFOLIO PERFORMANCE (UP 27.2%YTD)
(Portfolio performance is on MYstylework's Portfolio and is not a recommendation to buy and for informational purposes only. You are adviced to seek your own professional adviser's views and perform own due diligence when evaluating any stock, options or investment trades)
At certain opportune times, we will take it to our advantage to rake in the premiums well above our target of 2% a month. The trades we did on KWEB all expired worthless on 22 October taking in the average returns of 1.8% to 2.8% between 4 days to 8 days trade. Unfortunately, the price has shot up quite fast after Monday, we could not load any more trades at a safe strike. We will likely wait for a retracement to price of 51 before we evaluate any more new trades. KWEB is now trading at 52.78. As we see BABA and the rest of the component stocks like Tencent, Meituan, Bilibili, Pinduoduo, Netease, retracing slightly after a huge runup in the past2 weeks, the opportunity will be there soon.
YTD returns is now at 27.2% averaging around 2.7% per month as we run towards end of October. The returns since inception of the portfolio in August 2020 todate is 61.9% while S&P returns is trailing at 37.5%. Our portfolio beats S&P returns by 65%, which proves that by using our simple Framework you can generate better than market returns by really a lot. Average trade per month is only 10 trades, and for the time spent of not more than 1-2 hours a month, it is definitely worthwhile.
RIGHT TIME RIGHT PLACE
To win a war is not about strength or might. It is all about deploying the right strategies at the right time. The same goes in trading Options. With the same stock, you may use different strategies during different times and deploying the correct one may give you a better winning advantage.
One of the most important metrics to decide which strategy to deploy is Implied Volatility. At times of high IV, we tend to deploy credit strategies and at time of low IV we tend to deploy debit strategies. This is because when IV are high, options premiums are expensive and if we sell options means we get more premium and if we buy options, it will be more expensive making it less attractive for debit trades.
The opposite is important when we exit trades, ie. exit credit trades when IV is low and exit debit trades when IV is high.
Other things we can look at is when to deploy debit strategies (such as calls/puts or debit spreads). We tend to deploy debit strategies when we see an opportunity for an imminent or high probability that the stock will go up. Because we need 2 factor to move fast enough into our trade direction, ie. price and time. If we don't get this quick enough, highly likely we will end up in a losing trade as we will lose the option value due to the Theta decay.
Even at times if the price action is undecisive and moving sideways, we can deploy neutral strategies to our advantage, such as an Iron Condor or a Calendar Spread.
And if we are slightly neutral to directional biased then a Diagonal Spread or even naked puts would be appropriate.
By having a wide arsenal of strategies we can use them appropriately on any stock. You can even deploy various strategies on some of your favourite stock in your portfolio as you get familiar with that stock's price action and trading pattern.
On returns and risk side, various strategies will give you different returns and risk. You could also use this to ensure optimum use of capital and also manage the risk appropriately and sizing trades.
Once you master the various option strategies and understand their characteristics, you will have in your arsenal a wide array of weapons and be able to deploy the appropriate strategy at the right time to your advantage.
Deploying The Right One At tThe Right Time
FREE iPhone 13 Challenge
After 4 weeks, we are harvesting the first trade which is a Jade Lizzard. We tried to exit the full trade but was unsuccessful. So we partially the trade closing the Bear Call Spread as that portion of the strategy is challenged as the stock price breached the lower short strike. the balance leg which is a short put is almost reaching its max profit and we are just putting in a 0.02 closing order which should be filled in the next days as the expiry is at the end of this week, 29 Oct.
As we are reaching earnings date, we would also exit Trade 2 and 3 in the next days.
For those who have not registered for the iPhone 13 Challenge, the registration link is here [Register Here]. We will share the trade entries when we do a trade and also explain in detail the executed strategy in a video at the Challenge Members Area.
TRADERS TALK
Did you hear last week's Traders Talk?
I was speaking on why you should not invest in property but instead learn how to buy property. Is there a difference, yes for sure!!! Listen to Traders Talk Series 19 if you have not done so. View Past Traders Talk
I have even got the highlights here for a sneak peak...Sneak Peak 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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