Feeling good…
It felt good last week as I had travelled to Japan for the first time after 3 years. As you know Japan reopened sometime in October last year without any travel restrictions or hard rules on Covid. There are just so many people there, and getting out of the airport immigration took more than one hour.
The first thing I did was of course to savour on the food, sashimi, tempura and going together with Japanese beer. Weather is great at 14-15 degrees as opposed to the heat back home. We also did a live Traders Talk show out of our little hotel room and after that some light trading. That’s the great thing about knowing how to trade to generate income. There’s no fixed time or location that bounds you and you can practically do it at leisure as and when you want to. Unlike a traditional job, you will have to stick to your chair and clocking in 9-5, 5 days a week.
While travelling, you are doing it after you have enjoyed the sights, shopping and food. best of all, if you can make back some of what you spent and even better make more to spend the next day! That’s the greatest feeling you could have when trading during your travel. It’s not really work but something you would love to do and spend a little time while resting in your hotel room unwinding.
Frankly, there is no other work I would trade place with and it’s the best thing I have learnt that will stick to me for life.
"The purpose of our lives is to be happy." - Dalai Lama.
SPX (3916)
Surprisingly SPX was up for the week despite all the turmoil in the banking sector. The contagion went on from 3 US banks and almost the 4th, First Republic Bank before 30 billion infusion from major US banks. The European banks are not spared when Credit Suisse was the first one to suffer a fall before SNB infused liquidity to stop it from failing.
The irony of you taking out your deposits from “smaller banks” into “bigger banks” to find out that they return these back to the “smaller banks”, making it look like a big ponzi scheme…when the deposit stops the bubble burst and lets do all good and pass it around. 😂
SPX gave way on Friday, after the relief rally from the backstops taken by the Fed and CPI which came out as expected 6%, probably to prepare for the upcoming Fed Rate hike on 22 March trading day. The consensus now came down from 50 bps back to 25 bps. I do not think that it will go down to zero despite bank failures, inflation is still sticky at 6%.
It would not be surprising that we see SPX coming back to 3800 level where we almost touched on Monday last week.
The trading range for the week is between 3750 and 4000.
NDX (12519)
NDX was up 5.8% for the week with a more positive note that the Fed won’t be as aggressive with its rate hikes to avoid a bigger disaster in the banking sector. Whilst the Fed has given some fresh lives on the banks or as other people say, more to help out the rich which got their money stuck during the turmoil, the market is not out of the woods. 12800 as the next resistance up and 11700 as the next support down.
The trading range for the week is between 11900 and 13250.
HANG SENG INDEX (19518)
HSI is holding its position for now above 19000 levels and last Friday broken up above 19303 support level. Not the most bullish daily candle on Friday as there was really 2 sided action between the bulls and bears as it ended like in a draw in between.
We will look at now if it can breakout within the range trade of between 19100 and 19850.
TO ADJUST OR NOT TO ADJUST…
We mentioned many times adjustments is one element that we need to learn when trading options, especially when we are doing credit trades. There are few things which people often ask on adjustments.
How to adjust?
When to adjust?
Will adjustment increase or decrease risk?
How to adjust?
Adjustment is nothing more than closing the current position and opening a new one at the same time.
We can adjust a few things.
#1 Duration - extending duration with no change or change in strike price
#2 Strikes - changing strikes, either up or down or widening/narrowing strikes.
When to adjust?
We tend to adjust when our position is challenged. Depending on what strategies we use, the timing on when to adjust defers.
We will in this example, use one of our Trade Digest trades which we did during Traders Talk on XOP. We did the Iron Condor trade on 28 February, when the stock price was around 134. Today the price is 117.66.
Our trade entry was, -121P/+118P & -152C/+155C for $105, max loss $195.
The Bull Put Spread ( -121P/+118P) of the Iron Condor is fully ITM.
There is still 33 days till expiry. We are 20 days into the trade.
So do we adjust now or not? Few things we consider to decide on this…
Defined or undefined risk trade - In below adjustment guide, we will explain adjustments for a defined risk trade.
As we know our max loss on entry, so the risk is controlled. There is no problem if we run the trade without any adjustments. However, if we want to adjust, here are a few things to consider when our strikes gets ITM.
#1 Remaining days to expiry (DTE), we tend to leave the trade unadjusted if we have more than 21 DTE. If DTE is less than 21 days, we can adjust by rolling the trade forward in time for additional credit. The deeper we are ITM, the lower possibility we can get a credit for rolling. The longer we roll, the higher credit we may get, but we tend not to roll a trade longer than the next month expiry.
#2 How deep are our strikes breached. Follow rule #1 if the stock price is between the short strike and the long strike and roll the trade forward without any change in strike price. If both the short/long strikes are breached, and if we cannot roll the trade forward with a credit, we can consider paying a little debit to buy time. Note however, paying to roll will increase your risk as you are changing the defined risk trade max loss to a higher max loss from entry due to the debit paid. Alternatively, you may also widen the strikes of the spread to avoid a debit paid and continue to get more credit. Notwithstanding, getting more credit on a trade, widening the strikes will also increase the max risk of trade.
#3 Using technical analysis, to consider if we want to adjust or not. Although, this is a non-mechanical trade adjustment, which means we start to use judgement to make a trade decision, many people still find success mixing mechanical trading with price action trading. Example, if the put strikes of an Iron Condor is tested or breached, and the stock price is oversold or hits a possible support, we may leave the trade unadjusted in hope that the price will recover up. Especially, if we are breached towards expiry of the trade and the stock price is significantly oversold or hits strong resistance, we may just hold it to wait for reversal and only adjust if it does not go your way coming into expiry.
Lets take our trade on XOP to decide what to do now.
Stock price now at 117.66. Both the put strikes are ITM, -118P/+121P.
DTE remaining 33 days > 21 days, so no adjustment required. Leave it for another week when it reaches 21 days to decide.
Although, both strikes are ITM, we will follow Rule #1 on DTE to decide on adjustment.
The price action on charts indicates, a oversold stochastics on the daily chart. Price hit the support of 114.58 and bounced indicating a support level. So we can leave the trade unadjusted for now to enable the stock price to get back OTM.
The trade is now losing $60, 30% of the max loss of $195.
Conclusion - no adjustment required.
However, you may want to leg out of the Iron Condor on the Bear Call Spread as it is deep OTM and almost all the extrinsic value of the trade is gone, leaving little premium for the remaining 33 days. You can put in a GTC order to leg out at 0.02 -0.03. This kind of legging out decision would avoid situations of a price whipsaw on highly volatile stocks. As at one time, you lower put strike is challenged and the stock price may suddenly turn the other way to challenge the upper strikes on the call side. If that happens, you will see the profits on the call spread side evaporate and can even go into losses. One thing good, if you manage to leg out one side of the trade and the stock price reverses, the remaining trade will only increase profitability without offsetting profits on the opposing side. This way, we can exit the trade faster with an overall profits once the challenge side gets into profits as we have already realised one part of the profits earlier.
The skills to adjust or not to adjust takes time to master but once you understand the fundamentals, you should be able to pick it up quickly.
Here, we explained one type of adjustment using an Iron Condor example, there are other strategies which require a different set of adjustment rules. Stay tuned to our newsletter as we would one day cover them too here. 😉
TRADERS TALK
Listen to us live every Tuesday, 730pm (GMT+8) where we digest the market and also get to the core of becoming better traders.
We did our first international live show on the go… This week we spoke about early negative price movements are not necessarily damaging to our trade, in fact it can be most advantageous.
Send us an email @ support@mystlework.com if you have any questions and we can cover them during the show.
Review our past traders talk. Let more of your friends know about our show and let them benefit also. View Past Traders Talk here.
Follow-us so you will be notified when we go live! Follow and click on the notification button, so you will never miss a show.
TIKTOK VIDEOS
DELTA is one of the most important Options Greek. Understand what it represents and how to use it to improve tour trading and how it is used for hedging and also capital and return management.
Iron Condor Trade on XOP. Get FREE petrol trading options. FREE Options Trading Newsletter https://mystylework.substack.com.
How to use Advanced Options Strategies to hedge your long term stock investment for free. Learn Options Trading for Free
Trading Options Using Jade Lizzard strategy. Get free petrol subsidies trading XOM 😏 #optionstrading #investing101 #stockmarket #xom
Banks don't want you to know this secret. Revealed in one of our earlier Traders Talk in June 2021. #banksecrets #investing101 🌈✨🏝️
Generate Property like cash flows from the stock market with only one fifth the capital. #Hello2023 #propertyinvesting #rentalincome #investing #stockmarket
Investing 101. It is difficult to catch the bottom and catch the best prices but we can tranch in our buy points so we can get the best overall long term returns without missing the boat. #hello2023 #investing #apple
Trade Digest on XBI - Trading Range using Iron Condor options strategy live from Traders Talk 27 Dec 22. #optionstrading #tastyworks
Long Trade on JD. Trade setup from Traders Talk 6 Dec 22 #optionstrading #tastyworks — www.tiktok.com TikTok video from Mystylework (@mystylework.trade): "Long Trade on JD. Trade setup from Traders Talk 6 Dec 22 #optionstrading #tastyworks". JD Long Trade | 6 Dec 22 Traders Talk | Like & Share ♥️. Lazy chill out, romance overseas celebrity, 10 minutes(1019319).
Trade Digest On XLE using Iron Condor #optionstrading #optionsstrategies — www.tiktok.com TikTok video from mystylework.trade (@mystylework.trade): "Trade Digest On XLE using Iron Condor #optionstrading #optionsstrategies". Iron Condor on XLE | Trading in Range Use A Neutral strategy | Iron Condor | .... Lazy chill out, romance overseas celebrity, 10 minutes(1019319).
5 ways to reduce cost of calls. The ultimate traders' guide. #optionstrading #optionsstrategies — www.tiktok.com TikTok video from mystylework.trade (@mystylework.trade): "5 ways to reduce cost of calls. The ultimate traders' guide. #optionstrading #optionsstrategies". 5 Ways To Reduce Cost Of Calls | options trading | traders | .... Lazy chill out, romance overseas celebrity, 10 minutes(1019319).
Trading options with 68.2% probability using Expected Move 😎 #optionstrading #trading101 — www.tiktok.com TikTok video from mystylework.trade (@mystylework.trade): "Trading options with 68.2% probability using Expected Move 😎 #optionstrading #trading101". Expected Move | How to trade options | trading options | .... Corporate Uplifting Inspirational Motivational Pop Rock Piano Violins Theme Song.
mystylework.trade (@mystylework.trade) on TikTok — www.tiktok.com TikTok video from mystylework.trade (@mystylework.trade). Butterfly Trade | How to setup low cost high returns options trade | Learn to trade options | .... Lazy chill out, romance overseas celebrity, 10 minutes(1019319).
Winning Options Strategies everyday. Creating high probability low risk trades 😎 #optionstrading #optionsstrategies #elonmusk @tastytrade — www.tiktok.com TikTok video from mystylework.trade (@mystylework.trade): "Winning Options Strategies everyday. Creating high probability low risk trades 😎 #optionstrading #optionsstrategies #elonmusk @tastytrade". Elon Musk | Stock trading | Another WIN 😎 | .... Sunrise.
Twitter shareholder's meeting for takeover by Elon Musk 13 Sep 22, 10am. Lets trade... #optionstrading #optionsstrategies @tastytrade — www.tiktok.com TikTok video from mystylework.trade (@mystylework.trade): "Twitter shareholder's meeting for takeover by Elon Musk 13 Sep 22, 10am. Lets trade... #optionstrading #optionsstrategies @tastytrade". select Nov 18 expiry | Sell ATM call strike 43 | recheck ATM price on open on Monday | .... TikTok's song-like tropical house(974524).
J.Powell's Message yesterday in 1 minute... @tastytrade #optionstrading #optionstrading #stockmarket — www.tiktok.com TikTok video from mystylework.trade (@mystylework.trade): "J.Powell's Message yesterday in 1 minute... @tastytrade #optionstrading #optionstrading #stockmarket". Fed Message??? 🏦 | Responsibility For Price Stability.... | Inflation Target | .... Suns.
What to expect for this week's market.. #optionstrading #optionsstrategies — www.tiktok.com TikTok video from mystylework.trade (@mystylework.trade): "What to expect for this week's market.. #optionstrading #optionsstrategies". SPX down 141 points (3.37%) last Friday after J.Powell speech | Monday another 27 points drop | but we see some slight support at 4000 level above daily 50 MA | .... Change My Mind.
Option Trade on JD - watchlist at last Traders Talk on 9 Aug. Closed today $922 profit 🤑 #optiontrading #tradingstrategy — www.tiktok.com TikTok video from mystylework.trade (@mystylework.trade): "Option Trade on JD - watchlist at last Traders Talk on 9 Aug. Closed today $922 profit 🤑 #optiontrading #tradingstrategy". Option Trade JD covered potential trade during 9 Aug Traders Talk Entry 9 Aug Exit 26 Aug Profit $922 | watch till end to see the trade we did 😉 | Option Trades Adjustments - Based on Price Actions | .... YOU'RE MY SUNSHINE.
Hawkish remarks by J Powell crushed the market - pullback expected until Next FOMC in Sept 21. Watch for key points raised #optionstrading #optionsstrategies — www.tiktok.com TikTok video from mystylework.trade (@mystylework.trade): "Hawkish remarks by J Powell crushed the market - pullback expected until Next FOMC in Sept 21. Watch for key points raised #optionstrading #optionsstrategies". Key Points For Traders | Here's what JP said.. | > rates will go up until inflation is down to 2% | .... Flip through.
Visit and follow us at our Facebook Page for more contents!
Access here >>Facebook Page<<
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.