Options Trading Newsletter - Issue #153 - Life's Path [Options Today - Updates on Positions]
Life's Path...
Life’s Path…
This week's newsletter is penned and sent from a unique vantage point—34,000 feet above ground—as we make our way towards the Swiss Alps. Reflecting on the journey, I realize the countless times we've embarked on similar trips over to Europe over the past two decades. I vividly remember the first time, 22 years ago, brimming with excitement. Yet, that initial thrill gradually faded, and such travels soon morphed from exhilarating adventures into routine, even somewhat dreaded, obligations.
This transition from novelty to normalcy is a common thread in life's tapestry, where first experiences often shine brightest. The glamour of jet-setting across the globe may seem enviable, but it belies a deeper truth: with each departure, there's a palpable sense of leaving something far more valuable behind—a piece of oneself, perhaps, or moments with loved ones that work and distance render inaccessible.
Similarly, the daily grind—clocking in those 12-hour shifts for decades—can lead us to question our choices. It prompts a reflection: is there not a more fulfilling path? Life, after all, is not a one-dimensional pursuit of professional success. True fulfillment lies in a delicate equilibrium among personal relationships, financial stability, and spiritual well-being. Achieving greatness in one aspect at the expense of others offers little solace.
As the years go by, I've started to think more about what really matters. It's important to find your own way to live a life that feels right, where you're not just following what happens, but making choices that fit with what you want and value. I've found my path to doing that, and it makes me wonder—have you found yours? This journey of finding balance and happiness isn't just my story. It's something we're all trying to figure out, in our own ways.
“If you don’t prioritize, someone else will” - Greg Mckeown
SPX (5005)
CPI came out higher than expected, 3.1% versus expected 2.9% and that caused a gap down on Tuesday for SPX but later days recovered until the PPI was announced on Friday, 0.3% versus 0.1% and market sold off once again.
The higher than expected CPI and PPI could means interest rates could stay higher for longer, as we see that the first rate cut probabilities have now been moved to June with a 51.7% probability.
On the market volatility index (VIX) we saw a huge spike up to 18 level on Tuesday after the CPI release. In the past, many months, we do not see a daily VIX spike that high of close to 30% in a day. Although it came down subsequently, we see that VIX has been slowly creeping up from 12s level to 14s level (green upward sloping line), indicating that SPX may be in for a retracement soon. If we look at the top stocks including the Magnificent 7, is all now trading below 52 weeks high. Big move stocks like SMCI had a huge selloff on Friday and ADBE also dropped more than 7% in a day. If you are long on any of the stocks which had rallied, protect your profits by having a stop loss or by using options structures. We pinned our Traders Talk on “How to Hedge for Free” on TikTok.
Trading range for the week is 4950 to 5100.
NDX (17685)
NDX gave up 1.5% for the week, and failed to achieve new highs after PPI release on Friday given more uncertainty on a faster rate reduction by the Feds. We could possibly see markets to be getting more realistic on a continued upmove without limits as volatility creeps back in slowly. We do not expect the market to move much this week as Monday is an exchange holiday in the US and there will be no material market moving data releases for this week. Watch out for possible retracement in the coming weeks, as there is something called gravity on earth…
On earnings move, COIN shot up more than 30% on earnings release and the same for HOOD up over 20% for the week on higher trading volumes on cryptos along with the overall surge in crypto market in the last quarter. Our Options Today earnings trade on HOOD last week came out a WINNER.
Trading range for the week is between 17400 to 18300.
HANG SENG INDEX (16339)
HSI held up support higher now at 15450 level indicating that interest for the market is now back higher. We do not think that it will dip back below 15000 level as we hoped for earlier to get in long on HSI.
Today, HSI went down below 16408 level, the previous high. If HSI goes above this level, it may be a posibility that we see a change in trend as the daily charts move into a higher high price action. Nevertheless, the possibility of a weaker US market this week is an opportunity for lower entry into HSI.
OPTIONS TODAY - TRADE STATUS ON HOOD
HOOD closed at exactly $14 on expiry last Friday. The bull call spread achieves a 100% targeted profit if you had held it or closed near expiry on Friday. We entered the trade at $0.50 and a 100% target profit would be $1.50, a 3x return. We exited the trade earlier though and generated a profit of $77.
The butterfly trade also was a winner and it closed within the profit zone of $13.50 to $15.50. We closed the trade on Friday at between $50-$62 profits on 2 lots. We paid only $5 for each trade which means a return of 9x-11x.
Trading butterfly on lower priced stocks below $50 has been a good strategy as the stock price movement on earnings POP runs still within the expected move and because of the lower price stock, it hardly runs out above these expected move area if you catch the direction right. Of course, you can also trade both sides (up/down) if you are willing to invest one side which might potentially double your entry cost. In any case, a winner above 2x would have covered the cost easily. So far our winners is more than 5x for sure.
Total profits from this earnings trade was $179 and we paid in total $60 for both strategies. Almost 3x return on average.
OPTIONS TODAY - TRADE STATUS ON BA DEBIT CONDOR
BA is now trading higher at $203.8 now. The trade is healthy as it is still trading above $200 and the theta decay on the Bear Call Spread is slowly coming in. It would just need a big spike to $210-215 levels in the coming 2 weeks to see the trade getting into higher profits. BA price is also showing support at $202.
OPTIONS TODAY - TRADE STATUS ON MICRO CRUDE OIL FUTURES IRON CONDOR
Another WINNER WINNER chicken dinner.
OPTIONS TODAY - POOR MAN’S COVERED CALL ON XLU
XLU is now trading at $61.23 slightly up. We rolled up the short call with premium of $0.40 to 15 March expiry. We will continue to generate premiums out of this trade while waiting for the recovery in stock price, improving the value of the long call. We have time on our side and the slower the price increase the better for the trade to generate income on short calls. So far we have received $2.70 in premiums.
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TIKTOK VIDEOS
Earnings play on HOOD
Life is a play. Your are your own director, screemwriter & actor in life's play. #motivation #success
We can no longer live the way our parents did, the world have changed. Don't conpromise your family and our future generations... evolve with the times..understand it and we will prosper.
We start a market education series to help aspiring traders understand how to become successful in trading.
Market Psychology…
What drives the market? Understand this to be a better trader 😉 #stockmarket #trading #bullrun
Struggles… Pain is inevitable, suffering is Optional.
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#struggles #motivation #inspirationalquotes
Happy New Year and May 2024 open new doors for you…
Merry Christmas & Happy New Year… May 2024 be blessed with new beginnings and continued success for all…
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