When you make Trading fun...the money will come...\
TRADING HARD VS TRADING SMART
After trading the markets for so many years, one thing which I was never been able to do is to spend time analysing the stocks and dissecting the financials and various ratios. Looking at the financials of companies at my workplace every month is already an overkill let alone looking at another 10 to 20 more stocks.
I really salute those traders who can know in and out of the stocks and enter their trades based on this information they have and coupled with the right technical set-up. I could never do that, especially to find the time and patience to work on these.
Well don't get me wrong, I am not saying that is not good or anything like that but there are many type of traders and many ways for you to generate profit and increase your trade expectancy. I am just not the information overdrive type.
I look at things more simple and trade on the stocks which I know and better still the products/services I use. The market leaders would also be the category of stocks I trade more often. On technical side, I would just look at the overall price action of the charts and probably one or 2 indicators such as Simple Moving Average and also Stochastics.
On the other Options metrics, Delta, IV, IV Rank would be the things I take more interest. Keeping it simple is what makes me a happy trader, lets not stress yourself up as we have better things to do in life...spend time with your family...watch Squid Game...that's more fun right?
At the end of the day, if you overwork the details and then generate an average return of 20% a year, then I think it is too much time spent on that when you can just use a simple strategy recycling the same 5 to 10 stocks generating 2% per month (the same 20+% per year) using the Options strategy which we teach in the Income Generation Secrets Framework, right?
Trading is not really on how much hours you put in but applying the right strategies to commensurate with the effort spent. But again, putting in more hours does not necessary means you will generate more returns, so then why not make things simple and apply simple concepts that works, those that will not make trading strenuous and stressful.
"When you make trading fun...the money will eventually come"
MARKET UPDATE
SPX
From its low in early October, SPX has gone up by 10% all in within just 6 weeks the furthest it had gone in 2021. Is that good or bad?
With market all green like Santa's elves, it seems everybody is gearing towards the last 2 month before closing for Christmas. It seems too good to be true?
I would still say ride it up with a bit of caution...
Sector wise, we can see that the consumer cyclical is slowly inching up to take the top place. Leading the month is of course TSLA which has shot up to 1,222. TSLA post stock split price in August 2020 was 422, which means it has gone up by another 3x since. This is not really the product it is building but a throve of TSLA supporters as there are many other EV better than TSLA, at least to my personal opinion.
Other back to norm stocks has also surged up recently like BKNG which gapped up after earnings but lost all the increase before end of the day and the next day recovered it and went to all time high of 2631. The price action of this round post earnings movement seems quite erratic and does not make sense, a selldown on good earnings and then rally up. Same thing happened for SBUX, which gapped down post earnings and then recovered all within a week. These kind of unexpected gap down and recoveries are prevalent during this month earnings.
Another one which might potentially happen the same is SQ, which reported better than expected earnings, went up 6+ and then ended the day down by almost 10. Lets see if it pops back up next week.
NDX
Nasdaq 100 all the way up....
FB needs to close above 344 to confirm back the upswing above 50EMA
NDX also continued reaching ATH almost everyday with the new record at 16454.
GOOGL reached ATH at 3006 and MSFT also reached ATH at 338.
FB (now META) lets continue to call it FB rite, as META sound so cold....also recovered a lot of lost ground in the past 1 to 2 weeks. It recovered, around 10% ($33) post earnings in less than 2 weeks. Although, it closed back up above 50 EMA, it has a bearish candle with a long tail at the end of Friday,
CSP PORTFOLIO PERFORMANCE (UP 18.8%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)
This week only RIOT expired worthless and we rolled the capital for another new trade for 2 weeks for a premium of 3.5%. Notwithstanding RIOT can be a volatile stock due to the volatility of BTC, in the past months since June, 25/26 looks like a good support level. Allocating a smaller part of our capital to get high returns at this level, seems to be a sensible thing to do as all the other safe stocks has already gone parabolic high and not something which we are even comfortable to sell puts at these high levels.
The chart above shows the price of BTC/USD which has moved up back to the highs in April whereas RIOT has not really followed the upswing back to its high in April. So the risk of any reversals if BTC/USD crashes back would be limited for RIOT. $25 seems to be a safe support spot for any puts to be sold. This time round, investors has a new found girl like MARA or HUT. We will be a bit loyal and just stick to the safe ones like RIOT.
MARA highly correlated to B
HUT has also been more correlated to BTC/USD this round of upswing
2 more weeks till November Expiry and the challenged positions for now is on KWEB which has not been the best as its swings are still unpredictable if it wants to go up or continue to go down. In terms of rolling repairs, we can still generate a decent premium of 0.4/0.5% per week even if it is slightly ITM.
Besides that EWZ is still ITM and we should look to rolling it forward when the monthly expiry comes.
YTD returns wise, we are still at around 18.8% which is not bad considering it includes the unrealised losses on the assigned Chinese counters like Tencent, HKEX, Ping An and also YUMC.
STRATEGY EVOLUTION
One of the things I have learnt over my years trading options is how one strategy can evolve and transform into various form once we understand what kind of characteristics it has.
Understanding when we can or cannot deploy a strategy and how we can make use of it safely to generate high probability trades has helped me get a lot of WINS.
The strongest and most powerful strategy is no other than the plain old selling of Puts and Selling of Calls. The same strategy which we focus on our core training on Income Generation Secrets.
Once you understand how to use selling of puts, we can use it in so many ways and also use it as a medic when we get into a bad trade.
Last week, I did a collaboration with a fellow Trader in Traders Talk, special series "What's Working Now? What's your Trade..." and I explained a super powerful Options Strategy called Superbull. Superbull is a double bullish trade as it comprises 2 bullish strategy in one single trade executed at once. Here's how the set-up is done:-
#1 Selling a OTM Put (Credit - collect premium)
#2 Buying a Bull Call Spread (ATM Call and selling a higher Strike Call, reducing the cost of the call)
Buying a Call is a bullish strategy but we need to pay a very high price and we have to be correct in the direction. To avoid the high cost and also risk that we may be directionally wrong, we try to reduce the cost by 2 ways, #1 Sell an OTM put at around 20 Delta and #2 to further reduce the cost of the call by selling another call at a higher strike. Both the selling of put and call will significantly reduce the price of the call. Many of times, we can even structure a zero price trade with this set-up. Means we pay $0 for the trade as the selling of put and call is equal to the price of the buying of the call.
If the stock price goes up, we make money from both the bullish strategy (Naked put and also Bull call Spread).
If price does not go up, or even go down but not lower than the short put strike, we will win in the short put and the premium will cover or reduce for the losses in the Bull call Spread. Kind of like an insurance.
The only downside is that the price move below the short put and this will result in a higher loss, ie. full loss on the Bull Call Spread and also the undefined loss for the short put. Having said this, the set-up and trade entry rules will keep us safe enough from such kind of situation.
To understand more on this Superbull strategy and when we can execute it, head to the Traders Talk, starting minute 34.30.
FREE iPhone 13 Challenge
After earnings on 28 October, AAPL has been going sideways. We had not got any new opportunities to enter any trades as we really can't guess where it is headed. Market has been running all time high and AAPL has been a bit lagging behind. If market reverses, it seems that AAPL will have a bigger hit when that happens.
So we would probably put in a neutral trade like Iron Condor next week. Or even a Butterfly will be a cheap entry and high return if prices are moving within expected move up and down.
Keep your eyes open on the e-mail notification in case any trade set-up is possible next week.
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 21 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
Remember to join us every Tuesday 7.30 pm on my Facebook Page. Follow-us so you will be notified when we go live!
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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