Weekly newsletter of MYstylework - Issue #65
CHANGING TIMES...
CHANGING TIMES
Suddenly I felt old and out of times...
Here I am trading the stock market, doing a bit into cryptocurrencies and NFTs to get more income streams for a more secure financial future. Then suddenly I see on youtube this one boy which barely finished his high school saying that he had made some hundreds of thousands on a NFT project. In the past, you see young kids making good income through making videos on youtube. Then came playing video games and now investing or trading NFTs. Of course there are also a lot youngsters who trade the stock market with the introduction of free to trade platforms like Robinhood and Webull.
What made all these possible? The lifting of technological barriers and also widespread education which exposes everyone with a learning mind regardless of age. In the past, we only started to make money when we finished college or university. Now, technology and abundance of information allows even kids to start making money before they even start schooling.
We all live in a new era now and if we are still following traditional means on income generation, we are really a dinosaur living in a modern era. We are likely to go extinct or already extinct and lose out in many ways.
Opportunity are abundance, just take up something extra and learn how to be good at it. I am sure that will help you secure a better future for you and your family one day.
Time is the only thing we have before we die...make use of it wisely before you run out of it...
SPX - 4108
We are around where we were last week, closing the week down by 50 points. The market is still playing both sides with Thursday spiking up strongly before plummeting down the next day after several news flows which came out. Strong jobs data coming out making the Fed more confident that it is on track with the rate hikes policy. Also the tingling hunch of Elon Musk having a bad feeling about the economy and announced a 10% cut on Tesla's salaried job had gave away another 9% of Tesla's valuation and putting people on risk on mode again. Microsoft also gave a shout out on an early earnings outlook on lower earnings due to forex translation losses and the stock shaved $12 straight off before ending +2! It is really a sell first think later kind of scenario nowdays....
If you trade based on news flows, that's the kind of volatility you need to go through. Like last week we spoke on neutral trades on Traders Talk, and we put on a neutral Iron Condor Trade on MSFT, even with the bad news and volatility, the trade generated returns of 7% for the week.
Trading for week to be around 4000 to 4200 range. S&P Futures opened slightly up on Monday.
NDX - 12548
NDX also lost momentum on Friday dipping below the "W" pattern neckline. It is neither in a very bearish or bullish state. Frankly, it can go either side but best is just go sideways for a while so we can benefit from our theta decays. Of course only if you are selling premiums, you will benefit. If you are on calls or puts, everyday you will lose and die of a slow death if prices just stays put.
VIX went down over this week by 3.5%. As long as SPX stays above the 4000 level, VIX should not have any significant spikes.
For NDX, we need to see it hold above 12,573 next week to confirm a breakout pattern and not a bull trap. If it retraces below 12,573 level, it has to close back above with a bullish pinbar above to show a bullish price action. If it closes below with a bearish pinbar next week, more likely it fails to turn bullish and is just a mere short bear market relief rally.
NDX trading range for the week is 12350 and 13100.
STAYING NEUTRAL - IRON CONDORS
In markets like this, price volatility makes it very difficult to be directional without keeping your buts on the seat and screen. Just take MSFT price movement on Thursday, where it went down more than $10 on opening and then ended the day up $2+. If you had taken to sell down MSFT, you would get into deep trouble as the price stayed down only for few minutes and inched back up throughout the day. Also, the first 30 minutes to an hour on market opening is also a volatile period to trade. Things can change quite fast during this time and market can take a total u-turn many of times.
One neutral trade strategy which we use is Iron Condor.
Set-up
4 legged strategy comprising of a Bull Put Spread and a Bear Call Spread.
Target to collect premium of at least 1/3 of the strikes width of the spreads.
Duration 45 days optimum.
Work around Delta 20 for the short strikes of each side of the vertical spreads.
Entry Conditions
Conditions where we can go neutral is when the stock is going sideways or trading within a range. The best possible time of entry is when the stock is in middle of range. IV environment for entry should be high (>40% IV) to collect more premium.
Exit & management
Exit when 50% of the max profit earned. This is to achieve a consistent result over time.
Iron condors are defined risk trade. There are various ways to manage the trade but stick to one which you are comfortable. Example, exit trade when you lose 1x of the premium collected.
Other more advanced management strategies would involve rolling of strikes and rolling in time when any of the short strikes of the verticals are tested. Decision of rolls depends on balance of DTE and also if rolling can reduce risk of trade, ie. generate more premiums from additional credit generated or increase risk ie. reduce premiums due to the debit paid on rolling. When you get familiar with the way the trade behave and also the stock, you can make better decisions on whether to manage the trade or just exit and move on.
Risk profile
The trade behaves on the left side like a bull put spread and on the right side like a bear call spread. We need the price to trade within the range and on expiry land in between the profit zone for maximum profit.
TRADERS TALK
Did you hear last week's Traders Talk?
We had a great topic and so much insight on trading was given out. Apologies for the bad and intermittent connection.
Listen to Traders Talk Series 49 if you have not done so. View Past Traders Talk here.
Remember to join us every Tuesday 7.30 pm on my Facebook Page. 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.
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THRIVE OPTIONS BUSINESS BUILDER
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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.