Weekly newsletter of MYstylework - Issue #84
POTENTIAL HAS A SHELF LIFE
POTENTIAL HAS A SHELF LIFE....
All good things must come to an end...
Do you agree with this? Well in a way it is true that nothing last forever especially if it is good stuff. Just a simple example, last week KFC did a promotion of 2 Snack Plate for RM20. Guess what? All the KFC stores were packed and with long ques because the promotion was only for a day. I've never seen KFC with this much people on normal days. Just because people thought it was a good deal, they all went to have KFC just that day of the year. In fact, I also tried my luck and went over to 1 during lunch time and the que was just too long and I tried again for dinner at another store and again same disappointment. No KFC for me that day...
The other thing I also wanted to share here is "Potential Has A Shelf Life". I'm now talking about market potential. Back in March 2020, when Covid struck and crashed the market for some days, when some people sold off their position many people took this as a potential and entered the market. Many took gains of 100% or more when the market rode to all time high up till end last year before the market crashed again. Again, what do we see here? The potential or opportunity was gone in a short time, if you had not made it during this time, its gone... the good thing here is that potential and opportunities always comes back, it is a matter if you will and want to catch it. The market now again provides a great potential to get great stocks at great prices, but I must stress again "Potential Has A Shelf Life". Go watch Traders Talk for my personal picks.
SPX - 3752
The 3600 level held up again quite well last week and we closed 169 points (4.7%) up. Last Friday, the SPX was relatively strong with hardly any major downticks throughout the trading session and closed 2.4% up for the day.
The next level up to watch for is 3800. This week there is no significant events apart from a small unemployment claim release on Thursday 830 pm. A higher unemployment claim is expected to be positive for the market as that is an indication of economy sizzling down.
SPX opened strongly on Monday but sizzled down shortly. This week's trading range is 3650 to 3850.
NDX - 11310
The 11,000 level held up strongly throughout the week and NDX closed up 618 points (5.8%). After 3 weeks of failed attempt to breach this level, last week was a first time NDX closed strongly above the level. We would expect to see the rally to continue as we were down now by almost 9 weeks prior. Watch out for 11650 level resistance. If NDX can breach this level quickly, expect to see the continuation to 12500 level.
We expect this week's range to be at 11000 to 11550. Futures opened strongly up on Monday but gave it back after 5 hours into trade.
NEUTRAL TRADE WITH A TWIST...
Lat Tuesday's Traders Talk, we spoke about Neutral Trades but with a slight twist. We entered into an Iron Condor on XLE but at the same time doubled the position on the long side (ie. Bull Put Spread). As you are aware, an Iron Condor comprise a Bear Call Spread and a Bull Put Spread and we will profit when the price ends up trading within the bottom and upper range. Here's the trade details:-
Trade Entry
Normal Iron Condor - Credit $1.52
Sell 75 Put, Buy 70 Put (Bull Put Spread)
Sell 90 Call, Buy 95 Put (Bear Call Spread)
Additional Long Leg - Credit $0.98
Sell 75 Put, Buy 70 Put (Bull Put Spread)
This trade does not change the upper and lower boundary of the profit range of 75 and 90 (ie. short strikes of put and call) but when the price goes close to the upper boundary of 90, the trade would not lose as much as the gains from the additional Bull Put Spread will insulate the prices. The risk of trade goes up though, from $348 to $750.
The reason why we entered an additional leg below is that we expect that the price of XLE to continue to go up during the trade and may hit or even breach the highs before coming down on overbought levels. To avoid the trade going into a loss during the period, we protect it with the additional long leg.
As expected XLE went up around $6 after entry. If you have done a normal Iron Condor, the trade would be in losses now. But because we added another long Bull Put Spread leg, we are still in slight profit of $39 till close last Friday. The trade can continue to run up way above 90 and at that time, the long legs (Bull Put Spread)'s extrinsic value will be very low which we can exit the long positions. The short legs (ie. Bear Call Spread) will reach overbought levels and when it retraces, we may also exit this leg and make a profit for the whole trade in less time till expiry.
Total Premium collected is $250 and risk is $750. We will see how the trade runs and if the outcome as what we expect. If you understand how options behave on price movements and duration, we could use it to our benefit by structuring it using the appropriate strategies.
By the way, our SPY Iron Condor trade entered on 6 September, we closed it with a profit on Thursday. In fact on Friday, expiry, the closing price was within the trading band we entered for the trade, ie. if you kept the trade till expiry, a 100% full profit. We exited at 75% profit, which is not too bad as to get the additional 25% we had to risk 75% profits in pocket which is too high to take. Always, book in your profits at appropriate levels as your position can change anytime, even within a day can make a lot of difference.
Tik Tok Videos
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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.
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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.