Survived Another Day
Well, well, well... look at who didn't blow up his account today!
After two days of ripping higher, the bulls finally paused for a break. My best guess for today's action is that seasonality won out as the market needed a technical breather. There is also considerable uncertainty associated with this trading week. Don't forget: Speculators Hate Uncertainty. Chair Powell will be speaking to Congress twice this week (Tues & Wed). The Jobs Openings (JOLTS) Report drops Wednesday morning. And finally, the Unemployment Report comes out this Friday.
This issue of "Matt's Shower Thoughts" will cover my opinions of various aspects of the markets, upcoming seasonal influences & my two new positions.
Enjoy!
Market Events: March 7th
10:00 AM Fed Chairman Powell Testifies To Senate
10:00 AM Wholesale Inventories
03:00 PM Consumer Credit
Seasonality Update
S&P 500 Seasonal Bias (March 7th)
- Trades (Years Tested): 25
- Bull Win Percentage: 52%
- Profit Factor: 0.67
- Bias: Bearish
Equity Curve -->
Current Account Value (March 6th)
$10,188.48
Daily Realized P&L: -$1.55 (No clue what this is from)
YTD Realized P&L: +$569.33
Closed Position(s)
None
New Position(s)
META Put Credit Spread (10) March 17th
- Sold: $170 & Bought: $167.50 --> Credit: $0.18/ea
- Max Return: $18/ea & Max Risk: $232/ea
- Profit Target: Undecided
- Profit Odds: 86%
Reasoning: This is a hedge against the original META play (CCS @ $190). META's recent bullishness made me sweat a little, so this is the start of me mitigating the situation. This PCS turns the overall position into an Iron Condor. It is mathematically impossible for both spreads to expire in the money (max risk). However, both could hit their max gain if META is above $170 & below $190 on March 17th.
WMT Call Credit Spread (10) March 31st
- Sold: $145 & Bought: $146 --> Credit: $0.20/ea
- Max Return: $20/ea & Max Risk: $80/ea
- Profit Target: $0.08/ea
- Profit Odds: 77%
Reasoning: My bias on the overall market in the short term is bearish. Walmart did not have a good earnings report. Over the past week, WMT insiders sold $1.8 of the stock. When I add this all up, it makes me feel like a CCS is easy money.
Current Position(s)
COIN Call Credit Spread (5) March 17th
- Sold: $72 & Bought: $77 --> Credit: $0.50/ea
- Max Return: $50/ea & Max Risk: $250/ea
- Current Value: $0.74/ea
- Profit Target: $0.20/ea
- Profit Odds: 77%
META Call Credit Spread (5) March 17th
- Sold: $190 & Bought: $192.5 --> Credit: $0.33/ea
- Max Return: $33/ea & Max Risk: $217/ea
- Current Value: $0.80/ea
- Profit Target: $0.15/ea
- Profit Odds: 65%
SPY Call Credit Spread (3) March 17th
- Sold: $409 & Bought: $412 --> Credit: $0.56/ea
- Max Return: $56/ea & Max Risk: $244/ea
- Current Value: $1.09/ea
- Profit Target: $0.25/ea
- Profit Odds: 63%
QQQ Call Credit Spread (5) March 24th
- Sold: $313 & Bought: $315 --> Credit: $0.38/ea
- Max Return: $38/ea & Max Risk: $162/ea
- Current Value: $0.42/ea
- Profit Target: $0.15/ea
- Profit Odds: 79%
SPY #2 Call Credit Spread (4) March 31st
- Sold: $415 & Bought: $417 --> Credit: $0.42/ea
- Max Return: $42/ea & Max Risk: $158/ea
- Current Value: $0.57/ea
- Profit Target: $0.20/ea
- Profit Odds: 72%
TSLA Call Credit Spread (3) March 31st
- Sold: $245 & Bought: $250 --> Credit: $0.70/ea
- Max Return: $70/ea & Max Risk: $430/ea
- Current Value: $0.21/ea
- Profit Target: $0.20/ea
- Profit Odds: 94%
TSLA #2 Call Credit Spread (5) March 31st
- Sold: $220 & Bought: $222.50 --> Credit: $0.37/ea
- Max Return: $37/ea & Max Risk: $213/ea
- Current Value: 0.36/ea
- Profit Target: $0.15/ea
- Profit Odds: 82%
SPY #3 Call Credit Spread (5) April 6th
- Sold: $414 & Bought: $417 --> Credit: $0.55/ea
- Max Return: $55/ea & Max Risk: $245/ea
- Current Value: 0.97/ea
- Profit Target: $0.20/ea
- Profit Odds: 69%
My Thoughts
All in all, I'm happy the bulls didn't continue ripping off my face today. It's clearly possible for the run to continue and my incessant crying to proceed. However, it's also possible for any of the catalysts (Powell, Job Openings, or the Unemployment Report) to benefit my position. I suppose I'm betting on Lady Luck giving me a bit of a break.
The new META play is the start of me hedging my current questionable bets. I will continue this moving forward. I'll also proceed with lowering the correlation of my positions (i.e. WMT). So far, a good start, but serious work still needs to be done.
If you have any questions or input, let me know. Thanks for reading -- Much love!
Notes
Max Return (Credit Spreads): The credit received when creating the position. This is achieved when you get to the expiration date and the price is below the sold contract for a Call Credit Spread and above the sold contract for a Put Credit Spread.
Max Risk (Credit Spreads): The difference between the spread's two strikes minus the credit received when the position was created.
Breakeven (Credit Spreads): The sold strike plus the credit for CCS and the strike minus the credit for PCS.
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Both of these trades hit if held until close -- 6 total units!
Both of these trades hit if held until close -- 6 total units!
SPY missed & QQQ hit
The Trump-China-Trade announcement from the NYT knocked me out of my position. The CCS's were sold at $1.80/ea and I was forced to buy them backl at $4.40 -- This means my realized loss was $3,120 :(
The hedge did exactly what hedge plays are meant to do. It balanced me out! These PCS's were sold at $0.85/ea and expired worthless -- THIS MEANS MY REALIZED GAIN WAS $2,975!
