Daddy Powell
What a wild, wild day!
Things started off strong. As expected, there was a lot of technical chop as we got closer to the FOMC results. However, it did seem as if the bulls were in control. After the 25bps rate hike was announced, the bulls remained in control until the end of Powell's press conference. That's when all hell broke loose. The market sold off to such a degree that we got the gap fill from two days ago ($394.17).
The FOMC decision and following speech were essentially a nothing burger -- no major bombshells. The rate hike was expected and most of Powell's commentary was expected. I do feel it's appropriate to note a key change in the Fed's release.
"The Committee anticipates that some additional policy firming may be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time."
This new verbiage was considerably more dovish than previously releases. Speaking of which, the Summary of Economic Projections (SEP) suggested that there will only be 1 more rate hike for the current cycle. In my dumbass opinion, this is why the initial reaction was bullish. Things took a turn for the worse when Powell made it abundantly clear they are currently planning for no rate cuts this year. He also mentioned how "financial conditions seem to have tightened" & "we see the likelihood of credit tightening".
No matter how you slice it, this will lead to the next few days being very interesting.
Market Events: Thursday, March 23rd
08:30 AM U.S. Current Account
08:30 AM Initial Jobless Claims
08:30 AM Continuing Jobless Claims
10:00 AM New Home Sales
Seasonality Update
S&P 500 Seasonal Bias (March 23rd)
- Bull Win Percentage: 44%
- Profit Factor: 1.37
- Bias: Leaning Bullish
Equity Curve -->
Current Account Value (March 22nd) +$50
$9,665
Daily Realized P&L: +$50
YTD Realized P&L: +$436
Closed Position(s) +$50
SPY $374/$373 Put Credit Spread (5) April 6th
- Original Credit: $18
- Closed Debit: $8
- P&L: +$50 (+55.6%)
Note: I accidently closed half of the Iron Condfor for April 6th. I got a little too excited during Powell's speech and made a fat finger mistake. I'll now be treating the other half as a normal call credit spread.
New Position(s)
SPY CALL Credit Spread (3) April 6th
- Sold: $411 & Bought: $412 --> Credit: $18
- Max Return: $18 & Max Risk: $82
- Current Value: $10
- Profit Target: ~$8
- Profit Odds:
SPY PUT Credit Spread (3) April 6th
- Sold: $386 & Bought: $385 --> Credit: $19
- Max Return: $19 & Max Risk: $81
- Current Value: $27
- Profit Target: ~$8
- Profit Odds:
Reasoning: Continuing the Iron Condor train!
Current Position(s)
NVDA Call Credit Spread (2) March 31st
- Sold: $270 & Bought: $275 --> Credit: $71
- Max Return: $71 & Max Risk: $429
- Current Value: $195
- Profit Target: $25
- Profit Odds: 61%
OXY Put Credit Spread (10) March 31st
- Sold: $58 & Bought: $57 --> Credit: $20
- Max Return: $20 & Max Risk: $80
- Current Value: $36
- Profit Target: $8
- Profit Odds: 57%
QQQ Call Credit Spread (10) March 31st
- Sold: $312 & Bought: $313 --> Credit: $0.20
- Max Return: $20 & Max Risk: $80
- Current Value: $36
- Profit Target: $8
- Profit Odds: 69% (Nice!)
TSLA Call Credit Spread (4) March 31st
- Sold: $200 & Bought: $202.50 --> Credit: $37
- Max Return: $37 & Max Risk: $213
- Current Value: $71
- Profit Target: $15
- Profit Odds: 71%
JPM Put Credit Spread (5) April 6th
- Sold: $125 & Bought: $120 --> Credit: $100
- Max Return: $100 & Max Risk: $400
- Current Value: $137
- Profit Target: $40
- Profit Odds: 58%
SPY Call Credit Spread (5) April 6th
- Sold: $406 & Bought: $407 --> Credit: $12
- Max Return: $23 & Max Risk: $77
- Current Value: $22
- Profit Target: $10
- Profit Odds: 82%
TSLA Call Credit Spread (5) April 6th
- Sold: $207.50 & Bought: $210 --> Credit: $40
- Max Return: $40 & Max Risk: $210
- Current Value: $60
- Profit Target: $15
- Profit Odds: 76%
SPY Iron Condor (5) April 14th
- $411/$412 Call Spread --> Credit: $20
- $375/$374 Put Spread --> Credit: $17
- Max Return: $37 & Max Risk: $63
- Current Value: $34
- Profit Target: $15
- Profit Odds: 77%
TLT Put Credit Spread (10) April 21st
- Sold: $101 & Bought: $100 --> Credit: $27
- Max Return: $27 & Max Risk: $73
- Current Value: $17
- Profit Target: $10
- Profit Odds: 78%
My Thoughts
Hello, volatility. My dear old friend.
As discussed yesterday, I care about the 200-day moving average ($393ish). We have been above it recently, which made me lean bullish in my short-term prediction. That is now not true. The markets cratered into today's close. The downside gap was filled. The 200-day SMA was breached. And, to the dismay of the banking sector, the selling didn't stop there.
So, yeah. Things took a bearish turn, but that doesn't mean I'm yoloing puts... yet. The market can best be characterized as whipsaw galore over the past month. Lots of fake out breakouts and fake out breakdowns. Personally, I'll be waiting around a bit more for extra confirmation before I size up my bets.
I'll continue with my iron condor strategy -- That's much more of a math game rather than a directional bias. I wish you luck if you're playing big in the environment. Don't let your risk get out of hand.
Thanks for reading -- Much love!
P.S. If there are any typos, illogical statements, or pieces of stupid reasoning, my apologies. I'm sick af (not in the cool way).
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 missed. Both of these trades hit if held until close -- 4 total units!
These PCS's were sold at $2.20/ea and were bought back at $0.40/ea -- THIS MEANS MY REALIZED GAIN WAS $3,600!!!
These PCS's were sold at $1.00/ea and were bought back at $0.10/ea -- THIS MEANS MY REALIZED GAIN WAS $1,800!!!
Both of these trades missed. Both of these trades hit if held until close -- 4 total units!
These CCS's were sold at $0.80/ea and were bought back at $0.20/ea -- THIS MEANS MY REALIZED GAIN WAS $1,200!!!
