Trap Card?!
What in tarnation???
Looks like the bull party needed to take a bit of a breather. The golden question is now: Is the party over or are people just taking a water break? The Retail Sales report came out at 8:30am ET (-1.0% vs -0.4% Exp). Roughly around the same time, multiple important earnings reports were made public. JPMorgan, Citi, Wells Fargo & UnitedHealth Group all beat. I know that's a crazy thing to say beings the market closed out the day in the read. But hey, that's the market for you! It's always going to do whatever you don't want it to do.
In terms of Market Events, next week isn't anything too special. However, there are still tons of earnings from mega-cap companies coming down the pipeline. I highlighted some of the key reports below. Please don't forget that April commonly favors the bulls (especially in the second half).
Market Events: Monday, April 17th
08:30 AM Empire State Manufacturing
10:00 AM Home Builder Confidence Index
Earnings: April 17th - 21st
Monday: Charles Schwab & State Street
Tuesday: Bank of America, Bank of NY Mellon, Goldman Sachs, Interactive Brokers, J&J, Lockheed Martin, Netflix, Silvergate Cap & United Airlines Holdings
Wednesday: Heineken, IBM, Las Vegas Sands, L’Oreal, Morgan Stanley, Nasdaq & Tesla
Thursday: Alaska Air, American Airlines, American Express, AT&T, Blackstone, Philip Morris, Taiwan Semiconductor, Union Pacific & Virtu Financial
Friday: P&G & Schlumberger
Note: This is NOT the full list -- I included the names of companies that are popular within the Goonie Community.
Seasonality Update
S&P 500 Seasonal Bias (April 17th)
- Bull Win Percentage: 52%
- Profit Factor: 0.54
- Bias: Bearish
Equity Curve -->
Current Account Value (April 14th)
$9,690
Daily Realized P&L: -$9
YTD Realized P&L: +$388
Closed Position(s)
SPY $411/$375 Iron Condor (5) April 14th
- Original Credit: $37
- Closed Debit: $100
- P&L: -$315 (-63%)
SPY $413/$380 Iron Condor (5) April 14th
- Original Credit: $34
- Closed Debit: $4
- P&L: +$150 (+88%)
SPY $420/$397 Iron Condor (3) April 21st
- Original Credit: $78
- Closed Debit: $26
- P&L: +$156 (+67%)
Current Position(s)
SPY Iron Condor (3) April 28th
- $422/$424 Call Spread --> Credit: $41
- $393/$391 Put Spread --> Credit: $28
- Max Return: $69 & Max Risk: $131
- Current Value: $39
- Profit Target: $30
- Profit Odds: 82%
SPY Iron Condor (3) April 28th
- $419/$421 Call Spread --> Credit: $38
- $399/$397 Put Spread --> Credit: $34
- Max Return: $72 & Max Risk: $128
- Current Value: $71
- Profit Target: $30
- Profit Odds: 73%
SPY Iron Condor (3) May 5th
- $424/$426 Call Spread --> Credit: $46
- $397/$395 Put Spread --> Credit: $37
- Max Return: $83 & Max Risk: $117
- Current Value: $66
- Profit Target: $30
- Profit Odds: 79%
New Position(s)
SPY Call Credit Spread (3) May 5th
- Sold: $422 & Bought: $423 --> Credit: $23
- Max Return: $23 & Max Risk: $77
- Current Value: $29
- Profit Target: $10
- Profit Odds: 74%
SPY Put Credit Spread (3) May 5th
- Sold: $400 & Bought: $399 --> Credit: $18
- Max Return: $18 & Max Risk: $82
- Current Value: $16
- Profit Target: $10
- Profit Odds: 78%
Reasoning: A continuation of the Iron Condor strategy.
My Thoughts
Talk about a trap card, eh?
I continued with the iron condor strategy, but I didn't do anything too crazy beyond that. Today's price action might signal a reversal. It could also be a basic breather. I'm honestly not leaning one way or another. My plan is to wait for the next breakdown or breakout, and then I'll play it accordingly.
From a seasonal perspective, April does favor the bulls. The CPI Report and PPI Report were both dovish. Additionally, the big banks have been reporting some solid recovery numbers. I would argue we aren't in a good situation, but things are clearly improving. We will be getting more insights next week, so buckle up.
TGIF mofos!
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!
