Sunday, October 28, 2018

On watch Mon, Oct 2

On watch Mon, Oct 29

  1. AMD (🐻, to create a strangle against our short puts for additional November premium and to mitigate directional risk in case the stock continue to sell off)
  2. BRZU (🐂)
  3. DRNA (🐻)
  4. ESPR (🐻)
  5. NUGT (🐻, to create a strangle against short puts, calls prices increaseddespite the stock’s stagnation on Friday [])
  6. SVXY (add, 🐂)
  7. TTD (🐂)
  8. UVXY (🐻)

Once again indexes were crushed on Friday, ending the week down between 3 to 4%, as SPYQQQ, and IWMall continue to trade under their 200 DMAs, with SPY now in correction territory.  Leading stocks continued to slide in reaction to AMZN’searnings miss but in the aggregate neither bears nor bulls had control of the market, as the day closed with doji, which indicates indecision among market participants, and SPY held support at the 400 DMA.  This indecisive close bodes a rally this week as a result of technical traders, bottom pickers, and short sellers buying to cover, but I expect selling in the indexes to continue thereafter, and then intensify.  

Because people are replete with fear, with VXX (ie fear index) trading up 58% since the beginning of October, there is no shortage of opportunities to sell puts.  However, because the markets are a bit difficult to trade right, I will remain disciplined in my entries, keep positions smaller than usual, and take profits and losses quicker.  Buying on the way down is for amateurs and almost assuredly ensures crap results — why ignore the recent drastic shift in supply/demand and try to catch a falling knife?

With now just 18 days to expiration, we should start to see the extrinsic value in our November OTM contracts melt away much more rapidly.  Had the markets not sold off as aggressively as they did last week, we'd already be out of our long delta positions.  Be that as it may we're now heading into the homestretch.  

Finally, from hereon out, I will try to send out weekly recaps via Evernote.  A frequently used terms (FUT) page was also created and sent out to Evernote users on Saturday.  The FUT will be a live collaborative endeavor, editable by any student with Evernote in order to produce the most clear, effective, and practical page.