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Weekly Report 2021-08-22

trading journal

 

WEEKLY MARKET OVERVIEW

Finally, we saw some market weakness this week, but after a positive start on Monday and a shallow pullback on Tuesday and Wednesday, what could have been the beginning of a deeper correction for the S&P500 (SPY) turned out to be another opportunity for bulls to step in at more favorable prices, and by Friday's close, most of the weekly losses had already been recovered.

Dow industrial stocks and small caps have been lagging against the rest of the market and mega stocks in particular.

Weekly market performance (Week 33/2021)

S&P500 (SPY) -0.57%
Nasdaq100 (QQQ) -0.30%
Dow Jones Industrial (DIA) -1.19%
Small Caps (IWM) -2.54%

Despite the spike on Wednesday, the Market Volatility Index (VIX) is back below the 20 level.

 

WEEKLY TRADING JOURNAL 

Here follows a summary of last week’s activity in my Trading Journals for all the four official options strategies I trade inside the Options Trading Club.

Full disclosure. I have 100% skin in the game on these positions, as they are all trades I made in my trading accounts with real money.

 

Cash Secured Puts (CSP) Strategy

This has been a very busy week for the CSP strategy (the main strategy we play inside the OTC Discord Community), being the one of the monthly options expiration cycle, and having several open positions.

Among the 31 open cash secured puts expiring on August 20th, 7 expired worthless for full profit, while I rolled 5 positions just one week out to next Friday August 27th, and 16 positions one month out to September 17th. Only 3 of the more difficult positions inside the portfolio had to be adjusted to further expirations.

The beauty of this amazing CSP strategy is that all the trades that are not behaving as expected can be adjusted, and often improve the overall result of the campaign. That is the case of the 08/20 CSP $125 on PII, with the stock ending the week only 42 cents below the strike price. To avoid assignment, I had to roll the position one month out a few minutes before the close on Friday. For doing that, I received a juicy premium of $390 per contract, and actually improved the annualized return of the trade from 32% to 37%. That is pretty remarkable considering the stock price was trading $4.75 lower compared to the day I entered the original position. 

So far, inside my CSP Trading Journal channel, I have closed a total of 39 winning trades with a 100% win-rate since the launch of the Options Trading Club at the end of May 2021.

 

The Wheel Strategy (WS)

Inside the Options Trading Club, I play the Wheel Strategy on just a few underlaying instruments, and the ARKK ETF is by far one of my favorites.

Since the end of December 2020, I have played 18 campaigns on ARKK, and despite some of them being quite challenging to repair, I was able to never get assigned the shares, and achieve outstanding annualized returns varying from a minimum of 23% (on the most difficult campaign) to 111%. Excluding commissions, I collected a total of $5,774 in premiums.

On Friday, with the ETF closing the week at $115.80, and with a CSP about to expire at the $116 strike, I decided to take assignment for the first time after about 8 months of playing the Wheel Strategy on ARKK.

 

With the ETF trading only 20 cents under my strike, and all the premium collected so far, the real cost basis (excluding commissions) on the 100 shares I got assigned is $58.26, or about half of the strike price. All of this is thanks to a solid strategy in place, and the patience of collecting premiums for several months in order to build a reasonable safety margin before accepting assignment. 

The ownership of these 100 shares of ARKK will now allow me to play the Wheel Strategy also on the upside, selling covered calls in addition to the usual cash secured puts.   

 

Vertical Credit Spreads (CS) Strategy

Inside my Credit Spread (CS) Trading Journal, I run a $1,000 virtual portfolio to teach traders new to options (and having limited capital to start with) how to grow a small account with a conservative options strategy using discipline and patience. Last week I opened a new Bull Put Credit Spread on MTCH, that so far is behaving as expected.

The portfolio is up 29.5% since the launch of the Discord Chatroom at the end of May 2021, with 11 wins and one small loss.

 

Time Spreads (TS) Strategy

The fourth official strategy of the Options Trading Club is on Time Spreads (TS), such as calendar or diagonal spreads. I mainly use this strategy as a delta neutral edge against the other more directional strategies traded inside the community.

At the moment, I am running towards the completion of a double calendar campaign on IWM. At the end of next week, the short legs are due to expire. Depending on the price action of the underlaying ETF, and the related value of the long legs, I might decide to terminate the campaign. If that is the case, I will post the final results in the next weekly report.

If you have any questions, just drop me an email at [email protected]

Take care and trade wisely!

-Gianmarco

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