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Weekly Report 2022-03-20

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WEEKLY MARKET OVERVIEW 

After months of roller coasting and continuous pain, the S&P500 (SPY) had the best week since the 2020 US presidential election rally.

The week started on Monday with another red session and with Chinese equities on the verge of implosion. When things appeared to be at their worst, the market began to recover, posting an impressive series of four consecutive long green daily candles.

Next week will be crucial in evaluating whether what we've seen in the last few days is merely a "dead cat bounce" or if we're finally out of this extended decline.

 

Weekly market performance (Week 11/2022)

 S&P500 (SPY) +5.82%
 Nasdaq100 (QQQ) +8.35%
 Dow Jones Industrial (DIA) +5.20%
 Small Caps (IWM) +5.36%

After the strong market rebound, the Market Volatility Index (VIX) dropped sharply and is now just below the 24 level.

 

WEEKLY PERSONAL PORTFOLIOS OVERVIEW 

As a result of the last few months of market correction, for the first time since the launch of the Options Trading Club (OTC), I couldn't close any winning cash-secured positions on a monthly expiration cycle. But that's normal in these market conditions and to be expected for directional option strategies like these.

I adjusted some of the positions to further expirations, while collecting additional credit in the process. On the other hand, I decided to take assignment on other positions and start to play the Wheel Strategy on the call side.

That has been the case with SNBR, where I let the 03/18 CSP $95 (1 contract) expire in-the-money on Friday night, and I had to buy 100 shares at $95 while the stock closed the week on the open market trading at $65.05.

On the surface, this looks like a terrible position, and for sure, the trade didn't behave as I wished it would. Anyway, the $1,680 I was able to collect during the 227 days of the CSP campaign, plus the $170 I received on Friday for opening a 06/17 covered call at the $85 strike price, had reduced my adjusted cost basis down to $76.58 per share.

There is still a long way before I can close this position for a profit, but I am definitely in a much better spot than if I simply decided to buy the shares on the open market at about $97 on August 8, 2021, the day I started this Wheel Strategy position on SNBR

As usual, if you have any questions, just drop me an email at [email protected]

Take care and trade wisely!

- Gianmarco 

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