Weekly Report 2022-05-01

trading journal


Following another horrible week, the S&P500 (SPY) closed the worst month since the Corona Crash, all after five months of struggles that began shortly after the 2021 Thanksgiving Day.

The fourth long solid red candle over the past seven trading sessions has brought the price to the crucial test of the 2022 lows at around the $410 level.

Needless to say, a failure of support at this level will put the market on the verge of a much more serious correction than what we have already experienced so far.



Weekly market performance (Week 17/2022)

 S&P500 (SPY) -3.30%
 Nasdaq100 (QQQ) -3.73%
 Dow Jones Industrial (DIA) -2.54%
 Small Caps (IWM) -4.01%

With fear picking up, the Market Volatility Index (VIX) is moving towards the 2022 highs and is now around the 33 level.



Since the beginning of 2022, I have started to adopt a more conservative approach with the (bullish) directional strategies that I utilize inside the Options Trading Club (OTC) and teach to the members of The Wheel Academy

With most of my trading capital allocated to protect existing positions (most of which are currently underwater), I only sporadically open new trades and just in situations that really catch my attention.

Following the idea of one of my students in The Wheel Academy, on Tuesday, April 19th, 2022, I shared with the members a new trade setup on TQQQ.

STO (Sell-To-Open) TQQQ 04/29 CSP $42 for a $0.64 credit
Delta = 0.14
IV = 80%
Projected AROI of about 56% in 10 days


Due to the new extended market pullback over the following days, the position soon started to move into the red and (after a failed rebound last Thursday), I had to adjust on expiration day to avoid assignment. So on Friday, I rolled out and down TQQQ from 04/29 CSP $42 to 05/13 CSP $40 for an additional $0.43 net credit.

With TQQQ closing the week at $36.53, there is no doubt that the position is currently underwater, and it may take some time and effort to pull it back on track in this market environment.

However, considering the total net credit of $1.07 already collected and the $40 strike price, my breakeven level on this campaign is now at $38.93.
That is way better if compared to $49.42, which was the price the ETF had when I entered the position and the potential breakeven level if I decided to go long the shares rather than sell a cash-secured put against them.
As usual, if you have any questions, just send me an email at [email protected]
Take care and trade wisely!
- Gianmarco 

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