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Weekly Report 2022-08-28

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WEEKLY MARKET SUMMARY 

This is what I wrote in the last Weekly Report: "Going into the next trading week, we might expect further weakness and a test of the first level of support at the 417 level. If that doesn't hold, the key level to watch then would be at the 400 mark."

And that is exactly what happened. After gapping down below the 417 support at the weekly open on Monday, the SPY (S&P500 ETF) tried to rebound and reclaim this key level. However, what appeared to be a successful recovery on Thursday was wiped out by the FED-related news on Friday.

Following weeks of consistent buying pressure and renewed bullish enthusiasm, last Friday's abnormally long solid red candle has thrown the market into a new potential downturn. As we enter the new week, we'll see if fear spreads into another massive selling wave (as it has on several occasions this year) or if bulls can hold around the 400 level. A break below this level might signal the start of another correction and a possible deep decline to a test of the 2022 lows support level.

Weekly market performance (Week 34/2022)

 S&P500 (SPY) -3.99%
 Nasdaq100 (QQQ) -4.78%
 Dow Jones Industrial (DIA) -4.19%
 Small Caps (IWM) -2.91%

Despite the wild Friday selloff, small caps have held up better than the rest of the market.

The Market Volatility Index (VIX) spiked and moved above the 25 level as a result of the new sharp market pullback on Friday.

 

WEEKLY TRADING SUMMARY 

Here is the summary of the main events from last week at the Options Trading Club (OTC).

Cash Secured Puts

After months of abstinence, I was able to close a Cash Secured Put (CSP) trade for a nice quick profit last week.

On Friday, August 19th, I posted this position inside Options Trading Club.

Sell-To-Open ARKK 08/26 CSP $42 for a $0.48 credit
Delta = 0.21
IV = 62%
Projected AROI of about 50% in 7 days

Despite last week's heavy selloff, the position expired worthless for full profit at the weekly close on Friday.

 

Time Spreads

During this difficult trading year, one of the best performing strategies has been Calendar Spreads, which tend to profit from rising volatility in choppy market conditions.

At the weekly open on Monday, taking advantage of the market gap down, I successfully closed a Double Calendar campaign on SPY:
Buy-To-Close SPY 08/24 Short Strangle -405p -424c for a $57 debit
Sell-To-Close SPY 08/31 Long Strangle +405p +424c for a $407 credit
Max Risk = $766
Net Profit = $109
ROI = 14.2%
Trade Duration = 19 days
AROI = 273%

 

Small Account Challenge

The Small Account Challenge (SAC) is underway in the Options Trading Club (OTC). Down below is the weekly recap of RoRo the creator and thought leader of the challenge.

"Week 1 of the challenge is over and what a week it was. For those of you out there with actual small accounts, if you have ever questioned "Is it possible to trade and make money with less than $5000?"... THE ANSWER IS YES!!!!

I'm not saying that everything you see here is a sure-fire winner or this strategy is better than that strategy. What I'm saying is our members are making trades and bringing in some nice premium. And of course, let me clarify before I go any further.....Past Performance Is No Guarantee Of Future Results.

With that said ... A BIG SHOUT OUT to.....
In six quick, small trades ... He has made over $1700 ... That is a 35% gain on his total account in less than one week. Most of us only dream about that kind of return ... in a year. And these weren't YOLO trades on some crazy meme stock. These were your basic $1 wide Put Credit Spreads. I would suggest, if anyone is interested, check out his trades.

Rounding out the Top 3...... gained 9% ...... and pulled in 3.5% in week one.

Also, another BIG SHOUT OUT to our fearless leader for turning this little challenge in to his very own Experimental Options Laboratory.....Double Calendar.....Hedged Wheels....... I may not understand them, but I am amazed at the trades he is coming up with.......and one day......we may all be following his lead.

Personally, I am trading the way I always trade. I'm not trying to experiment with new, different strategies ... not yet anyway. My goal with this challenge is to prove to myself, and to others, that trading small, trading safe, trading smart ... will get you the returns you want without the headaches and stress that trading can give you. Small, consistent profits will add up and over time you will be amazed at how far you've come. Remember ... Trading is not a sprint. It's a marathon.

Congrats also to everyone else participating in the S.A.C. I'm keeping track of all your trades ... and I like what I see so far. Keep up the good work ... and have fun. See you all next week."

 

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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