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Weekly Report 2022-09-04

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WEEKLY MARKET SUMMARY 

It can be difficult to get a broad perspective of what's going on when immersed in the day-to-day market noise. Zooming out and using weekly charts can assist in gaining a longer term perspective and seeing things at a higher level.

Following a new gap down on Monday and another deep red week, the SPY (S&P500 ETF) is now just above the 390 support, a level that was tested several times in May and after being broken out in mid July launched an impressive 4-week rally.

We'll see if this level can be considered a valid support in the coming week after Monday's holiday. A break below the 390 level, on the other hand, could indicate that this correction will continue towards the 2022 lows around the 360 support.

Weekly market performance (Week 35/2022)

 S&P500 (SPY) -3.22%
 Nasdaq100 (QQQ) -3.99%
 Dow Jones Industrial (DIA) -2.84%
 Small Caps (IWM) -4.70%

Following another red week for the broad market, the Market Volatility Index (VIX) remains above the 25 level.

 

WEEKLY TRADING SUMMARY 

With most directional strategies still not very active due to this new market pullback, the Small Account Challenge (SAC) is quickly becoming the most active section of the Options Trading Club (OTC). 

The Small Account Challenge, as the name implies, is aimed specifically at traders with limited trading capital and provides an excellent learning opportunity for traders of all levels of experience.

Here are the main rules for the challenge:

  • Start Date: 08-22-2022
  • End Date: 12-31-2022
  • Starting Account Size: $5,000
  • All trading strategies are allowed.
  • Trades are unique (not already posted in other sections).
  • The winner will be the trader with the largest account balance on the last trading day of 2022.  

Because of the unstable market conditions, I have used delta neutral and hedged trade structures in the Small Account Challenge thus far.

I have four open positions after two weeks of the challenge, and I have closed a total of eight trades, with seven wins and one manageable loss. The total profit realized is $547, representing a 10.9% return on capital.

Here's an example of the type of trades I've been making during the challenge.

On Tuesday, August 23rd, I opened a GOOG Double Calendar Spread (Sep 2nd -110p -120c and Sep 23rd +110p +120c) for a $2.94 debit, which is also the position's maximum risk.

 

On Friday, September 2nd, with the stock trading just above the put strike, I closed the position for a $3.47 credit, netting a profit of $53 and a +18% return on risk capital over 10 days.

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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