Weekly Report 2022-10-09

trading journal


After the SPY (S&P500 ETF) lost key support at the 360 level on the last trading day of Q3 2022, the first week of October began with a strong green candle on Monday, followed by an impressive gap up at the open on Tuesday with overwhelming buying pressure across the entire session. However, after digesting the sharp move up on Wednesday and Thursday with relatively indecisive price action, the market fell back down to a new test of the major 360 support level on Friday. 

If the 360 level holds next week, we could see the start of a longer-term rebound. On the other hand, if this support gets violated and lost, we must prepare ourselves for more roller coaster riding and a possible new leg to the downside.

Weekly market performance (Week 40/2022)

 S&P500 (SPY) +1.57%
 Nasdaq100 (QQQ) +0.69%
 Dow Jones Industrial (DIA) +1.97%
 Small Caps (IWM) +2.24%

In another wild week, small caps have outperformed the rest of the market.

In such an unstable market environment, the Market Volatility Index (VIX) remains quite high, just above the 31 level.



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

Monthly Income Machine (MIM)

The MIM methodology is a rules-based premium selling option strategy that takes advantage of the high probability of profit offered by deep out-of-the-money put selling combined with the risk and margin reduction provided by deep out-the-money put buying. The basis for the MIM is a book called "The Monthly Income Machine", written by Lee Finberg.

Since the beginning of December 2021, our amazing moderator Trader64 has been running the MIM section of the Options Trading Club (OTC) and has placed over 150 trades, with 148 being wins and two currently in repair mode. Here's an example of a recently completed trade.

On September 26th he sold-to-open a LNG Oct21'22 125/120 Put Credit Spread for a $0.40 net credit per contract.

After only four days, the position was closed for a $0.16 debit, keeping 60% of the initial premium and resulting in an outstanding 438% annualized return on the initial risk.


Small Account Challenge (SAC)

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.

"Ahhhhh....Just another crazy week in the markets. As you know, my Magic 8 Ball was correct again. It knew that we would have a big up move.....But what it didn't tell me was that all the gains we made on Monday, Tuesday and Wednesday would be gone by Friday. All in all, the markets squeaked out a tiny 1% gain from last week. Now, the big question, Do we find support here? Otherwise, there's not much to stop us from testing the 2020 lows.

 Our current standings, for the most part, remain the same. The only change is that #3 and #4 have switched positions and are separated by the slimmest of margins, .008%
#1 Current Account Balance $7,032 +40% No Open Positions
#2 Current Account Balance $5,828 +16.5% One Open Position
#3 Current Account Balance $4,944 -1.1% Two Open Positions
#4 Current Account Balance $4,904 -1.9% One Open Position
#5 Current Account Balance $4,698 -6% Three Open Positions
#6 Current Account Balance $4,384.51 -12% Four Open Positions
#7 Current Account Balance $4,299 -14% Three Open Positions
#8 Current Account Balance $3,936 -21% Three Open Positions
#9 Current Account Balance $3370 -32% No Open Positions

One final comment.....
I want to give a shout out to and the success of his MIM trades. I still think that they're a perfect vehicle for any account size, but they do fit very nicely in a small account and would be perfect in the Small Account Challenge. Since we are dealing with a $5000 account, the management of the trades would most likely have to be handled with the 3x stop loss because the funds are not there to turn a position into a CSP. Also, each trade only requires a minimum of $500......which would mean you could have up to 10 trades on at a time.

I ran a quick search, and it looks like since we started the challenge, he has recommended 22 trades....and only one of those, we would've had to take the loss. Again, only having 10 trades on at a time, we might not have even been able to take that one. The credits are small and consistent.....and depending on the accuracy of my math, it looks like these little gems are returning 5% per month". 

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

Take care and trade wisely!


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