Monthly Report 2023-01-01

trading journal


As we wrap up this extremely challenging year in the stock market, at the end of December 2022, the SPY (S&P500 ETF) closed with a -6.19% decline over the previous month. It's the fifth time in 2022 that the monthly chart has posted a red candle with a loss above the 5% mark. Last time this happened was in 2008, when the first two months of 2009 saw a continuation of the decline before finally bottoming and launching a new secular bull market.

Of course, we don't know at this time where the bottom is and when the market will resume its long-term uptrend. All we know is that stocks are now way better valued than they were 12 months ago, and that now is a much better time to look at buying opportunities.

After the promising breakout of the descending trend line on the monthly chart experienced in November, these are the insights we can draw from what happened in December.

  1. Despite the new sharp sell-off, the December monthly lows rebounded on the descending trend line
  2. Aside from the possible support given by the trend line, the key lower level to watch in January is at the 2022 lows around the 360 mark.
  3. On the upside, of course, the key level to watch is the psychologically critical resistance level at the 400 mark.
  4. The December monthly red candle completely "engulfed" the November green candle, showing that we are still in a pessimistic and fearful market environment.
  5. After missing the much-anticipated Santa's Rally, we must keep our seat belts securely fastened as we enter the new year.

Monthly market performance (December 2022)

 S&P500 (SPY) -6.19%
 Nasdaq100 (QQQ) -9.23%
 Dow Jones Industrial (DIA) -4.28%
 Small Caps (IWM) -6.94%

In the overall December sell-off, the most conservative market area held up a little better compared to tech and growth stocks.

Despite the sharp market monthly fall, the Market Volatility Index (VIX) is closing the year at the bottom of the 2022 range, just above the 20 level.



Last month's update of my trading activity within the Options Trading Club (OTC)

After closing the experimental multi-leg campaign on Macy's (M) for a modest profit, in December I mainly focused on the management of my main Wheel Portfolio.

I let the December covered calls on ARKK-BK-C-MMM-TNA-TQQQ-TROW-XBI expire worthless, while I let the shares of the in-the-money covered calls on BWA and LOGI be taken away. That allowed me to keep a total premium of $1,398 and free up $9,500 of capital.

Part of the capital that I raised in the past few months was allocated to secure new short puts on companies already in my portfolio. This, in turn, transformed the previously established covered call positions into covered strangles, where I can use all the tools made available by the Wheel Strategy.

This is the trade log of the new cash-secured puts opened in December.

December 5, 2022:
STO MMM 01/20 CSP $120 for a $2.63 credit
Delta = 0.32
IV = 25%
Projected AROI of about 17% in 46 days
(I already own 100 shares) 

December 19, 2022:
STO CMCSA 01/20 CSP $32.5 for a $0.67 credit
Delta = 0.30
IV = 33%
Projected AROI of about 23% in 32 days
(I already own 100 shares and have a 01/20 covered call open against them)

December 23, 2022:
STO EBAY 01/20 CSP $37.5 for a $0.60 credit
Delta = 0.24
IV = 33%
Projected AROI of about 21% in 28 days
(I already own 100 shares and have a 01/20 covered call open against them)

Happy New Year!


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