Monthly Report for April 2023

MONTHLY MARKET SUMMARY FOR APRIL 2023

After five consecutive months in a lateral consolidation regime, the SPY (the S&P 500 ETF) ended the month with a breakout attempt. This is an encouraging sign coming in the middle of Q1-2023 earnings season, probably showing that the future is not so dark as most market participants were anticipating. Of course, we now have to see if during the month of May this breakout attempt will be confirmed or if we'll get back into the previous consolidation pattern.

Monthly market performance (April 2023)

– S&P500 (SPY) +1.60%
– Nasdaq100 (QQQ) +0.51%
– Dow Jones Industrial (DIA) +2.53%
– Small Caps (IWM) -1.79%

While the S&P500 was pushed up by the higher-capitalized companies, small caps keep lagging the rest of the market.

The Market Volatility Index (VIX) has been falling for the entire month, closing just above the 15 level for the first time since the middle of 2021.

MONTHLY TRADING SUMMARY FOR APRIL 2023

The following is one of the trades (taken on a real-money account) that I closed in April and shared in real-time with the members of the Options Trading Club (OTC) Discord community and the The Wheel Academy (my private coaching program).

On March 21, with the stock bouncing back after a sharp pullback, I sold-to-open a MO 04/21 CSP $45 for a $0.94 credit, with a projected AROI of about 24.3% in 31 days.

After a few days since my entry, the stock price plunged due to the crossing of the ex-dividend date and consequent stock repricing (that for MO is around $0.94 per quarter) and some mixed news. With the put option being in-the-money and plenty of time until expiration, I decided to let the position alone, leaving any potential repair procedure for later.

In the end, no repair was necessary, as the stock price recovered nicely, allowing me to buy back the put contract for just $0.04 the day before expiration. I booked a profit of $87.90 net of commissions, for a return on the allocated capital of +1.95% in 30 days, equal to an annualized return on investment (AROI) of +23.8%, all without the need of any sort of trade management.

Take care and trade safely!

Gianmarco