Monthly Report for February 2023

MONTHLY MARKET SUMMARY FOR FEBRUARY 2023

After an exceptionally strong start to the year, the market lost some of its January profits in February, with SPY (the S&P 500 ETF) posting the fourth consecutive consolidation candle. This is currently confirming that the market has transitioned from the extended bear phase of 2022 to a lateral consolidation regime.

The small body of the February monthly candle and the failed breakout to the upside (as shown by the long upper wick) are also suggesting that bulls are trying to get back in control of price action. However, the market is still vulnerable to news, economic data, and increasing interest rates, and for the moment, the key $400 level remains the line in the sand in the current battle between bulls and bears. 

Monthly market performance (February 2023)

– S&P500 (SPY) -2.51%
– Nasdaq100 (QQQ) -0.36%
– Dow Jones Industrial (DIA) -4.18%
– Small Caps (IWM) -1.72%

With the S&P500 losing some of the January gains, we continue to see a strong rotation into small caps and big tech stocks.

Despite the February market losses, the Market Volatility Index (VIX) remains relatively low, closing the month at about the 20 level.

MONTHLY TRADING SUMMARY FOR FEBRUARY 2023

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

During this choppy market consolidation, I continue using the Wheel Strategy to sell cash-secured puts on carefully selected stocks when appealing setups appear.

On February 8, with the stock pulling back after a solid earnings report, I sold-to-open an AMZN 03/17 CSP $90 for a $1.51 credit, with a projected AROI of about 16.4% in 37 days.

The stock continued to fall with the rest of the market during the following weeks, but so far it has never touched the strike price level. My plan is to let it run until expiration week and then manage it accordingly depending on price action.

One of the great benefits of the Wheel Strategy is that it allows us to make money even when the stock moves against our initial predictions. This is what happened with the MMM 02/17 CSP $110 that I closed a few hours before expiration for a $119.36 profit (including commissions) for a nice 18.9% AROI over 21 days, despite the stock price having fallen almost 3% from my entry.

February 2023 was another 100% win ratio month for Trader64, one of the amazing moderators of Options Trading Club (OTC).

This is what he wrote inside the community at the end of the month:

"February is in the bag and it was another good month for the mim-trading-journal portfolio... During the month we closed 5 trades which is less than we would like to be closing, however 100% of the were winning trades!!! Our average AROI was 158% which indicates that many, if not all of the trades were closed early. In total we generated $128 of cash if only one contract were taken for each trade. Thus, once again, the mim-trading-journal paid for your annual OTC dues this month".

Take care and trade safely!

Gianmarco