The Outlook
For Wednesday I am expecting another attempt at a bounce for stocks.
SPY Options For The Market Direction Portfolio
On Friday April 8 I had bought 10 puts for Apr 22 expiry at the $445 put strike for $3.79 at 12:31. They were sold on Tuesday at 3:28 for $10.02.
As outlined yesterday in the morning Investing Strategy Notes on Tuesday I bought 25 SPY put options for May 6 expiry at the $435 put strike for $5.86 at 10:08. I sold 10 at 3:10 for $8.69 and 5 at 3:24 for $8.47.
On Tuesday at the close I bought 15 SPY calls for Apr 29 expiry at the $441 call strike at 3:47 paying $6.33. I plan to sell these in any rally attempt on Wednesday. If there is no rally Wednesday I will average them lower if needed and sell them out on Thursday as I would expect a rally then.
PayPal Decline Repair Example
The stock closed at $108.25 on Tuesday.
There was no trade on Tuesday. No trade is planned for Wednesday.
Tomorrow’s Trade for Wed Apr 13 2022
I am not sure there will be a Tomorrow’s Trade for today. I will wait to see the price action, volumes and market movement on Wednesday before posting any potential trade.
JP Morgan Chase Stock (JPM)
They report earnings today before the open. I will be selling put options after earnings but not in the first half hour if the stock rises. I want to give the stock enough time to make a move lower, if it bounces initially. I plan to try to stay 15% below where the stock is trading and will go out as far as May 20 expiry if needed.
Delta Air Lines Stock (DAL)
They also report earnings today before the open. I will be selling put options after earnings but not in the first half hour if the stock rises. I want to give the stock enough time to make a move lower, if it bounces initially. I plan to try to stay 15% below where the stock is trading and will go out as far as May 20 expiry if needed.
Revisiting History
Historically the month of April is positive 85% of the time since I have kept records since 1984. The second week of April historically is positive by half a percent on average since I have kept records since 1984.
April tends to be the best month of the year for stocks. This is also the last month in the so-called “best six months of the year”.
Ultra ETF Trades
TQQQ ProShares UltraPro 3X Bull NASDAQ 100 (TQQQ)
There were no trades on Tuesday in the TQQQ.
No trades are planned for Wednesday.
SQQQ ProShares UltraPro 3X Short NASDAQ 100 (SQQQ)
There are no trades planned for today.
SDOW ETF – 3X Short Dow Jones Index
There are no trades planned for today.
UDOW ETF – 3X Bull Dow Jones Index
There are no trades planned for today.
MACD – Confirmed Down Signal – Apr 11 2022
On Monday April 11 we got a confirmed down signal. The market is now below 4400 which was the first goal for the downturn. We could get a bounce and then another attempt to break below 4400 later in the week. At some point this month I think the index will fall to 4200 or even 4150 before rebounding.
VIX Index Strategy
On Tuesday the VIX closed at $24.26.
Trade 1:
For Apr 20 I was still holding 30 call contracts at the $70 call strike long and on Fri Apr 1 sold 30 call contracts at the $30 call strike for 70 cents. (This is lower from the $40 call strike which I originally sold) I am offering to buy to close early for 35 cents to start and will reduce from there. On Fri April 8 I bought and closed the 30 calls at the $30 call strike for 54 cents to end that trade as the indicators look negative for the SPX for next week. The $70 calls are still being held long.
Trade 2:
I started a second trade on Thursday March 31 and bought 10 of the May 18 expiry $20 call strike for $5.30 and sold 10 of the $40 call strike for $1.45.
On Thu Apr 7 2022 I sold 3 of the calls for $6.40 and bought 3 of the short calls back for $1.30.
On Tue Apr 12 2022 I sold 2 of the calls for $6.60 at 3:29 and bought 2 of the short calls back for $1.30 at 1:51.
Trade 3:
A third trade was entered on Tuesday in the VIX Index. You can review the trade through this link.
This trade from April 5 is still being held.
Close Trades Early
Just another reminder it is important to make sure to use spikes and rallies to close positions to lock in profits and raise cash levels for further trades. The past several weeks has shown the value of closing trades early and getting capital into new trades as the market falls lower. Closing early is pivotal to not getting caught holding deep in-the-money short puts as a stock falls, simply because the investor forgot to place an offer to close and failed to leave it open.
In rallies, make sure to close trades that are at risk or which you are nervous about.
You can also consider using this excel spreadsheet to assist in alerting when to close trades early.
Don’t Abuse Margin
Just another reminder to watch overuse of margin, especially in a downturn.
Super Charge Buy-Write Strategy
There are no trades being done today using the Super Charge Buy-Write Strategy.
For investors unaware of this strategy this article outlines the Super Charge Buy-Write Strategy and is a good starting place to understand this strategy.
Trade Ahead Of Earnings Strategy
These are the trades planned for today using the Trade Ahead Of Earnings Strategy.
Citigroup Stock (C) releases their earnings on Thu Apr 14 2022 before markets open. I am using $10.00 debit spreads with the reverse iron condor method for May 20. A setup example based on Tuesday’s close would be buying the $50 put strike and selling the $40 put strike. Buying the $50 call strike and selling the $60 call strike.
Goldman Sachs Stock (GS) releases their earnings on Thu Apr 14 2022 before markets open. I am using $30.00 debit spreads with the reverse iron condor method for May 20. A setup example based on Tuesday’s close would be buying the $320 put strike and selling the $290 put strike. Buying the $320 call strike and selling the $350 call strike.
Morgan Stanley Stock (MS) releases their earnings on Thu Apr 14 2022 before markets open. I am using $7.50 debit spreads with the reverse iron condor method for May 20. A setup example based on Tuesday’s close would be buying the $82.50 put strike and selling the $75 put strike. Buying the $85 call strike and selling the $92.50 call strike.
Taiwan Semiconductor Stock (TSM) releases their earnings on Thu Apr 14 2022 before markets open. I am using $10.00 debit spreads with the reverse iron condor method for May 20. A setup example based on Tuesday’s close would be buying the $95 put strike and selling the $85 put strike. Buying the $95 call strike and selling the $105 call strike.
United Health Group Stock (UNH) releases their earnings on Thu Apr 14 2022 before markets open. I am using $30.00 debit spreads with the reverse iron condor method for May 20. A setup example based on Tuesday’s close would be buying the $530 put strike and selling the $500 put strike. Buying the $530 call strike and selling the $560 call strike.
Wells Fargo Stock (WFC) releases their earnings on Thu Apr 14 2022 before markets open. I am using $7.50 debit spreads with the reverse iron condor method for May 20. A setup example based on Tuesday’s close would be buying the $47.50 put strike and selling the $40 put strike. Buying the $50 call strike and selling the $57.50 call strike.
Disclaimer: There are risks involved in all investment strategies and investors can and do lose capital. Trade at your own risk. Questions? Use Ask Teddi
