The Woke Economy is not about progress, it’s about distribution. It’s not about competency, it’s about equality. But mainly, the Woke Economy is about Marxism. It is time we wake up from the Woke Economy!

Make Equal – Not Special

In the 1960s, many of us were convinced that we could stop the Vietnam War if we could just show enough love. With all the bad vibes out there, all the world needed was a hug… and maybe a flower.

Now in the 2020s, “Woke” has emerged as another counterculture movement to cast awareness of outcome inequality. But instead of hippies, we have victims – instead of ‘Defund the Military’ we have ‘Defund the Police’ – instead of the Sexual Revolution, we have Gender Freedom. Irresponsible utopianism and hedonistic self-indulgence have been rewoken.

But what makes Woke more dangerous than peace is the explosion of hyper-partisan political aggression across the country. And that aggression is being stoked by the “Woke Democracy.”

Woke Democracy

Financial policies without consequences are a product of the Woke Democracy. Local communities are electing to minimize police protection, support comfortable homeless encampments and allow petty crimes as a version of reparation. If we ever want to see what true Democracy looks like, look at Woke Democracy. If we want to see what kind of economics comes from true Democracy, look at our Woke Economy.

Woke Democracy is when our policy managers take their policy directives from Social Media’s “Likes” rather than erudition.

Woke Economy is mainly about Marxism

Economic policies without consideration for consequences are what we get from the Woke Economy. It’s not about progress; it’s about distribution. It’s not about competency; it’s about equality. But mainly, the Woke Economy is about Marxism. It is time to wake up from the Woke Economy!

So far, the Woke Economic has got us high inflation and social discontent (and sucky Vertical Spreads). The Woke Left is now arguing that if they can just achieve their radical agenda, their policies will fix our fiscal issues – yes, Marxism will do that. But Marxism is a humanly-unrealistic utopian state that requires a strong central government to support – like Communism.

About This Week’s Commentary

This week’s commentary is short on peas but long on peeves.

Congress’ rare reconciliation opportunity to fire-hose a long list of long-sought liberal agendas has derailed a COVID recovery. Instead of focusing on rebooting our supply chain, re-engaging our workforce, or concentrating on getting us back to everyday life, our governments focused on Woke Economics – such as CRT, removing statues, renaming schools, and gender identity. The Misery Index has not been this high for nearly 40 years.

We need to be America again.

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Other Posts from Options Trades By Damocles

This Week’s Market Sentiment

This Market Sentiment Section is typically completed by midday Monday morning. By the time this journal is published, it will be a week old.

(As of 02/14/2022)

This section reviews five indicators: VIX, Put/Call Ratio, S&P 500, Consumer Sentiment Index, and Ecopolitical events that could affect the market’s direction. I will use these indicators to help guide my trading decisions for this week.

Each of my five indicators will “vote” on a DEFCON (Damocles Options Trading Readiness Signal) level, exclusive to that indicator. Then, In the final sub-section, “My sentiment for this coming week” below, I’ll compile the votes into a DEFCON level for the week.

Ecopolitical Tree Shakers (ETS):

Ecopolitical (Sociopolitical-Economics) Tree Shakers (ETS) can be breaking news, political machinations, Federal Reserve musings, or even Twitter Trends. They are events that can abruptly change the dynamics of the current markets. U.S. political polarization’s impact on Wall Street cannot be glossed over.

ETS is like a lit fuse to a bomb. The fuse can be fast or slow, and the bomb can easily be a dud. But I need to watch this closely as an indicator. The ETS can significantly disrupt all the other indicators at the drop of a hat.

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Last week’s critical economic numbers were better than expected (expected a bee sting but only got a chigger bite):

• Ukraine military action can shock global energy prices
• Federal Reserve Interest Rates debate this week
• Inflation jump by 7.5%
• Senate pass Continuing Resolution to fund the Government until March 11.

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The US cauldron of eco-muck is about to boil over. With Russia threatening to nuke energy prices around the world and inflation hitting a 40-year high, I suspect this week’s Federal Reserve meetings are going to add gas to the fire. Aggressive upping of the national Discount Rate will hit the breaks on economic growth and add more cost to the necessities that we depend on.

But Fed’s action is needed:

Rasing interests rates will raise the cost of stuff. Raising the cost of stuff means we will buy less stuff. The fewer stuff we buy means more stuff is left on the shelves or in the warehouse. The more stuff left in the warehouse the lower the cost of stuff.

Raising interests rates is a cure for inflation. But the time between when the rates are raised and when the cost of stuff is lower – sucks!

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Omicron is starting to take up less room on the liberal media’s headline space. The newly reported cases are falling 20% each week (and by having a Democrat President there is no need to hype the hyperbole).

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Expect the fearmongering to ratchet up early in 2022 as the mid-term elections campaigning start to heat up. With the “Right to Vote” act defeated, the media-mantra will now be “we can not trust the 2022 election – except if Democrats win.”

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ETS votes DEFCON 3

VIX: Broad Market Volatility

The VIX is an emotion-gauge for the general investing population. It is thought to be driven by the Marketeers’ current level of greed or fear. As one-month forward-looking volatility, it is not designed to tell us which direction the market will move but rather how fast it can get there.

A VIX of 15% is assumed to be a market at rest. Since the intrinsic nature of the Stock Market is to move up, a VIX close to 15% or below will correspond with the market’s innate tendency to rise.

The 1-month trajectory of the VIX Regression Channel continues a push higher, but the last two weeks of lowering volatility have made a restorative tilt.

• Last week the VIX ended at 26.4%, a concerning jump from the previous week of 23.7%. But this jump came as the Labor Department released January’s CPI.
• Over the weekend, the VIX continued its rise to 27.4% (as I write this).
• The current VIX is above the 9-Day SMA, the 9-Day SMA is above the 50-Day SMA, and the 5-Day is 48% above the 15%.

All VIX signs suggest we are in a time of high volatility and a high degree of market uncertainty – and the Marketeers hate uncertainty.

Being blind to all other indicators, I will vote for an optimistic DEFCON level 3

VIX votes an optimistic DEFCON 3

Put/Call Ratio:

Put Options are frequently used as protection against existing investments falling. When the ratio between Put Options bought versus Call Options bought is above 1, this is an indicator that the Marketeers are buying insurance to what they may see as declining Markets (or a pending Market collapse). Conversely, when the Put/Call Ratio falls below 1, there is a general sense that the broader Markets will increase, and more investors are buying more than selling.

• The S&P 500’s Put/Call Ratio spent most of last week in the “Good Shape” region.
• The end of the week CPI report created a ratio shock that pushed the ending value to 0.77
• The 9-Day SMA took a jittery turn towards up with the week’s ending value of 0.57.
• Current ratio is above 9-Day SMA, 9-Day is above 50-Day SMA, and the 50-Day is rising

To me, this week’s ThinkorSwim chart suggests the Marketeers have not bailed the markets at this point and are sticking to their existing portfolios.

Being blind to all other indicators, I’ll vote for a cautious DEFCON 4

Put/Call Ratio votes a cautious DEFCON 4

Consumer Sentiment Index (CSI):

A low CSI index is a general dissatisfaction with our current management of U.S. economic policies. This dissatisfaction will imply that something has to change. A high satisfaction rating suggests approval of the current policy management and implies market stability. Surveys of Consumers (umich.edu)

The CSI data fell 8.9% from January’s already dismal numbers. Punishing inflation is the primary contributor to the poor sentiment.

Being blind to all other indicators and just looking at this week’s CSI, I feel we should be extremely cautious.

Misery Index

With the copious amount of economic pressures throughout the nation this year (inflation, employment, interest rates, etc.), knowing what the Misery Index is and what direction the index is moving can cast a long shadow on Marketeer’s sentiment. Numbers are coming from the U.S. Bureau of Labor Statistics (bls.gov).

• Inflation Rate: rose 0.6% in Jan ’22. Up to 7.5% from a year ago.
• Unemployment Rate: January rate = 4.0%

Misery Index = 11.5% (7.5% + 4.0%). Up from 10.8% last month

CSI votes a dismal DEFCON 3

Market Indexes:

DOW (DJX) = 34,738 – down 1.0% from 35,090 last week. (4 weeks deviation: 524 down from 733 last week)
S&P 500 (SPX) = 4,419 – down 1.8% from 4,501 last week. (4 weeks deviation: 86.81 down from 123.57 last week)

The S&P 500 is a stock market index that tracks the 500 largest companies in the U.S. This index represents about 80% of all the capitalization for the country. The S&P is widely considered the best indicator of how all the U.S. markets are performing.

Market Thrashing

4 Weeks Thrashing of DJX = +/- 524 points or 1.5% of the market’s volume is marketably down from 2.1% last week.
4 Weeks Thrashing of SPX = +/- 86.81 points or 2.0% of the market’s volume is a sizable drop from 2.7% last week.
(Market Thrashing above 1.0% might indicate indecision from the Marketeers.)

The 4-week Market Thrashing continues to be high but also continues to fall week to week. High Thrashing is a signal of uncertainty by the Marketeers, and the Marketeers hate uncertainty. But a falling Thrashing may signal a locking-in to the current week’s trajectory.

• The 4-month trend turned decisivly bearish
• The 4-week trajectory has leveled
• The 9-Day SMA and the 50-Day SMA continue running with the Bears
• Current value of SPX is now well below the 9-Day SMA and the 9-Day is well below the 50-Day SMA.
• Falling Thrashing suggests a testing of a bottom

Being blind to all other indicators, I’ll go with an optimistic DEFCON 3

Market Index votes an optimistic DEFCON 3

My sentiment for this coming week:

Of the five indicators:

• The ETS is voting a – DEFCON 3
• The VIX took an inflationary bounce – optimistic DEFCON 3
• The P/C Ratio shows nervousness – cautious DEFCON 4
• The CSI shows a consumer base not excited about our economic future – DEFCON 3
• The Market Indexs suggests a testing of a bottom – optimistic DEFCON 3

My indicators are suggesting that we may be testing the bottom side of the January bruising. But scary ETS on the horizon may spoil market hopes.

Trading Readiness Level for this week

DEFCON = 3

This week, I will focus on:

With this week’s DEFCON 3, I’m going to maintain defense.

• Roll the most at-risk opened Vertical Spreads.
  • Rolled Spreads to be pushed towards OTM if possible.
  • Be OK with paying a premium as long as the debit is not more than the premiums originally collected.
  • Be OK with a widening the strike width, as long as the additional risk does not exceed the week’s max
• Spread term of 8-weeks or less.

Note: Of my four spreads that were most at-risk when the markets began their turn south, I have already rolled three (hopefully out of range from being early assigned). The one QQQ Vertical Bull Put Credit Spread that I left in the high-risk category will be rolled Monday.

Profit and Loss Statements

(As of 02/11/2022)

Cash Balance Sheet

	Year 2022	Month Feb	Week #7
Beginning Account Balance	$28,000.00	$28,201.75	$28,546.88
Deposits (Div. & Int.)	$0.22	$0.00	$0.00
Withdraws (paycheck1)	-$525.00	-$0.00	-$0.00
Premiums on Open	$5,230.00	$2,485.00	$1,059.00
Premiums on Close	-3,993.00	-$1,986.00	-$909.00
Fees Paid (total)	-$17.39	–$6.14	-$2.05
Ending Account Balance	$28,694.83	$28,694.83	$28,694.83
Total Gain/Loss	$694.83	$492.86	$147.95
ROR		1.7%	0.5%
ROC	2.5%

Cash Flow Chart

(Note: the negative weekly results for weeks 4 were when I withdrew $525 from the Trading Account for my paycheck.)

My Performance vs. SPY

Hypothetically, instead of depositing $28,000 in my Options Trading Account, could I have done better if I bought $28,000 of the ETF/SPY instead?

	Options Trading Account	SPY (Fictional)
Initial Investment (As of Jan 4, 2021)	$28,000.00 (Cash)	$28,000.00 (58.9523 shares @ $474.96)
Funds Added	$5,230.22 (Premiums)	0.22 shares (Dividends Reinvested)
Funds Removed	-$4,010.39 (Early Close & Fees)	$0 (Fractional Shares Sold)
Market Changes	-$4,785.50 (Open Spreads’ Fair Market Value )	-$2,201.61 (Gain/Loss)
Ending Balance	$24434.33 (Mark-To-Market)	$25,798.39 (59.1706 shares * $436.00 CV)
ROI	-12.7%	-7.9%

Schedule for this Week

Goals for this week: (02/14/2022 – 02/18/2022) (Week #7)

• Document lessons learned or new thoughts
• Open one or two wide-strike spread
• Update Trading Log as trades occurs

Monday:

• Determine/update this week’s market sentiment section
• Calculate/record Put/Call Ratios for all stocks on the watch list
• Review/tweak Trend-Channels for all stocks in the watch list
• Set target expiration dates for all Options as follows:
  • Bull Credit Spreads: Apr 01, 2022 (6-8 weeks)
    Note: If there are no Options Chains published for the 8-week expiration, then use the next Options Chain down from 8-weeks (7-weeks, 6-weeks). Beyond 4-week expirations, only the monthly chains are available to trade.
• Look up Ex-Dividend dates for positions in/approaching ITM (MarketWatch/Calendar)
• Stage possible trades for all watch list stocks by 10:00 AM
• NO TRADING BEFORE 10 AM. (Let the Market find its direction after the weekend.)
• Watch one Webcast or take one online mini-course to be completed by Friday.

Tuesday – Thursday:

• Review how yesterday’s staged trades moved. Adjust premiums to take advantage of movements.
• Submit a couple of Spreads, but keep a close watch. If one is accepted, cancel the others (we want only one new active trade per day).
• Be mindful of Entry Rules.

Friday:

• Review the total technical dollars at risk for this week. If significantly below $500, then submit additional spreads if prudent.
• Update and post weekly journal (this blog) with any lessons learned or strategy changes.

This Week’s Trade Activity

(As of 02/18/2022)

Spread Count Summary:

	Year 2022	Month Feb	Week #7
Vertical Bull Put Credit Spread	11	4	1
Vertical Bear Call Credit Spread	0	0	0
Vertical Bull Put Debit Spread	0	0	0
Vertical Bull Call Debit Spread	0	0	0
Margin Interest	0	0	0
Total	11	4	1

Current Dollars at Risk:

	Year 2022	Month Feb	Week #7
Vertical Bull Put Credit Spread	$17,385.	$9.515.	$2,941.
Vertical Bear Call Credit Spread	$0.	$0.	$0.
Vertical Bull Put Debit Spread	$0.	$0.	$0.
Vertical Bull Call Debit Spread	$0.	$0.	$0.
Iron Condor	$0.	$0.	$0.
Total Dollar Risk	$17,385.	$9.515.	$2,941.
Max Risk Allowed	$28,000.	N/A	$3,500.

Vertical Spreads Opened This Week

(02/14/2022 – 02/18/2022)

(Rolled) QQQ:350p/310p  – Open 02/14/22 – Expires 04/01/22 – Max Gain = $1,059.00 – Open Price = $349.53
(Vertical Bull Put Credit Spread)
At Open: Prob. OTM=46.8%, Headroom=+0.2%, Max Loss=$2,941.00, AROR=285.4%

Entry Rules for Vertical Bull Put Credit Spreads:

1. Current maximum dollars at risk < $28,000? Yes ($17,385)
2. Max dollar at risk this week < $3,500? Yes ($2,941)
3. Max time to have any dollars at risk < 8 weeks (<56 days)? Yes (46 days)
4. Long-term trend (four months) bullish? No (see chart)
5. Short-term trajectory of the underlying bullish? No (see chart)
6. 2-week Thrashing < 1% & Bullish: No (2-week Thrashing = 2.4% / Bullish, )
7. Put/Call Ratio < 1, (or falling if it is > 1)? No (1.4 up from 1.2)
8. Current price above 9-Day SMA?: No (see chart)
9. 9-Day SMA above 50-Day SMA?: No (see chart)
10. Short-strike > 1 SD below the current price? No (1SD=$329.18)
11. Short-strikes Prob-OTM >= 85.0%? No (40.4%)
12. Short-Strike price below the trend channel at expiration?: No (see chart)
13. Strike Width minimum (>= 15)? Yes (40 strike width)

Opening this Vertical Spread violates most of my parameters Entry Rules. But desperate times call for desperate measures. I should create Entry Rules for Rollers.

This Spread is a roll from QQQ:360p/344p  – Open 12/28/21 – Expires 02/18/22. With only 4 days left until expiration, I wasn’t feeling too confident that the Short Strike would not be assigned.

Vertical Spreads Currently Cooking

(As of 02/18/2022)

(Rolled) QQQ:360p/320p  – Open 02/08/22 – Expires 03/25/22 – Max Gain = $1,178.00 – Open Price = $353.65
(Vertical Bull Put Credit Spread)
At Open: Prob. OTM=40.4%, Headroom=+1.8%, Max Loss=$2,822.00, AROR=338.3%
Now: Prob. OTM=25.4%, Headroom=+5.0%

SPY:390p/370p  – Open 02/04/22 – Expires 03/25/22 – Max Gain = $125.00 – Open Price = $446.66
(Vertical Bull Put Credit Spread)
At Open: Prob. OTM=85.9%, Headroom-12.7%, Max Loss=$1,875, AROR=49.3%
Now: Prob. OTM=83.6%, Headroom=-10.5%

(Rolled) QQQ:350p/310p  – Open 01/25/22 – Expires 03/18/22 – Max Gain = $1,310.00 – Open Price = $442.47
(Vertical Bull Put Credit Spread)
At Open: Prob. OTM=40.6%, Headroom= +2.1%, Max Loss=$2,690, AROR=341.6%
Now: Prob. OTM=37.5%, Headroom=+2.2%

SPY:415p/395p  – Open 02/02/22 – Expires 03/11/22 – Max Gain = $123.00 – Open Price = $455.27
(Vertical Bull Put Credit Spread)
At Open: Prob. OTM=84.5%, Headroom-8.8%, Max Loss=$1,877, AROR=64.1%
Now: Prob. OTM=73.7%, Headroom=-4.8%

SPY:410p/390p  – Open 01/19/22 – Expires 03/04/22 – Max Gain = $115.00 – Open Price = $458.30
(Vertical Bull Put Credit Spread)
At Open: Prob. OTM=86.5%, Headroom-10.7%, Max Loss=$1,885, AROR=50.2%
Now: Prob. OTM=82.0%, Headroom=-5.9%

DIA:330p/315p  – Open 01/14/22 – Expires 02/25/22 – Max Gain = $95.00 – Open Price = $358.51
(Vertical Bull Put Credit Spread)
At Open: Prob. OTM=84.3%, Headroom-8.0%, Max Loss=$1,405, AROR=58.1%
Now: Prob. OTM=80.7%, Headroom=-3.6%

SPY:430p/410p  – Open 01/12/22 – Expires 02/25/22 – Max Gain = $110.00 – Open Price = $470.75
(Vertical Bull Put Credit Spread)
At Open: Prob. OTM=85.8%, Headroom-8.7%, Max Loss=$1,890, AROR=47.8%
Now: Prob. OTM=62.1%, Headroom=-1.3%

Vertical Spreads Closed This Week

(As of 02/18/2022)

SPY:431p/416p  – Open 01/07/22 – Expires 02/18/22 – Max Gain = $172.00 – Open Price = $399.76
(Vertical Bull Put Credit Spread)
At Open: Prob. OTM=83.0%, Headroom-8.0%, Max Loss=$1,386, AROR=69.2%
At Close: Prob. OTM=93.9%, Head Room=-1.3%, AROR= 69.2%

Cost to open: $1.14 premium collected * 100 shares = $114.00
Cost to close: $0.00 premium paid * 100 shares = $0.00 (closed worthless)
(Net Profit= $114 to open – $0.00 to close – $1.00 fees = $113.00
AROR= ($113.00 / 43 days in play) *365 / $1,386= 69.2%

(Rolling) QQQ:360p/340p  – Open 12/28/21 – Expires 02/18/22 – Max Gain = $144.00- Open Price = $402.27
(Vertical Bull Put Credit Spread)
At Open: Prob. OTM=83.0%, Headroom-10.1%, Max Loss=$1,856, AROR=54.1%
At Close: Prob. OTM=17.7%, Head Room=+3.7%, AROR= -371.6%

Cost to open: $1.44 premium collected * 100 shares = $144.00
Cost to close: $9.09 premium paid * 100 shares = -$909.00 (closed to roll)
(Net Profit= -$144 to open – $909.00 to close – $2.00 fees = -$907.00
AROR= (-$907.00 / 48 days in play) *365 / $1,856 = -371.6%

At the time I closed this Spread, QQQ = $347.34 (14.0% below the 52-week high and still 2.8% in correction). With 4 days to expiration Friday, the Short Strike is $10.47 (2.9%) ITM. Both the long and short term trajectory is bearish. I feel pretty confident that the Short Strike would not recover and be assigned before 2/18.

I rolled this trade to QQQ: 350p/310p exp 04/01 (see Vertical Spreads Opened This Week section above).

Conclusion

Can selling options for income be considered a Home Business? Can I make money at home by selling Vertical Bull Put Credit Options Spreads? These are questions that I am trying to answer for myself.

Three years ago, I set out on a task to see if I could make a retirement income from home by trading Stock Options. I began with NO knowledge of Options mechanics and only $8,000 to risk. And because I learn best when I write things down, I have documented every step of the way (every bonehead mistake, process epiphanies, interconnecting events, externalities, and so on).

This blog is my Options Trading Journal. I will record my weekly Option Contracts buys and sells in hopes of gaining experience.

Experience is the ability to recognize that
I’m about to make the same mistake again.

– Damocles

Disclaimer

Even though I have tried to make it clear that this blog is my personal trading journal, it has been suggested by others that I, nevertheless, include a general disclaimer. So here goes…

“This blog and the information contained herein is not intended to be a source of advice or analysis concerning the material presented. The information and/or documents contained in the blog do not constitute investment advice.”