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My 4-month Trend Channels will stay bearish as the tail-end of the channel’s data runs through the 65-day market downturn. So, as our agile Spider-Man swings off of the Correction’s bottom, I need to be as agile and make temporary changes to my Entry Rules – only like a Spider can.

Whatever life holds in store for me,
I will never forget these words:
‘With great power comes great responsibility.’
This is my gift, my curse. Who am I?
I’m Spiderman.”

(Movie: Spider-man)

Agile Rules for Vertical Spreads

For the foreseeable future, my four-month Trend Channels will stay bearish as the tail-end of the channel’s data runs through the 65-day market downturn. So, as our agile Spider-Man swings off the Correction’s bottom, I need to be as agile and make temporary changes to my Entry Rules – only like a Spider can.

One of my rules for selecting a Lost Resistant Short-Strike is to examine the four-month Trend Channel, and if bearish, then my suggested Short-Strike should be an additional 5 points below the current price’s Standard Deviation. But since the last 6-weeks market trajectories were decisively bullish, I will temporarily change the Trend Channel duration for this one rule from 120 days to 42 days.

give me a visual

For this week, I will experiment a bit with the Trend Channel’s length.

  1. Change the 4-month channel’s line type to dots and disable the “Right Extention” option. This will continue to show me their 4-month trend without projecting the current 4-month trajectory.

  1. Add a second 6-week Trend Channel. Turn on the “Right Extention” option to show the 6-week trajectory.
4-Month Regression Trend Channel for SPY - OptionsTradesByDamocles.com

One of my fundamental Spread strategies is to Trade the Trend. But, as the markets begins to scurry out of the early year’s Correction, I found there was not much value in the four months length of the channel. During the long-term Bull Market, a four-month trend will help me keep my sights on the trajectory, but a duration of that long will have a hard time reacting to the velocity of change.

Now that we are returning to a bull trajectory for the markets, it seems a four-month channel will equally be too slow to respond to a rebound.

So, for the next couple of weeks, I will start experimenting with different lengths to my Trend Channel(s).

J Jonah Jameson
J Jonah Jameson

Peter Parker: “Spider-Man wasn’t trying to attack the city… he was trying to save it.
That’s slander.”

J. Jonah Jameson: “It is not. I resent that. Slander is spoken.
In print, it’s libel.”

Movie: Spider-Man

For this week, temporarily changing my Trend Channel will dramatically change the criteria for selecting my Short Strikes. So I need to be especially agile not to get too aggressive.

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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 03/28/2022)

This section reviews five indicators: Ecopolitical events, VIX, Put/Call Ratio, Consumer Sentiment Index, and the S&P 500, and how these 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.


Yikes – Yawn – Yay

  • Russia likely to default 4/4 debt payment – Yikes
  • WTI oil wobbling at the $115 level, keeping gas prices high – Yikes
  • Inflation/Interest Rates cast dark shadows over my at-risk Spreads – Yikes
  • Stagflation/recession fears- Yikes
  • Expect a half-point interest hike in May – Yikes
  • Housing market in need of repair – Yikes
  • Russia is Biden’s 2022 midterm scapegoat – Yawn
  • Biden proclaims regime change in Russia – Yawn
  • A Build Back Better makeover – Yawn
  • 2023’s Federal Budget to include Billionaire Tax – Yawn
  • Russia redefine Ukranian Objective – Yay
  • S&P 500 had two winning weeks in a row – Yay
  • Wednesday’s Jobs Report exceeded expectations – Yay

Geopolitical

  • As a peace agreement starts coming into focus, the Russian military action in Ukraine is signaling a change in objectives. They have been unexpectedly bogged down and repulsed by a bunch of farmers with pitchforks (being metaphorical). So, they are now regrouping to shore up the Russian-friendly eastern side of Ukraine. The fear-mongering mainstream media, hyping WWIII, massive US cyberattacks, and a nuclear exchange with Russia, are hugely disappointed.
  • The Marketeers were relieved when Russia made its $117 million interest payment last week. But in a week from now, 04/04/22, the Russian government has to pony up with $2.2 billion – in US dollars. And since Russia owes US banks nearly $15 billion, a default could send a shock wave through our markets. But since $2.2 billion (or even $15 billion) is considered throwaway money to the Federal Government, I suspect the shock won’t last long.
  • Last week’s Warsaw speech threw the White House into damage-control pandamonium and created a global uproar. Biden’s nine-word ad-lib stating Putin “cannot remain in power” has ratcheted the rhetoric to Cold-War levels. But how much different is this from Reagan’s brash “we begin bombing in five minutes” in reference to 1984 Russia? (One big difference was that Reagan’s comment was an obvious joke during a ‘mic-check’ practice to his radio speech – that comment was never aired. But Biden’s was broadcast worldwide at the end of a major US policy speech.)  

Socioeconomics 

  • Averages for three of my four go-to underlying ETFs inched up for a second week in a row. QQQ followed the +8.6% the week before with another 0.9% this past week. DIA added another 0.2% over its 5.3% jump, and SPY did the best by adding 1.6% last week over its stellar run of 6.0% the week prior. IWM was the only ETF that lost 0.5% from its positive 5.4% prior week. All four of my underlying assets rose an average of almost 7% for a two-week trajectory.
  • The Feds raised the Federal Discount rate by 0.25% to 0.5% during last week’s policy meeting. They also announced their intention to raise the rate by 0.5% during each of their future policy meetings this year. (Note: The Federal Reserve has its policy meetings during the odd months of this year.) So by the end of the year, expect my credit card interest rate to be about 3.5% more than it is now.
  • Build Back Better will reemerge from its ashes as the Democrats are crazed for a reconciliation win. But BBB 3.0 will be a lot different from its predecessors. Expect a focus on more bipartisan projects like Climate Change (including friendly fossil-fuel rules), narrowly targeted and fully funded social spending, and a healthy dose of debt reduction.
  • A Billionaire Tax will be included in Biden’s 2023 Federal Budget, and it may be problematic. For the first time, it is including taxing “unrealized appreciation” of assets. I’m not sure how being taxed on profits you never receive can pass Constitutional mustard. But if it does, see Progressive Dems like AOC or Sanders eventually push this on everyone who has a 401k.
  • Pending home sales have fallen for four straight months. And with the prospects of higher mortgage interest rates, I would expect it to fall further. And when the Housing markets cools, so do large parts of the economy (Home Depot, Rooms to Go, Whirlpool, etc.). I would expect to see a year-long lull with home consumption until most of us get used to the higher cost. I just hope this only affects the growth in the US economy and does not push it into a bear market.
  • Recession flags are being waved. But the market turmoil that is usually associated with a recession may have already happened. (Recessions are usually declared after we see it in the rearview mirror.) An inverted yield curve, rising short-term interest rates, and some economic downturns have already had a down payment over the last three months. Although hard financial times still appear to continue, I’m hoping not to see another 10% drop in a short month and snag my Vertical Spreads. (Note: I will boo-hoo over my buy-and-hold portfolio in a different blog.)

Most ETS’ Yikes items appear to have legs. So what is depressing the markets now may continue to do so. But it also seems that we may have reached the limit of the Marketeer’s patience towards the current market correction and hopefully we won’t lose too much more ground over the next few weeks.

ETS votes optimistic 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.

ThinkorSwim Chart: CBOE Market Volatility Index (VIX) - 03/27/2022
- OptionsTradesByDamocles.com
ThinkorSwim Chart: CBOE Market Volatility Index (VIX) – 03/27/2022

The 4-week trajectory of the VIX Regression Channel continued a dramatic swing down as the Marketeers assess a market trajectory change.

  • Last week the VIX ended at 20.8%, a significant drop from the previous week of 23.87%.
  • The current VIX is below the 9-Day and 30-Day SMA, but the 9-Day SMA is above the 50-Day SMA

The dramatic turn towards a lowering VIX is showing a degree of the Marketeer’s confidence with the current market trajectory. And since the current 4-week movement in my ETFs is decisively bullish, this stands to be good news.

But the current VIX is still above 20% as well as the 9-Day SMA. Even though I smell a bull in the air, I still need to be cautious.

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 for 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.

ThinkorSwim Chart: S&P 500 Put/Call Ratio - as of 03/27/2022
- OptionsTradesByDamocles.com
ThinkorSwim Chart: S&P 500 Put/Call Ratio – as of 03/27/2022
  • The S&P 500’s Put/Call Ratio spent most of last week in the “Good Shape” region
  • The end of the week value of .55 is a slight drop from .57 last week
  • The 9-Day SMA was fell to a six-week low ending at 0.59
  • The current ratio dropped below the 50-Day SMA but the 9-Day is still above the 50-Day SMA

Last Thursday (3/24) the Put/Call Ratio fell below the 0.5 line for the first time since Jan 11. Even though the sub 0.5 level is only for a few minutes, it shows that the Marketeers are gaining confidence that we are back on a bull market trajectory.

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)

Consumer Sentiment Index as of 03/27/2022
- OptionsTradesByDamocles.com
Consumer Sentiment Index as of 03/27/2022

March Finals continue to disappoint. The indexes continue to inch downward, as we all struggle with high inflation, food shortages, and rising interest rates.

March index of 59.4% is a disheartening 5.4% lower than just a month ago. And now, 59.4% is not the lowest in 10-years.

Continued low CSI numbers are conformation of the general dissatisfaction with the government’s economic policies.

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 0.8% in Feb ’22. Now up to 7.9% from a year ago.
  • Unemployment Rate: Febuary rate = 3.6%. Continue slight drop from 3.8% in Feburary.

Misery Index = 11.5% (7.9% + 3.6%). Slightly down from 11.7% last month.

CSI votes a dismal DEFCON 3

Market Indexes:

DOW (DJX) = 34,861 – up 0.3% from 34,755 last week. (4 weeks deviation: 695 down from 552 last week)
S&P 500 (SPX) = 4,543 – up 1.8% from 4,463 last week. (4 weeks deviation: 112.54 down from 80.75 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.

ThinkorSwim Chart: Daily S&P 500 Index - Four Months Trend (Updated 03/27/2022)
- OptionsTradesByDamocles.com
ThinkorSwim Chart: Daily S&P 500 Index – Four Months Trend (Updated 03/27/2022)

Market Thrashing

4 Weeks Thrashing of DJX = +/- 695 points or 2.0% of the market’s volume is up from 1.6% last week.
4 Weeks Thrashing of SPX = +/- 112.54 points or 2.5% of the market’s volume is up from 1.8% last week.
(Market Thrashing above 1.0% might indicate indecision from the Marketeers.)

The Markets had a Wowser week last week. Soaring over 5% was the best in a year. But does this mean that we are on a go-go rebound?

  • The 4-month trend continues decisively bearish
  • The 4-week trajectory turns aggressively bullish
  • The 9-Day SMA turned bullish
  • The 50-Day SMA rises
  • Current SPX above the 9-Day SMA. breaking through the resistant line of the trend channel
  • A leveling in Thrashing suggests this coming week is still an unknown

The 4-Month Trend will continue Bearish for a while due to the Correction data on the back end. But the 50-Day SMA moved sightly Bullish for the first time in a month. The short-term trajectories are suggesting a possible return to a bullish direction.

Being blind to all other indicators, I’ll go with a cautious DEFCON 4.

Market Index votes a cautious DEFCON 4

My sentiment for this coming week:

Of the five indicators:

  • The ETS has systemic issues – optimistic DEFCON 3
  • The VIX is falling but still above 20% – optimistic DEFCON 3
  • The P/C Ratio shows continuing improvement – cautious DEFCON 4
  • The CSI shows a consumer base not excited about our economic future – dismal DEFCON 3
  • The Market Indexes look to rebound – cautious DEFCON 4

Volatility (VIX) and Put/Call ratios continue to fall as the broader markets showed a strong two-week jump. These three indicators are suggesting the Marketeers may be seeing a bounce back from the Corrections bottoms. But the ETS continues to have some weighty issues that could still shock a fragile rebound. Even though I’m hoping that we are at the beginnings of a rebound, I still want to be super cautious for the next couple of weeks. And since the year is still young, I’ll continue with an optimistic DEFCON 3.

Trading Readiness Level for this week

DEFCON = 3

This week’s Rules:

Maintain defense.

I have one rolled QQQ Vertical Spread set to expire this week. But this time, the probability of expiring worthlessly seems good. As of the start of Monday, the Short-Strike is now > 2.5% below the underlying’s current value. this will be the first (hopefully) in a series of rolled QQQs that will eventually roll off the inventory.

Entry Rules:

Wait until late Tuesday to confirm QQQ’s likelihood of expiring worthlessly:

  • Open 2 20-wide or 1 40-wide Strike-Width Spread (as the market sees fit)
  • Max-risk < $4K
  • Spread term of 8-weeks or less.
  • Short Strike > 1SD below Current Underlying Price
  • If 4-month 6-week Trend Channel is bearish then -5 from Short Strike
  • If 2-week trajectory is bearish then another -5 from Short Strike
  • If 1-Week trajectory is bearish then another -5 from Short Strike
  • If POTM is still < 85%, lower Short Strike until > 85%
Exit Rules:
  • Early close following this schedule:
    • 85% of max-gain if 4 or more weeks out
    • 90% of max-gain if 3 or more weeks out
    • 95% of max-gain if 2 or more weeks out
    • Let expire if less than 2 weeks out
  • Roll Spreads within 1 week of expiration if:
    • Short Strike is ITM
    • Short Strike < 1.0% below current price and 1-week trajectory is bearish
    • Short Strike < 55% POTM and 1-week trajectory is bearish







Profit and Loss Statements

(As of 04/01/2022)

Note: This month was my first for the year (and hopefully my last). This is solely from last week’s loss of $802 from a roll that, as it turned out, I did not need to roll.

Cash Balance Sheet

Year
2022
Month
Mar
Week
#13
Beginning Account Balance$28,000.00$28,416.96$27,454.80
Deposits (Div. & Int.)$0.67$0.23$0.23
Withdraws (paycheck1)-$1,575.00-$525.00-$0.00
Premiums on Open$9,178.00$2,779.00$206.00
Premiums on Close-7,927.00-$3,016.00-$12.00
Fees Paid (total)-$30.70-$9.22-$3.06
Ending Account Balance$27,645.97$27,645.97$27,645.97
Total Gain/Loss-$354.03-$770.99$191.17
ROR-2.7%0.7%
ROC-1.3%
1 Paycheck = 22.5% of initial investment paid out monthly

Cash Flow Chart

YOD Vertical Credit Spreads Cash-Flow Chart - As of 04/01/2022 (Excel Chart)
- OptionsTradesByDamocles.com
YOD Vertical Credit Spreads Cash-Flow Chart – As of 04/01/2022 (Excel Chart)

(Note: the negative weekly results for weeks 4, 8, and 12 were when I withdrew $525 from the Trading Account for my paycheck. Negative week 11 is from an unnecessarily bad roll.)

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$9,178.44
(Premiums)
0.22 shares
(Dividends Reinvested)
Funds Removed-$7,957.70
(Early Close & Fees)
$0
(Fractional Shares Sold)
Market Changes-$769.00
(Open Spreads’ Fair Market Value )
-$1,251.33
(Gain/Loss)
Ending Balance$28,451.97
(Mark-To-Market)
$26,748.67
(59.1706 shares * $452.06 CV)
ROI1.9%-4.5%
As of 04/01/2022 10:09 AM

Note: The markets started 2022 terribly. But I still believe that it will end higher than it began. So if I can keep my at-risk Spreads safe until the markets start a slow trackback, then all this negative unrealized market value will reverse.







Schedule for this Week

Goals for this week: (03/28/2022 – 04/01/2022) (Week #13)

  • 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 on the watch list
  • Set target expiration dates for all Options as follows:
    • Bull Credit Spreads: May 20, 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 open on any one 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 a weekly journal (this blog) with any lessons learned or strategy changes.

This Week’s Trade Activity

(As of 04/01/2022)

Spread Count Summary:

Year
2022
Month
Mar
Week
#13
Vertical Bull Put Credit Spread1962
Vertical Bear Call Credit Spread000
Vertical Bull Put Debit Spread000
Vertical Bull Call Debit Spread000
Margin Interest000
Total1962

Current Dollars at Risk:

Year
2022
Month
Mar
Week
#13
Vertical Bull Put Credit Spread$14,307.$9,476.$3,794.
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$14,307.$9,476.$3,794.
Max Risk Allowed$28,000.N/A$4,000.

Options Buying Power:

Unallocated dollars available to open new Vertical Credit Spreads:

Current Cash Balance$27,645
Set-Aside Dollars for Existing Spreads-$16,000
Cash Available for New Spreads$11,645.74
(Options Buying Power)







Vertical Spreads Opened This Week

(03/28/2022 – 04/01/2022)

IWM:180p/160p  – Open 03/31/22 – Expires 05/20/22 – Max Gain = $94.00 – Open Price = $208.31
(Vertical Bull Put Credit Spread)
At Open: Prob. OTM= 86.7%, Headroom= -13.6%, Max Loss= $1,906, AROR= 35.6%

ThinkorSwim Chart: Vertical Bull Put Credit Spread – IWM – Short: 180 Put – Long: 160 Put
- OptionsTradesByDamocles.com
ThinkorSwim Chart: Vertical Bull Put Credit Spread – IWM – Short: 180 Put – Long: 160 Put

Entry Rules for Vertical Bull Put Credit Spreads:

  1. Current maximum dollars at risk < $28,000? Yes ($14,307)
  2. Max dollar at risk this week < $4,000? Yes ($3,794)
  3. Max time to have any dollars at risk < 8 weeks (<56 days)? Yes (50 days)
  4. Long-term trend (four months two-months) bullish? Yes (see chart)
  5. Short-term trajectory of the underlying bullish? Yes (see chart)
  6. 2-week Thrashing < 1% & Bullish: Yes (2-week Thrashing = 0.9% / Bullish)
  7. Put/Call Ratio < 1, (or falling if it is > 1)? Yes (1.6 down from 2.8)
  8. Current price above 9-Day SMA?: Yes (see chart)
  9. 9-Day SMA above 50-Day SMA?: No (see chart)
  10. Short-strike > 1 SD below the current price? Yes (1SD=$186.42)
  11. Short-strikes Prob-OTM >= 85.0%? Yes (86.7%)
  12. Short-Strike price below the trend channel at expiration?: Yes (see chart)
  13. Strike Width minimum (>= 15)? Yes (20 strike width)

This is the first Vertical Spread opened this year where all (but rule 9) are green. Let’s hope this is not just another head-fake.

SPY:410p/390p  – Open 03/29/22 – Expires 05/20/22 – Max Gain = $112.00 – Open Price = $459.50
(Vertical Bull Put Credit Spread)
At Open: Prob. OTM= 86.4%, Headroom= -10.8%, Max Loss= $1,888, AROR= 41.3%

ThinkorSwim Chart: Vertical Bull Put Credit Spread – SPY – Short: 410 Put – Long: 390 Put
- OptionsTradesByDamocles.com
ThinkorSwim Chart: Vertical Bull Put Credit Spread – SPY – Short: 410 Put – Long: 390 Put

Entry Rules for Vertical Bull Put Credit Spreads:

  1. Current maximum dollars at risk < $28,000? Yes ($15,342)
  2. Max dollar at risk this week < $4,000? Yes ($1,888)
  3. Max time to have any dollars at risk < 8 weeks (<56 days)? Yes (52 days)
  4. Long-term trend (four months 6-weeks) bullish? Yes (see chart)
  5. Short-term trajectory of the underlying bullish? Yes (see chart)
  6. 2-week Thrashing < 1% & Bullish: No (2-week Thrashing = 2.0% / Bullish)
  7. Put/Call Ratio < 1, (or falling if it is > 1)? Yes (1.4 down from 1.8)
  8. Current price above 9-Day SMA?: Yes (see chart)
  9. 9-Day SMA above 50-Day SMA?: No (see chart)
  10. Short-strike > 1 SD below the current price? No (1SD=$426.58)
  11. Short-strikes Prob-OTM >= 85.0%? Yes (86.4%)
  12. Short-Strike price below the trend channel at expiration?: Yes (see chart)
  13. Strike Width minimum (>= 15)? Yes (20 strike width)

This Spread is my first with the shorter 6-week Trend Channel. 6-weeks may be too short, I’ll fiddle with a comfortable length. Maybe I’ll settle on a length that is the same as the max time for a spread – 8 weeks.

Vertical Spreads Currently Cooking

(As of 04/01/2022)

Currently rolled Spreads: 4
Spreads currently ITM: 0

(Rolled) QQQ:330p/290p  – Open 03/25/22 – Expires 05/06/22 – Max Gain = $322 – Open Price = $359.08
(Vertical Bull Put Credit Spread)
At Open: Prob. OTM= 77.5%, Headroom= -8.2%, Max Loss= $3,678.00, AROR= 75.8%
Now: Prob. OTM= 80.7%, Headroom=-8.3%

(Rolled) QQQ:345p/305p  – Open 03/15/22 – Expires 04/29/22 – Max Gain = $1,996.00 – Open Price = $319.40
(Vertical Bull Put Credit Spread)
At Open: Prob. OTM= 21.1%, Headroom= +7.2%, Max Loss= $2,004, AROR= 807%
Now: Prob. OTM= 70.2%, Headroom=-4.2%

(Rolled) SPY:410p/380p  – Open 02/23/22 – Expires 04/14/22 – Max Gain = $509.00 – Open Price = $430.68
(Vertical Bull Put Credit Spread)
At Open: Prob. OTM= 65.5%, Headroom= -4.8%, Max Loss=$2,491.00, AROR=148.9%
Now: Prob. OTM = 96.2%, Headroom = -9.1%

(Rolled) DIA:320p/290p  – Open 02/24/22 – Expires 04/08/22 – Max Gain = $660.00 – Open Price = $2,340.00
(Vertical Bull Put Credit Spread)
At Open: Prob. OTM= 55.6%, Headroom= -2.0%, Max Loss=$2,491.00, AROR=239.1%
Now: Prob. OTM= 98.3%, Headroom=-7.6%







Vertical Spreads Closed This Week

(As of 04/01/2022)

SPY:380p/360p  – Open 03/03/22 – Expires 04/22/22 – Max Gain = $142.00 – Open Price = $438.66
(Vertical Bull Put Credit Spread)
At Open: Prob. OTM=84.7%, Headroom=-13.5%, Max Loss=$1,858, AROR=55.4%
At Close: Prob. OTM = 95.9%, Head Room = 17.2%

Cost to open: $1.42 premium collected * 100 shares = $142.00
Cost to close: $0.12 premium paid * 100 shares = $12.00 (closed 26 days early)
Net Profit = $142.00 to open – $12.00 to close – $2.00 fees = $128.00
AROR = ($128.00 / 26 days in play) * 365 / $1,858 = 96.7%

This Spread was closed 26 days early via a 90% of Max-Gain Trade Trigger in ThinkorSwim. I hope to see many more of these early-closes in the next couple of weeks.

(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%
At Close: Prob. OTM = 99.6%, Head Room = -2.8%, AROR= 285.4%

Cost to open: $10.59 premium collected * 100 shares = $1,059.00
Cost to close: $0.00 premium paid * 100 shares = $0.00 (closed worthlessly)
Net Profit = $1,059.00 to open – $0.00 to close – $1.00 fees = $1,058.00
AROR = ($1,058.00 / 46 days in play) *365 / $2,941 = 285.4%

1. Spread opened (original) open 12/28/21, initial premium collected = $144.00
2. Spread closed (rolling) 02/14/22, premium paid = $909.00
3. Spread reopened (rolled) 02/14/22, premium collected = $1,059.00
4. Rolled Spread closed 04/01/22, premium paid = $0.00 (expired worthlessly)
Net profit from this effort = $294.00

The original Spread’s construction was 360p/340p. When this Spread was closed (rolled), QQQ’s current price was $349.53. If I would have let expired, my Short would have been assigned and my Long would have expired worthlessly. The net loss would have been ($349.53 – $360 * 100 shares =) -$1,047.

So by rolling the original Spread, instead of a net -$1,047 loss, I realized a net gain of $294.00. Rolling this Spread turned this loss into a profit during the time the markets were plummeting into a Correction.

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.”







OptionTradesByDamocles.com
OptionsTradesByDamocles.com