Has “Life, Liberty and the pursuit of Happiness” been supplanted with “Inclusion, Equity and the pursuit of Climate-Justice?” It seems like Bidenomics is dancing the Shipoopi with Lady Liberty – Bipoopinomics
He’s a con man, a swindler,
Charlie Cowell – (Movie: Music Man)
a smooth-talking, fancy-dressing,
no-good, two-bit shyster!
He’s been going from town to town,
taking people’s money for
instruments and uniforms for a boys’ band
that he never intends to form!
Bipoopinomics
Disclosure: This month’s Trade Journal entry is mostly Trade Trudging. Meaning, my commentary is less about Vertical Bull Put Credit Spreads and more about my annoyance with the current social-engineering campaigns. But I did make Spread trades and have recorded those activities below.
In the past two years, we have endured a tormented amount of forced social engineering from a hegemony of influential Social Warriors and a few socially manipulative investment firms holding our economy hostage. To live in the land of the free, I am now coerced to embrace homosexuality and transgenrderism in deference to inclusion. I am obligated to consider socially destructive reparations in defense of equity. And I am harassed to redefine my quality of life in acquiescence to climate justice.
So, considering the social engineering campaigns inflamed via Bidenomics, I am now paying about 15% more to live and have less personal freedoms-of-opinion than I did just two years ago. But as President Biden has proclaimed: “This is the Climate Change economy – get used to it.”
Gaslighting New Markets
Are there great, untapped markets for the gay community?
Can we create a new profitable revenue stream by championing LGBTP+ products and services by villainizing archaic social mores? (Promoting “tuck-friendly” trans-ladies’ wear, mainstream AIDS management, trophying “girl-hood,” affirming gender dickering, Drag Queen education, etc.)
Is there a fortune to be made in Climate Change Mitigation?
Can we develop significant earnings possibilities in climate mitigation by inflaming Climate Change hysteria? Ineffectual solar panels, untenable electric vehicles, scenery-sucking wind turbines, carbon-neutral jet skis, etc., all in the name of being socially responsible?
Will trillions in Slave Reparations be ripe for harvesting?
According to the National Endowment for Financial Education, only about 30% of the people who won a million+ dollars in the lottery were able to keep their money beyond a year. Many will make poor financial decisions (like buying expensive cars and homes, giving away large sums, or taking exorbitant trips). Others are targets for swindlers. And many struggle to cope with the sudden changes in circumstances and make poor choices. So, is there a profit potential in exploiting 150-year-old slave guilt?
A Woke Illuminati
In my SciFi conspiracy-theory imagination, I might imagine questions like these are being asked vis-a-vis a collaboration between a few influential Woke Warriors and mega-investment firms. A Woke like Illuminati who can force social changes on societies by gaslighting new economic markets. All operating from dark, smoke-filled back rooms deep inside an easily manipulatable Biden administration.
But seriously, I seem to be reading a lot about large pension management firms that are strongarming their clients to adopt extreme CSRs (Corporate Social Responsibility) policies in return for more favorable investment returns.
Socially Manipulative Investment Firms
These firms use a variety of techniques to influence the behavior of individuals and groups to benefit their own financial interests or social priorities. Some of the techniques that social manipulation firms use include:
Astroturfing: The practice of creating fake grassroots movements to promote a particular product or to twist opinions.
Information Manipulation: Manipulating information to deceive society about the true value of a particular investment or public sentiment.
BlackRock
In an interview with the Financial Times, Larry Fink, the CEO of BlackRock, the world’s largest asset manager, said that “social changes must be forced” in order to address climate change and other global challenges. Fink argued that “the free market alone will not be enough to solve these problems” and that “governments and businesses must work together to force the pace of change.”
Fidelity
In a speech to the World Economic Forum, Abigail Johnson, the CEO of Fidelity Investments, said that “we need to be more proactive in forcing social change.”
AB InBev
AB InBev, short for Anheuser-Busch InBev, is a multinational drink and brewing company headquartered in Leuven, Belgium, the largest brewer in the world and owner of Bud Light. Two of the investment firms that manage Bud Light’s pensions are the State Board of Administration of Florida (SBA) and BlackRock.
An ousted finance manager of Bud Light suggested in an article in the Guardian that the partnership with transgender influencer Dylan Mulvaney resulted from pressure from one of their pension Funds management firms. Florida Governor Ron DeSantis called on the SBA to investigate AB InBev and possibly explore a lawsuit (DeSantis argued that AB InBev had breached its fiduciary duty to its shareholders by partnering with Mulvaney).
Principal Financial Group
Principal Financial Group, the investment firm managing Target’s massive pension plans, has also taken several steps to address forced social changes. For example, the company has signed the CEO Action for Diversity and Inclusion pledge, which commits the company to increase diversity and inclusion in the workplace. Principal Financial Group has also created several diversity and inclusion initiatives, such as its Women’s Inclusion Council and LGBTQ+ Employee Resource Group.
We The People
Fueled by a federally funded Woke shadow administration under President Biden, we are going through a painful period of forced social change. We, the people, are not in charge of our own destinies, beliefs, or morals.
One thing obvious to me – Bidenomics is less about returning to pre-COVID prosperity and more about dancing the Shipoopi.
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Other Posts from Options Trades By Damocles
This Month’s Market Sentiment
This Market Sentiment Section is typically completed the first week of the month. By the time this journal is published, it will be mostly old news.
(As of Aug 2023)
Ecopolitical Influencers
Ecopolitical (Sociopolitical-Economics) Influencers (EPIs) 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.
EPIs are 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 EPIs can significantly disrupt all the other indicators at the drop of a tweet.
Yikes – Yawns – Yays
- Russian War boils towards NATO – Yikes
- Fitch Downgrades U.S. Ratings – Yikes
- China’s starting to deflate- Yikes
- Whitewashing recession possibility – Yikes
- Feds Raise Interest Rates – Yawn
- Trump Jan 6. Indictment – Yawn
- VIX Rock Bottom – Yay
- GDP up 1st quarter 2023 – Yay
Geopolitical
- Not entirely on the level of Russia invading Ukraine, the Belarusian military is daring to stick a toe into the NATO nation of Poland with two Belarusian helicopters flying into Polish airspace during a “training exercise.” Additionally, the Russian military launched a massive drone attack in the Ukrainian city of Izmail, across the Danube River from Romania (a NATO member). If Poland and Romania are drawn into the 18-month war between Russia and Ukraine, then the Western might of NATO will have the excuse to get directly involved with Russia. NATO action in that area will spark another global market pullback that may have a long-term effect.
- Former president Trump was indicted on four federal charges out of the Jan 6, 2021 probe, including conspiracy to defraud the U.S. and others. Additionally, Donald Trump will be arraigned Sept. 6 in Atlanta in the criminal case where he is accused of conspiring to overturn the 2020 election in Georgia. Whether politically charged or not, these indictments are a sad testimony of our country’s out-of-control political divide (thanks to social media). Trump is not President today, so his legal woes should not affect my long-term Vertical Spreads.
- China’s exports sank at their fastest pace since the COVID-CON began, which was caused by their Zero-COVID policy. Now it’s mainly caused the downturn in global demand for China’s goods. This demand reversal has ignited an “I got it – they don’t want it” spiral that is becoming the first significant indicator of the oncoming deflationary period. Even though deflation will be a relief to us consumers, it’s not going to be good for the investment assets us consumers own. As manufacturers transition from production on demand to production for inventory, price points and growth potential will be adjusted downward. Although I do not think this will place an assignment threat to my current Vertical Spreads, it may delay early exits.
- China is tipping towards an economic collapse – but we may never know. Still reeling from the effects of their Zero-COVID policy, a pending catastrophic failure in their real estate sector and a spare-no-expense military buildup had positioned China’s economy for an implosion. Fueled by massive stimulus from printing money, four decades of hyper-growth are about to catch up with them. But the US has been systematically severing economic ties with China for the past ten years. Thanks to NAFTA, Canada and Mexico have overtaken China as the US’ biggest trade partners. Our Marketeers will have a kneejerk reaction to a major China recession, but it should be short-lived – much, much shorter than China’s.
Socioeconomics
- After 3½ years of out-of-control volatility (rising as high as 53.6% on Mar 16, 2020), the VIX fell below 15 early in June for the first time since the COVID-CON. For the past two months, the VIX had lazily coasted below 15 – even going down as far as 12.9 on 6/22/23. This suggests (to me) that the Marketeers don’t see any geopolitical or sociopolitical issues brewing in the near term. This will undoubtedly affect the premiums I can collect on new Vertical Bull Put Credit Spreads. Still, hopefully, it will mean I can close my Spreads early (see Exit Rules).
- In this year’s first quarter, our GDP stepped up, and unemployment stepped down. For all of last year, nay-sayers were predicting that we were on the heels of a bad recession. But these numbers suggest that that ship may have sailed. Even though we have no way to be sure, it seems that Biden’s eco-gurus stating that we will have a soft landing after 2022’s massive interest rate hikes – may be right.
- Fitch Ratings cut the U.S. long-term foreign currency rating to AA+ from AAA. Laying blame squarely on the out-of-control long-term debt the Biden Administration placed on our economy (“This is the Climate-Change economy – get used to it,” so said President Biden.) But we have been here before. 2011 Standard & Poor’s downgraded the U.S. to AA+ for the first time since 1917. But an AA+ is not bad. While an AAA is considered “outstanding”, an AA+ is “excellent.”
- July’s inflation numbers suggest we are still on the epic peak of a new “Climate Change” economy and likely to stay this high, or higher (“Get used to it.” – Joe Biden). Prices climbed over 3.2%, with wholesale prices bumping more than expected by 0.3% in July. (Our weekly grocery bill for 20-ish items is nearly $200.) My takeaway, more interest rakes hikes are in our near future, expected retirement income is going to be less effective than projected, and high population migration will continue as people search for cheaper places to live.
- The Marketeers are bailing out of the Russell 2000 by 6.5%, the S&P 500 by 4%, and the tech-heavy QQQ by over 6% – all within the last three weeks. The overall market news (new news) has not been “bad enough” to explain the downturn, so I’m beginning to believe that the mega investments and hedge-fund firms might know something the rest of us don’t. Could it be that the potential for a painful recession is being whitewashed to not panic us, the stupid little investors?
Ecopolitical Influencers: Cautious DEFCON = 4
This Month’s Guidance
For the long-term (one year out): Over the balance of this year, I don’t expect any kind of 2022-like inflation/interest rates crisis. There is still a lot of growth potential as the Marketeers continue to transition back into the small-caps markets.
A June ’24 expiration is too early to have an election effect.
For the short-term (June ’23): The phenomenal market run-up over the last 6 weeks is proving too good to continue, as Marketeers have started to take their well-earned profits. I’ll expect a well-earned pullback this month, so I may want to wait until late to enter new Spreads.
As long as I follow my Entry Rules and Exit Rules, I’m confident that any new Vertical Bull Put Credit Spread I open this month should be successful.
Profit and Loss Statements
(As of 09/01/23)
My Performance vs. SPY
Hypothetically, instead of depositing $20,000 in my Options Trading Account, could I have done better if I bought $20,000 of the ETF/SPY instead?
| Options Trading Account | SPY (Fictional) | |
| Initial Investment (As of Jan 4, 2023) | $20,000.00 (Cash) | $20,000.00 (52.297 shares @ $382.43) |
| Dollars At Risk | $10,232.00 | $20,000.00 |
| Funds Added | $3,594.23 (Premiums, Int., Div.) | 0.612 shares (Dividends Reinvested) |
| Funds Removed | -$617.18 (Early Close & Fees) | -$0.00 (Fractional Shares Sold) |
| Market Changes | -$1,522.00 (Open Spreads’ Fair Market Value ) | $3,547.72 (Gain/Loss) |
| Ending Balance | $21,462.00 (Mark-To-Market) | $23,827.77 (52.9094 shares * $450.35 CV) |
| ROI | 7.3% | 17.5% |
| ROR | 38.1%1 | 17.5% |
| Dollars Earned | $1,462.002 | $3,827.772 |
1 Calculated separately by averaging each position’s individual ROR.
2 Earned vs. Unearned dollars.
This Month’s Trade Activity
(As of 09/01/2023)
Spread Count Summary:
| Year 2023 | Month Aug | |
| Vertical Bull Put Credit Spreads | 19 | 1 |
| Vertical Bear Call Credit Spreads | 1 | 0 |
| Iron Condors | 0 | 0 |
| Total | 20 | 1 |
Current Dollars at Risk:
| Year 2023 | Month Aug | |
| Vertical Bull Put Credit Spread | $10,232. | $1,740. |
| Vertical Bear Call Credit Spread | $0. | $0. |
| Iron Condor | $0. | $0. |
| Total Dollar Risk | $10,232. | $1,740. |
| Max Risk Allowed | $20,000. | 4,888 |
Note: no new Spreads this week.
Options Buying Power:
Unallocated dollars available to open new Vertical Credit Spreads:
| Current Cash Balance | $22,984 |
| Set-Aside Dollars for Existing Spreads | $12,000 |
| Cash Available for New Spreads | $10,984 (Options Buying Power) |
Vertical Spreads Opened This Month
(07/31/2023 – 09/01/2023)
In the ten months since this year’s 52-week low of the S&P 500, there has been two 7% reset to its aggressive growth (12/1/22 and 2/3/23). Each big pullback coincides with an inflation-related news event.
After the recent .25% hike in the interest rates on 7/26/23, the 4.7% pullback that started on 8/1/23 began when Fitch Ratings cut the U.S. Long-term foreign currency rating to AA+ from AAA. Then other troubling economic data piled on – restoking the fear of global recession.
Finally, (well, not ‘finally,’ but most recently) yesterday’s (8/26/23) hawkish speech by Fed Chairman Powell stated that inflation is still too high and to expect more hikes this year (embrace the pain).
Like the other resets this year, I am expecting the one we are in now to continue in like manner. So, for this reason, I have not opened any new Spreads since the first week of August.
With my goal of only opening new Vertical Bull Put Credit Spreads with the intention of closing early (please review my new Entry and Exit Rules), I will wait until the markets return to a 20-day bull trajectory.
DIA:315pp/310p/X4 – Open 08/09/23 – Expires 06/28/24 – Max Gain = $260.00 – Open Price = 353.21
(Vertical Bull Put Credit Spread)
At Open: Prob. OTM= 76.6%, Headroom= -10.8%, Max Loss= $1,740, AROR= 16.6%
Currently: Prob. OTM= 76.3%, Headroom= -9.7%, AROR= -23.5%
| Rule 1: Sell Only Major Market Index ETFs | Yes (DIA) |
| Rule 2: 50-Day SMA above 200-Day | Yes (see chart) |
| Rule 3: 20-Day Regression Line Bullish | Yes (see chart) |
| Rule 4: AROR > 16% | Yes (16.6%) |
| Rule 5: Prob-OTM > 70% | Yes (76.6%) |
(8/9) Long-term: OK (see Aug’s blog). P/C is rising (but below 2), IV is rising (but IV% is below 25%), and RSI is falling. This suggests an expected continuation of the current pullback.
Even though both RSI and the current price have fallen, neither has fallen below their Support Line. But the other ETFs have, suggesting a marketwide pullback will continue.
Hindsight: When opening this Spread early in August, the 20-day trajectory fell decisively bearish, and the RSI fell. These two indicators alone should have told me to wait for a reversal. I do not “need” to open Spreads. I can wait until the markets are moving in the right directions.
Vertical Spreads Currently Cooking
(As of 09/01/2023)
SPY:405p/400p/X4 – Open 07/18/23 – Expires 06/28/24 – Max Gain = $284.00 – Open Price = 452.13
(Vertical Bull Put Credit Spread)
At Open: Prob. OTM= 74.5%, Headroom= -10.5%, Max Loss= $1,716, AROR= 17.2%
Currently: Prob. OTM= 75.2%, Headroom= -10.2%, AROR= -6.3%
QQQ:325p/320p/X4 – Open 07/12/23 – Expires 06/28/24 – Max Gain = $336.00 – Open Price = 371.09
(Vertical Bull Put Credit Spread)
At Open: Prob. OTM= 73.9%, Headroom= -12.4%, Max Loss= $1,664, AROR= 20.7%
Currently: Prob. OTM= 76.1%, Headroom= -13.9%, AROR= 8.3%
QQQ:305p/300p/X4 – Open 06/27/23 – Expires 06/21/24 – Max Gain = $296.00 – Open Price = 363.60
(Vertical Bull Put Credit Spread)
At Open: Prob. OTM= 76.7%, Headroom= -16.1%, Max Loss= $1,704, AROR= 17.4%
Currently: Prob. OTM= 82.1%, Headroom= -19.2%, Max Loss= $1,664, AROR= 22.7%
IWM:165p/155p/X2 – Open 06/16/23 – Expires 05/17/24 – Max Gain = $326.00 – Open Price = 186.96
(Vertical Bull Put Credit Spread)
At Open: Prob. OTM= 71.8%, Headroom= -11.7%, Max Loss= $1,674, AROR= 21.0%
Currently: Prob. OTM= 78.3%, Headroom= -13.5%, Max Loss= $1,674, AROR= 25.4%
QQQ:300p/290p/X2 – Open 06/08/23 – Expires 03/28/24 – Max Gain = $292.00 – Open Price = 355.66
(Vertical Bull Put Credit Spread)
At Open: Prob. OTM= 77.4%, Headroom= -15.7%, Max Loss= $1,734, AROR= 19.0%
Currently: Prob. OTM= 86.6%, Headroom= -20.5%, Max Loss= $1,734, AROR= 28.9%
Note:
Vertical Spreads Closed This Month
(As of 09/01/2023)
Income to open: $1.42 premium collected * 100 shares * 2 contracts = $284.00
Cost to close: $0.65 premium paid * 100 shares * 2 contracts = $130.00 (closed 259 days early)
Net Profit = $284.00 to open – $130.00 to close – $4.00 fees = $150.00
AROR = ($150.00 / 55 days in play) * 365 / $1,716 = 58.0%
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.
My Options Trading activities include cover calls, cash-secure puts, Vertical Spreads, and other options strategies. Cover calls and cash puts assume that I already have a sizable portfolio and accumulated cash to generate a meaningful income. But short-term Vertical Spreads do not require a substantial cash investment to make some fun money. – This blog’s sole focus is short-term Vertical Spreads.
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 are 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.”