With 10 profitable weeks in a row despite the volatility in the market, it's been a while since we've written one of these up as we typically only put them together as a guide for when the market takes a dive and becomes a little more complex. Of course the bad news was that SPX and NASDAQ dropped over 4% and 5% today respectively so we are in that position. The good news? Despite that, we're still on track to make a decent sum of money this week. Let's talk about it.
Current status:
As it currently stands, we're looking at a "base profit" (if the market moves neither up nor down for the next 3 days) of $2,619. That's a reeeeally nice number, especially on a week where SPX is already down as much as it is. Our cautious approach to the week has paid off and we are in a positions where we can freely add/manage trades during a downturn as opposed to manage a margin call.
The only big item on here that could potentially swing this number is the SPX spread, as it's really important to our overall success this week that SPX finish above 3890 tomorrow. For full transparency if we get chased and have to close for $2.50, we're only looking at a $119 base profit. But again, any type of green is good on a week where we would currently be sitting on a $5,830 loss if we owned SPX. That's what I call outperformance. Let's talk about the individual trades now.
For some further context, here are the current breakeven prices and closing prices of everything in our portfolio. We will reference this in the conversation below:
DKNG: I've gotta say, I love the stock. Despite the horrid performance from the S&P 500 today that one still sits pretty at 17.35/share. As long as DKNG doesn't drop 4.38% over the next 3 days, we're going to make money on that. As such, we will be staying put.
If it does dip below $16.50ish, I'll look to double down with 16p in order to aggressively drive down that breakeven price.
SOFI: This one has been kinda ehhh and is one of two stocks we are currently playing that is below its breakeven price. Now I know the instinct here is to slam that double-down button, but we're only looking at a $50 loss on SOFI if this price holds. On a weekly basis (especially on a week as red as this) that's pretty much a non-event. I will only double down on this if we start to see significant ($0.10+) premium on the 5.5p. As of right now that premium is 0.05.
PTON: This stock has been all over the place but we still sit nicely with a 6.56% cushion on it. If it falls below 9.26 the tentative plan will be to add 9p to drive our breakeven price down near $9/share. Premiums on this one are just too good to pass up right now.
UVXY: This is our inverse SPX bearish trade. This one is unfortunately doing great. I see zero reason to touch this. Only thing I could maybe wrap my head around is actually rolling it up to a 10p so we can collect $200 more if the market continues to slide, but I'm not sure I want to take on that kind of risk here. Leaving it alone for now and 95% chance I let this expire worthless for $280 of weekly profit.
MNMD: This is a lingering IV reversion trade, and I think this has done a great job illustrating why we love the IV reversion trades. We're sitting on a 14% cushion with 3 days to trade and this stock is generally disconnected from the overall market. That means it's largely unaffected by big dips like we saw today.
ARQQ: IV reversion trade which we already closed for profit. The $105 profit here is a tidy little sum for what was a 5 minute trade, but looking back it only covered the price of maybe 4 stadium beers at Solider field. Perhaps looking back those $20 beers were trying to give me a hint about the CPI print. It was a hint that unfortunately was lost on me in the heavy rain. As a 49ers fan it pains me to link that picture.
AFRM: A good old friend of ours, starting back with that very familiar 5 contract position size. Ready to add 5 more if we dip below 22.90, which is a cozy (but not entirely comfortable) 5.33% away. Key takeaway with this trade is this is one that we were patient on and added this morning. Just because you don't have a trade to pick Friday afternoon, or even Monday afternoon, doesn't mean there won't be lucrative opportunities as the week progresses. This one will bring us $300 if it holds 23.50.
PLTR: You can also file this one in the category of options we sold this morning on the initial dip. The premium wasn't insane but I felt 7.38 was a good starting point. At-the-money call premiums next week are around $0.30 currently so I don't see a need to average further into this one for the time being. My opinion on that will change if it breaks down below $7/share.
OPEN: Another one that has recently done well for us an added this morning. 4% cushion so nothing to do there. While SOFI, OPEN, and PLTR are smaller positions, we don't want to get too nonchalant with just blindly doubling down when that breakeven is breached. Doubling down across multiple positions can add up quickly so we want to be strategic about when we do so. General rule for me is if we can get our breakeven price down at or below the stock price, don't deploy more capital. You'll see that in action from us on Friday if the downtrend continues.
TQQQ: This one is worth a decent discussion. We may have sized in a tad heavy off the bat, as the initial position takes up 11.63% of our portfolio. It's basically dead at our breakeven. Most important point to think about here is that this is effectively the exact same position directionally as our SPX spreads. SPX and TQQQ will be similar in terms of red/green days. I had some thoughts about doubling down or adding some more today, but if these get crushed tomorrow, it means that our SPX spreads will also be crushed. We want to avoid that at all costs.
Therefore I'll be waiting until we're out of the oversized SPX position to do anything with these. Either the market goes up and SPX + TQQQ are saved and I don't even need to worry about averaging down, or the market moves further down, in which case I don't want a TQQQ problem accompanying my SPX problem.
U: Had my eye on this all day and think we demonstrated some solid patience in adding. 35p for 0.66 gives us the 34.34 breakeven that is 6.33% below the current price. We've seen U bounce at 33-34/share so I think this is a great breakeven to be working with. This is again a half-sized position. 2%+ RoR on a half-sized position gives us just as much $$$ as a full-sized 1% RoR position. That's the idea and so far it's looking just fine as we attempt to take home $330 from it at max profit.
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So there you have it. Most important thing tomorrow will be SPX, which if it holds means that SPX will have gone from 4110 to 3930 in less than a day and we will have survived the bullish spreads with just a $10 loss. The 0-day SPX defense strategy has been working very well so far. If you want more info on how that works, check out the 0-day SPX strategy guide HERE.
I think we're still in prime position to take home an 11th consecutive winning week on a stretch that has us on track for over $35,000 of profit. To be alerted to these exact trades and join the discussion, sign up for HT Premium HERE to receive alerts and premium discord server access.