In what was one of the easier, more consistent weeks we've had in a while, we wrapped up this week with a $3,611 (2.45%) return, which outpaced the S&P 500 by 1.67%. Our total YTD returns are up to 75.29% which is dominating the S&P 500 return of 19.18%. We made a decent amount of trades and derived most of our profits from the ones we opened during the week, which totaled up to +$4,358 and emphasized the importance of reacting to what the market gives you. Here is a detailed breakdown of how the week went:
In what has come to be a continued trend, our largest position was a loser as CRSR continued its downtrend. We're going to keep sticking with this one because it can only be red so many weeks in a row (...right?). Outside of that though, everything went really well for us. We had one scare at the end of the week which we'll talk about later.
Our MRNA spreads started off in a little bit of hot water to kick off the week as MRNA tested $500/share. We stuck to our guns though in what we outlined in our trade plan by remaining patient and waiting for a pullback where RSI leveled out. $455 looked to be a key level on the chart and this is how that played out:
Always fun when things go pretty much to plan. Outside of that spread it was a big week for our IV reversion trades as ORPH, FULC, and ZEV all pulled some really nice low-stress profits for us.
We were also able to scalp a little premium by jumping in on oversold earnings moves with APPH, CPNG, and JMIA. All of which produced really nice, quick, and easy returns.
Through Thursday afternoon it was pretty smooth sailing and just about everything we touched turned into profit. It was a really good feeling. But as we always caution, you're not going to win every trade. So let's discuss what happened when we decided to enter into WISH before their earnings on Thursday afternoon.
Coolest Trade of the Week: Looking to score a quick $400 to cap off what had been a really nice week, we sold some WISH 8/13 8p. Now from a purely mathematical standpoint WISH was trading at about $9.40 and had an expected move of $1.35-ish which put the lower end of the expected move above our max profit point. That all checks out. Our breakeven point was $7.80 which we felt was perfectly manageable if the stock tanked. Thursday afternoon the earnings were announced and the stock tanked so our downside risk and trade plan was going to be put to the test.
WISH wrapped up the Thursday after-hours trading session at $7.50 which would put our 8p at a loss, but it could be managed. Friday morning however was a little different story as WISH opened around the $6.80 level and we were staring at a decently-sized loss. We stuck to what we outlined in the trade idea blog post by going through the HT wheel process and doubling down by selling 6.5p. We got a really nice bounce up to the $7.60 level and got to a point where we were actually able to get out of the trade with a profit despite the 20% drop against us. Here is how that looked:
Any time we can escape that big of a drop with a profit it's a huge W for us. A great lesson in patience and the importance of keeping buying power free to manage losing positions.
Looking forward: I'm still super hesitant until we can get any meaningful pullback in SPY. I've loaded up with a few positions just so we have some capital in play but we have a lot of buying power sitting on the sidelines ready to make something happen once we see another big red day/week.