I was shocked to see the market heading higher today after the rally yesterday.
Something doesn't smell right and I would not be surprised if we saw some larger downwards moves in the coming days.
The way the market is behaving gives me the impression that, although the market tends to be right, this time it is not.
If the market was always right then we would not have had major crashes.
By the time I am writing this post the SPY is already down $2, which might be just the result of the disappointing earnings tonight by Apple, Amazon, Google, Starbucks, etc., but it could be the start of a new slide.
For those, who are new to my daily market comments, I place and document one trade a day with the objective of helping everyone learn how to trade options.
What's my trade for today?
Today I tried my luck with another earnings trade and this time it was on #SBUX (#Starbucks). Take a look at it's moves in the past 9 months:
Because of how much it went up I am bearish on this stock so I bought a calendar put spread anticipating a drop after the earnings.
The stats
Trade Type: Calendar: Short Feb 3 $110p; Long Apr $110p
Strike: $110
Expiry: 21 Apr
Delta: 10
IV Rank: 40.2
Premium: $-2.31
Cap Req: $231
Annualised Prof at Expiration: ?
IMPORTANT: Studying previous trades provide the opportunity to everyone to learn a great deal so I encourage you to click on the links below and digest the info.
Closed:
https://www.tycoonitos.com/community/market-comments/daily-trades-20230109
Rolled:
https://www.tycoonitos.com/community/market-comments/market-comments-20220524
https://www.tycoonitos.com/community/market-comments/daily-trades-20230117
https://www.tycoonitos.com/community/market-comments/daily-trades-20230120
Watch more detail here:
Let me know what you think.
Nice winner!
Closed at $2.58 for an annualised profit of 1284%.