Market comments 20221123

The market seems to believe that the inflation problem is slowly going away, which drives the share prices up.

But that's just one side of the equation.

The fundamentals are in pretty bad state and I would not be surprised if what we are seeing now is the calm before the storm.

Massive layoffs took place everywhere, the inflation consumed the savings of people, property values dropped significantly, etc.

I would not be long in the overall market.

In fact, I am considering changing my index positions (SPY, QQQ, IWM) from strangles to iron condors.

What's the difference?

The iron condor limits the risk on both sides of our strangles. It is rare that I would trade iron condors for two reasons: it's a lot more expensive than the strangles and it's difficult to adjust. However, because the VIX has dropped from mid 30's to nearly 20, we can buy put options at a much cheaper rate then a month ago. I will look into these adjustments in the coming days.

What's my trade today?

#NKE (#Nike). The volatility jumped up in the past couple of days so it's time to sell options against it. I chose the Dec strangle as I am hoping to close it before earnings. If it goes against me then I can easily roll to Jan.

NKE Daily Chart

The stats

Trade Type: Short Strangle

Strike: $95 / 118

Expiry: 16 Dec

Delta: 1

IV Rank: 65.1

Premium: $0.90

Cap Req: $1068

Annualised Prof at Expiry: 134%

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/market-comments-20221121

https://www.tycoonitos.com/community/market-comments/market-comments-20221118

Rolled:

https://www.tycoonitos.com/community/market-comments/market-comments-20220218

https://www.tycoonitos.com/community/market-comments/market-comments-20220520

https://www.tycoonitos.com/community/market-comments/market-comments-20220421

Let me know what you think.