Dear Trader,
Last week, I wrote that in bear markets every move higher is met with heavy selling.
And like last week…
…That’s what happened this week.
But that’s what creates wide ranging two-sided markets.
Despite the noise, we were able to put a few winners on the board!
As I often say that I learned on the floor, every day is a new opportunity.
Up, down or sideways — there’s always an opportunity.
But we are in a bear regime market and things can turn ugly, quickly.
That’s why it’s important we remember to be patient and more rigorous with how we deploy our capital.
And that means sitting on our hands or taking profits faster.
Let’s talk about the CBOE Volatility Index (VIX), aka the “fear” index, which closed at 27.
That is an increase from last week's reading and markets are 2x volatility as normal.
Now let’s talk shop.
Today, this position expires.
Unfortunately, we don’t have more time for this to play out.
There’s nothing that you need to do, and they will be removed from your account over the weekend.
Taking losses isn’t fun, but without the bitter, the sweet isn’t as sweet.
But remember the sweet part is making money and losses are part of the process.
Here’s a recap of what we did this week.
On Monday:
Buy-to-open the FOSL Mar. 18, 2022, $14 call
On Tuesday:
Buy-to-open the CNK Feb. 18, 2022, $17.50 call
On Wednesday:
Sell-to-close the CNK Feb. 18, 2022, $17.50 call
On Thursday:
Sell-to-close AMC Feb. 11, 2022, $19/$27 call spread
On Friday:
No action.
Right now, we’re holding:
This is my journal which is a debrief of every trade closed or expired to analyze what happened, why it happened and how it can be done better — like what the military uses after missions.
CNK Feb. 18, 2022, $17.50 call
Outcome: Closed for 100% gain.
Notes: Great trade and executed this perfectly.
AMC Feb. 11, 2022, $19/$27 call spread
Outcome: 92% gain.
Notes: Great trade and executed this perfectly.
SNAP Feb. 11, 2022, $43/50 call spread
Outcome: Expired worthless.
Notes: This was going our way, but then the company announced a self-offering, which took us down. I still like this trade and will look next week at another spread.
Have a great weekend and enjoy a fresh spicy margarita - TGIF!
To your wealth, freedom, and options!
Joshua M. Belanger