When Markets Become More Erratic

December 3, 2021

Dear Trader, 

What a tough tape this week!

 Monday’s rally was expected, but Tuesday drop was the curveball. 

This week's market action isn’t looking like a setup for a new rally, we’re starting to see the wind shift. 

The reason for the selloff is the FOMC admitting that the inflation genie is out of the bottle. 

The several year rally in stocks has been due to the FOMC printing money at a record level.

As I wrote a few weeks ago, it doesn’t matter; until it matters. 

It’s still early, but this could be the beginning of a bear market. 

Spotting the turn in markets is tough because it needs to develop, but it’s also tough on our PnL. 

And right now it’s tough on our PnL. 

But that’s the good and bad of the market, we can’t live day by day with market fluctuations.

It’s about surviving today, because there’s opportunity tomorrow. 

It can be frustrating, but I’ve developed a thick skin of scar tissue. 

The best advice I know is stick to the system and focus on the next trade.   

The CBOE Volatility Index (VIX), aka the “fear” index, closed at 30, which is above our key level of 15.

That means volatility is 2x the normal expected.

That’s why it is important to keep a trader’s mindset: Block the noise and keep calm.

With that said — let’s review our open positions and the ones expiring today. 

Portfolio Update

Today, this position will expire.

NVDA Dec. 3, 2021, $340 call

KO Dec. 3, 2021, $58 call

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 NVDA Dec. 3, 2021, $340 call

On Tuesday:

No action.

On Wednesday:

No action

On Thursday:

No action.

On Friday:

No action.

Right now, we’re holding:

  • TROX December 17, 2021, $25/$30 call spread
  • CCJ Dec. 17, 2021, $30/$36 call spread
  • BAC Dec. 10, 2021, $48/$50 call spread
  • MPC Dec. 17, 2021, $67/$70 call spread

Trade Journal

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.

NVDA Dec. 3, 2021, $340 call

Outcome: Expired worthless.

Notes: Trading is tough because every stock and day is different. Everything was looking great and then within minutes it turned on a dime and quickly erased the gains. It’s frustrating, but we can’t win them all.

KO Dec. 3, 2021, $58 call

Outcome: Expired worthless.

Notes: We took our shot and this didn’t work out as planned. 

Now it’s time to enjoy a fresh spicy margarita - TGIF! 

Have a great weekend and talk with you on Monday.

To your wealth, freedom, and options!

Joshua M. Belanger

Joshua M. Belanger
Joshua Belanger is founder of CounterVest and the editor of Hot Money Trader. He has been providing ordinary investors blockbuster returns since 2008. In 2018, the average return of Hot Money Trader beat the markets by over 15%