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Posted by Martin February 18, 2024
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Contest #12: Guess the S&P 500 Friday Close And Win Cash!


Last week we didn’t have enough votes, again. It looks like, visitors of this website do not want free cash. However, we are opening a new contest for the coming week. Remember, we need at least 5 people to vote. The winner wins free cash!

 

Contest voting is from Sunday February 18th – Wednesday February 21st and it is now OPEN

 
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Posted by Martin February 17, 2024
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What does the market outlook look like for next week?


stock market score Last week, our journey was, to put it mildly, a roller coaster designed by an economist with a wicked sense of humor. We experienced everything from the stomach-dropping dips to the exhilarating highs that could give any thrill-seeker a run for their money. So, what’s in store for us next week? What market outlook can we expect? Buckle up, as we dive into an analysis sprinkled with a dash of humor to keep things light.
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Posted by Martin February 12, 2024
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Evaluating Boeing as an Investment in 2024


Investing in the stock market requires a keen eye on market trends, company performance, and investor sentiment. Boeing, a giant in the aerospace industry, has been a topic of debate among investors, especially considering its challenges and market position in 2024. Let’s delve into the different perspectives on Boeing as an investment, based on recent analyst ratings, investor discussions, and market data.
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Posted by Martin February 11, 2024
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Contest #11: Guess the S&P 500 Friday Close And Win Cash!


We are opening a new contest for the coming week. Remember, we need at least 5 people to vote. The winner wins free cash!

 

Contest voting is from Sunday February 11th – Wednesday February 14th and it is now CLOSED

 
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Posted by Martin February 11, 2024
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Navigating Through Market Sentiment: A Look Ahead


stock market score The stock market is an ever-evolving ecosystem, constantly influenced by a variety of factors ranging from macroeconomic indicators to geopolitical events, and even investor sentiment. As we gear up for the upcoming week, a closer look at the current market sentiment and analyses from leading financial experts reveals a cautiously optimistic outlook, albeit with certain areas warranting attention.
 
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Posted by Martin February 05, 2024
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The Oracle of Oh No: How Doom-Predicting Investors Stay Afloat


Welcome to the rollercoaster world of investing, where the forecast is always gloomy with a chance of catastrophic market crashes, according to some of our favorite doomsayers. Today, we’re diving into the curious case of investors like Jeff Gundlach – the financial wizards who predict the financial apocalypse every Monday, yet somehow manage to stay afloat.
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Posted by Martin February 04, 2024
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Contest #10: Guess the S&P 500 Friday Close And Win Cash!


Last week, we didn’t get the minimum voters to have a valid contest. We need minimum of 5 people to validate the contest and have a true competition with one winner of cash. I hope, next week, we will have enough people to participate, have fun, and one of them win the cash prize! So far, it looks like, visitors are not interested in free cash gift. All you need to do is predict the next Friday’s market closing price and if you get close enough you win $100 cash gift card. Contest #7 was viewed by 215 visitors… contest #8 was viewed by 49 people. No one voted. Well, I will spend this week’s prize with my family. But don’t worry, next week will be another chance to win. And if no one votes, I will cancel this contest…

 

Contest voting is from Sunday February 4th – Wednesday February 7th and it is now CLOSED

 
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Posted by Martin February 04, 2024
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Stock Market in Overbought Territory But More Upside Coming


stock market score A few days ago the stock market participants were again panicking over something we all know and are aware of – interest rates. We all know inflation is easing and continues, so we all know that the FED will, at some point, start cutting the rates, and it doesn’t matter whether it will begin in March or July. We all know that the US economy is booming (despite many naysayers who believe we are doomed to crash), and we all know the labor market is still strong. Yet, at any time, the media tell us that the FED may “reconsider” the market panics. But is it panicking? The news outlets needed to tell us what was going on. It is their game, but no matter what theory they are making, the truth is that this market is overbought, and everyone is in FOMO out there. Any selling is just a pause in the rally. A dip that many jump in to buy.
 
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Posted by Martin February 01, 2024
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The Resurgence of Micron Technology in the Dynamic Memory Market


Micron Technology, a key player in the semiconductor industry, primarily known for its memory and storage solutions like DRAM and NAND flash memory, is witnessing a significant phase in its business cycle as of early 2024. This post delves into the current state of the memory market, examining the trends and forecasts that are shaping Micron’s business environment.
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Posted by Martin January 29, 2024
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When and Why Rolling Options Spreads


Rolling options spreads is a challenging task. Many times, I roll due to expectations or my fear, and it ends up being a mistake, like the last trade I opened a few days ago, and it was a too-soon roll.

When trading SPX, I usually sell Iron Condors. I started trading extremely conservative strikes (1 – 6 delta). One reason for that was to avoid rolling as much as possible. So I can leave the trade on until the very last moment.

 
rolling options spreads
 

Since I trade around 2 DTE trades, rolling is rare. In this case, I let the market touch my short option strike, and then I will try to decide what to do.
Here is my exit plan:
 

  1. Let the trade expire worthless for a full profit. There is no management and no stop-loss orders.
  2.  

  3. If the market goes down and touches or even breaches my strike, I will check why it happened. What is the catalyst for it? If I can’t find any and the decline is a pure nonsensical hiccup (Wall Street is full of them), I probably do nothing (unless it is expiration day and only a few minutes to expiration (15-30 minutes). If it is close to expiration, I will roll calls down to convert the trade into an Iron Fly (a short call strike is the same as a short put strike).
  4.  

  5. If the market keeps sliding and both put strikes get in the money, I close the short call for 0.05 debit and roll the put spread into 5-10 DTE and the same strikes and the same width as long as it is a credit trade. If it is a small debit, I still may take it because I will sell a new call spread against it to offset the cost of the debit roll.
  6.  

  7. If rolling for credit doesn’t work and selling calls doesn’t offset the cost, I start widening the strikes, going from $10 wide spread to $15, $20, or similar. I may also convert the call spread into put spread and vice versa.

 

However, note that my trades are 2SD (2 standard deviations), so if the market goes down 2 SD without any catalyst, I may decide to leave it as is (unless expiring) or roll to the same strikes and same width, still attempting to make it a credit trade, because such decline is too unusual. There is a significant chance that the market will bounce the next day or the next few days. It happened to me a few times already (on put as well as on the call side), so I will not roll as much as I used to due to this fact.

As I said above, rolling trades are not an easy task, and there are no set rules that you can use every time. Sometimes, you will roll a trade, turning it into a disaster.

So the question is – roll or leave it and take a loss? My philosophy is to avoid taking a loss as much as possible. So I roll. But when rolling, you must do your math and think about the results and consequences. Are you making it worse (digging a deeper hole) or improving your trade? Sometimes, I start rolling even for debits if the trade is better off rolled than closed for a significant loss. I have a few trades from the past that cost me $400-$1000 to roll, but the risk was $5,000 or even $10,000 (the spread was 50 to 100 wide spreads. I am okay with taking a $1,000 loss rather than a $10,000 loss if the trade expires in the money for a complete loss.

What if I cannot roll because I do not have the buying power to do so or for any other reason?

In this case, I let the old trade expire as is but opened a new “box” trade to kick the can down the road to get time to deal with the trade later when I have enough money.
What is a “box” trade? The box trade is when your short call strike is at the same strike as your long put, and your long call is at the same strike as your short put:
 

Example:
 

4760 short call – 4760 long put
4770 long call – 4770 short put
 

What does this do to you? Well, you keep the trade alive, and you collect the entire width premium minus fees. In the example above, you will collect a $1000 premium, and your BP requirement will only be between $50 and $100. I usually open this with 45 DTE; if I am stressed, I may choose more DTE – 150 or 200 DTE. Why? The most important thing is time. I gain time without hitting my portfolio and can think about what to do next. Also, based on the market conditions, I started rolling calls higher to widen the box into an Iron Fly or even Iron Condor. I roll the entire structure (which will not impact the collected premium as it will be either a small credit or debit) and then start widening the spreads. If I was unsuccessful (the market was moving too fast, for example), I stopped adjusting and let it go while opening a new box.

So, these are my strategies for rolling the trades. Deciding which one to use depends on the market. If there is a legitimate panic (bear market, crisis, etc.), I might convert puts to calls or roll to lower strikes, etc.; if there is no catalyst, I may do what is described above.

Here is my latest trade with the rolls and my journal of why and what I did. Maybe it will help you better understand my process (read the section below in the spreadsheet under the “Notes” section.).

 




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