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2022 SPX put credit spreads trading review – week 08

Last week was difficult to trade SPX spreads. As the market was dropping and speeding up in declining, I started reversing and adding credit call spreads to neutralize the put spreads and collect premiums to offset the cost of rolling the puts. But the market reversed sharply and rallied hard on Thursday and Friday and pretty much all call spreads got busted. With a benefit of hindsight, one could say, it was a bad move to do and we should have left the puts intact. But no one knows the future. We reversed the calls to puts again (which if this rally fizzles will give us more hard time) and that cost money. Fortunately, last and this week, we built enough cash cushion to have enough cash for these costs.

The overall market decline took 50 days so far and dropped over 14% from its peak. That is a typical pullback depth and length for a geopolitical mess, so we may assume the worst is behind us. But people say that we now have FED that would send the markets lower. I don’t think so. I think the FED is already priced in and when they raise rates next month, the market will, in fact, rally. Same as with the war in Ukraine. When it was unknown if and when Putin starts his aggression, markets were falling. And when he finally attacked all the innocent people, the markets rallied.

Last week, we gave back some of the gains we built in the previous weeks. Our SPX PCS strategy finished the week down -6.90% while SPX was up +0.82%. Our overall SPX account is up +98.67% since the beginning of this program. However, unlike in previous weeks, we now have about $993 in unrealized losses. And that could give us some headwinds in the coming weeks. If however, the market will rally from now on, we will be able to offset these losses quickly.
 

Initial trade set ups

 

For my SPX strategy, I dedicated a $3,600 initial amount that will be used to trade SPX PCS strategy per week. If this amount is depleted, I will evaluate the strategy to determine whether to continue or change it. If I grow this amount, I will scale up the trading.
 

WHAT WILL WE TRADE?    
DAY DTE TYPE
MONDAY 7 DTE Put Credit Spread
TUESDAY 30 DTE Put Credit Spread
WEDNESDAY 7 DTE Put Credit Spread
FRIDAY 60 DTE Put Credit Spread
EVERY MONTH 120 DTE Put Debit Spread – HEDGE

 

Last week trading

 

Last week was not typical and we rolled many of the in-the-money puts, opened a few call spreads, added them to those puts (converting the put trades into Iron Condors), and opened call spreads in lieu of puts. All had to be undone at the end of the week.

Here are our delayed open trades:
 

SPX PCS delayed trades week 8
SPX PCS delayed trades
 

The trades are two weeks delayed. If you want to see the most recent trades or receive alerts, subscribe to our SPX alerts.
 

Overall, the strategy resulted in a -$530.05 loss last week. Note that the gain might be unrealized as some or all trades may be still open.
 

Initial account value (since inception: 12/07/2021): $3,600.00
Last week beginning value: $7,682.00
Last week ending value: $7,151.95 (-6.90%; total: +98.67%)
The highest capital requirements to trade this strategy: $15,413
Unrealized Gain: -$993 (-6.89%)
Realized Gain: $4,425 (+30.69%)
Total Gain: $3,432 (+23.80%)

 

SPX PCS account value
SPX PCS account value
 
Our SPX net-liq increased a bit last week. I consider it a good result since the market is volatile and non-trending, well, it is trending but the trend is choppy and weak.
 

SPX PCS account vs SPX
SPX PCS account vs SPX index net liq
 
However, comparing the account with SPX net-liq, we are still outperforming this horrible market.
 

SPX PCS account vs SPX
SPX PCS account vs SPX index
 

If the market continues being this choppy or even going down as fast as it has so far, I expect to use the gains to roll the trades that are in the money.

If you want to receive trade alerts whenever we open a new SPX put credit spread or a hedge trade, you can subscribe to our service:

 

SUBSCRIBE HERE

 

Note, if you wish to subscribe to multiple levels, you can do so by subscribing to one level only and then send us an email that you want to be added to other levels too.

Also, if you like this report, hit the like button so I know there is enough audience wanting to see this type of report. If you have any questions or want to see anything else about my SPX trading, do not hesitate to contact me or write a comment in the comments section. Thank you!

 
 





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