Donnie is f-ing it up again

So Donnie is on it again. It is astounding how ignorant he is. Or he is not and all this tariff thing is on purpose. No matter how hard I try to think about what is he trying to achieve, I cannot come up with any idea on “why.” Trump negotiated a trade treaty during his first term and now he is complaining about subsidizing Canada? I thought his treaty was supposed to be a great, bigly deal! Biden hasn’t changed the treaty! So what went wrong?

I think, what went wrong is the fact that Donnie is f-ing it up again so he needs to maintain visibility and the best way to do it is to piss everyone off. An the entire nation will suffer.

It pisses me off. Yes, I admit I opened a 0 DTE trade that went sour thanks to idiot Trump but this idiocy is bigger than one trade.

On Friday, I opened a credit put spread. It was an extremely safe trade – with 0.07 delta which was beyond 2 SD (standard deviation):
 

Donnie trade
 

At least I thought that it was a safe trade. I was so far away from the market that what could go wrong, right? Well, Donnie went wrong, as usually. What can you expect from a business genius who bankrupts a casino! But what drives me nuts even more is that Americans haven’t learned their lesson the first time. They needed their assess kick once again. So they voted for this moron once again. Will they ever learn? What happened to American that fought Nazism, Fascism, and Communism and today it is embracing it? On the other hand, it is fairly laughable hearing MAGots spitting their rage on socialism (none of them knows what it is) and today crying that their SNAPs were cancelled.

Well, the trade went south fairly quickly:
 

Donnie trade crash
 

At first, I was contemplating whether to close the trade for a loss or roll it or try to adjust it. Usually, when the markets crash beyond 2 SD, it is a rare event and they may be a bounce. But if we look at what happened during the Orange Era 1.0 the markrets took quite serious hits before they stabilized.

The implementation of tariffs, particularly those targeting China, had notable effects on the U.S. stock market. The initial announcement of tariffs in March 2018 led to a significant market downturn, with the Dow Jones Industrial Average dropping 724 points (approximately 2.9%) due to concerns over a potential trade war. Companies with substantial business in China, such as Caterpillar Inc. and Boeing, experienced considerable declines in their stock prices.

Throughout the trade tensions, investor uncertainty contributed to market volatility. For instance, on December 4, 2018, the Dow Jones fell nearly 600 points, reflecting apprehensions about the escalating trade conflict.

Despite these fluctuations, the overall performance of the stock market during Trump’s first term was strong. The Dow Jones Industrial Average increased from around 20,000 points at the beginning of his term to nearly 31,000 points by the end, marking a substantial rise. The S&P 500 also saw an average annual return of 13.73% during this period, ranking third among presidents since the late 1800s.

In summary, while the introduction of tariffs during Trump’s first term led to periods of heightened market volatility and specific sector downturns, the broader stock market demonstrated resilience and achieved significant gains over the term.

Now, I decided to roll the trade, although I am doubting that move. Maybe, I should have closed the trade instead. Next week will show what the right move to do was. But I am prepared to keep adjusting the trade as long as needed to finish it as a winner or break even trade.

What have I done once the trade crashed through my short strikes? Well, I made three rolls and adjustments. The first two adjustments were just rolls. The first roll was away in time but same strikes. The second roll was another roll away in time but also lower. None of these rolls worked, although I have collected more credit. So I used a third adjustment that I call an “uneven roll.” This roll is to roll only short strikes, add new long strikes, and add more contracts to collect a credit.

So, originally, I had six 0 DTE contracts. After the uneven roll, I now have 16 short puts and 22 long puts. This gives me a hedge should the market continue crashing. I can close the trade for a credit even if the markets smashes through all my strikes.
 

Donnie trade adjustment
 

I will have a clearer picture today at 4 pm (MT) when the futures market open and see if we keep crashing or this time the markets priced the tariffs in. Definitely, the ignorant Trump is going to create a significant turmoil and unlike in his first term, he can actually spark a recession. In 2018 when he was imposing tariffs, we didn’t have a fragile economy, high inflation and high interest rates. Today, we have high interest rates and tariffs are inflationary. This may force the FED to stop cutting rates to keep inflation in check. That will be a domino effect. Higher rates and tariffs will eat up profits and that will impact the markets. It almost seems like it is time to go bearish.

 
 





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