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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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.
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:
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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As we gear up for another trading week, it’s crucial for investors and market enthusiasts to understand the complex interplay of factors shaping market sentiment. This week’s outlook presents a cautiously optimistic scenario, tempered by geopolitical uncertainties and macroeconomic dynamics.
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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…
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I started trading an SPX Crumbs Strategy and developing it into other instruments such as individual stocks and futures. And it is working. I still deal with the old SPX trades that got me into trouble, but I am slowly eliminating them. It will take time, but I am confident. In the meantime, I trade the SPX crumbs and generate the desired income.
The SPX Crumbs refers to a trade collecting a tiny premium (hence crumbs) but significantly increasing the probability of profit. A few days ago I watched a Tasty Trade video about this and they were not in favor of this strategy. Honestly, I do not remember why anymore because I disagreed with them. The strategy works for me, so what is the problem?
But what exactly is SPX Crumbs? First of all, I sell options. I do not buy them. I only buy them as protection, which is a part of a trade, like an Iron Condor or a single vertical spread. Buyers are suckers, and eventually, they will lose money. There may be a few traders that make money. I am not one of them, so I need a trade that works most of the time.
Selling options can be tricky and also riskier than buying them. That’s why many people do not sell options. When you buy an option, you pay a premium. The premium can be small, but you can make a lot of money if the stock moves in your favor. All you risk is the premium you paid. In general terms, you risk 1 to make 9. But your probability of profit (of it happening) is extremely small, and you must be right on three determining aspects – time, magnitude, and direction. If you are wrong on any of those, you will lose money.
You can be wrong on all three aspects as a seller and still make money. The probability of profit is high (in my “crumbs” case, over 95% of it happens), but the income is tiny. You literally risk 9 to make 1. Discouraging?
But win 95 times of 100, and you will make money!
What about the 5 times losers? If not managed, these can wipe out your gains and more.
Yes, you can make a tiny profit 95 times and lose money five times. With the crumbs, you can make $30 every 95 times, but you can lose $970 every remaining five times of the time. That doesn’t look good.
That is what happened to me when I traded a regular strategy with 30 – 10 deltas. I was looking for a trade that would improve my chances of making a profit, sleeping well, and not worrying about every open trade.
The crumbs strategy is a trade in which you place your short strikes far away from the current market. With SPX, I trade Iron Condors (short and long calls and short and long puts). The reason is buying power. I need to limit the BP to a minimum to be able to trade. I prefer trading strangles (short call and short put only), but the buying power requirements are enormous! I would need over $90,000 in buying power to trade one 2-DTE trade. Not doable.
I can do this with futures (E-minis) as one strangle would require around $6,000 in buying power, but not with SPX. So, I must trade an Iron Condor and buy protective puts and calls to limit my exposure. I usually go with $ 10 wide spreads.
Then, you place your short strikes as far away from the market. I go way beyond 2-SD (2 standard deviations). The delta of the trade is 1 and up to 4, sometimes 5, but not higher. And the premium is about $15 to $30 before fees (I hear many saying phew, not worth it! I don’t want to risk over $900 and make $15!). But it works. Do this 100 times, and you will make a lot of money.
The charts above indicate how my accounts improved since September 2023, when I started trading this strategy. I hope the trend will continue. You can also follow me on Kinfo, a third-party website that verifies my trading. So, all trades are now third-party verified.
Here is an example of constructing a trade. I start with puts and calls at 2 SD and then check the premium. In the example below, the premium was 0.60, allowing me to lower the put strikes. When I did, the premium dropped to 0.35. I changed it to 0.25 for it to fill.
Here is the call side example:
As you can see, the entire trade has a 97% probability of profit. The markets would have to rally or crash more than 1.5 – 2% in two days for this trade to go bust. How often can this happen?
I analyzed all SPX trades since 2007. I checked how often the market dropped by over 2% in two consecutive days. And the market dropped more than 2% in a single day in 205 occurrences out of 4,278 trading days since 2007. That represents 4.79% of occurrences when this can happen. Your chances of winning are high.
The losses can happen, and they will be happening. Although we have over 95% chance of constantly winning, the losses can still wipe out all winning trades, plus more! The math is simple. Out of 100 trades, we will make $30 premium 95 times, which is $2,850, but we can lose $970 5 times, which is -$4,850. So we still can lose more than what we make!
That’s why the losers still have to be managed – either closed before the loss gets larger, roll it, or any other type of management. I usually roll the trades, keep them alive, and manage them to minimize a loss or even turn the trade into a winner.
Of course, the losing trades may occur fewer times than indicated above because I only trade 2 DTE trades. When the market starts crashing, I can react to it by stopping trading puts (until the bear market ends) or opening new trades with lower strikes every time I open a new trade. But that is a future to be seen.
I am happy with this trading so far. It delivers the results I wanted and always dreamed of and provides enough safety that I do not have to worry about the trade once I put it on. I collect small premiums every time I place a trade, which will add up. It is just a matter of time.
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Last week, we didn’t get the minimum voters again to have the contest valid. We only need 5 people to validate this 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!
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As we stand at the cusp of a new trading week, understanding the market sentiment becomes crucial for investors and traders alike. Market sentiment, the overall attitude of investors towards a particular market or asset, can significantly influence market movements. This week, various factors, including economic indicators, global events, and sector-specific news, will shape the market’s direction. Let’s delve into these aspects to gauge whether the sentiment leans bullish, bearish, or neutral.
Economic Indicators have always been a cornerstone in assessing market health. Recent data on GDP growth and unemployment rates provide insights into the economy’s strength. For instance, a higher GDP growth rate typically signals a robust economy, often translating into bullish market sentiment. Conversely, rising unemployment rates can indicate economic struggles, potentially leading to a bearish outlook.
Political and Global Events also play a pivotal role. For example, geopolitical tensions can create uncertainty, often resulting in a bearish sentiment. Conversely, positive developments, like trade agreements, can foster a bullish outlook.
Technological and Sector-Specific Trends are equally influential. Breakthroughs in technology or significant shifts in energy, healthcare, or finance sectors can drive market sentiment in either direction. For instance, a major innovation in renewable energy might spur a bullish sentiment in the energy sector.
The Stock Market Performance last week showed a mix of highs and lows, reflecting the market’s reaction to diverse stimuli. The major indices, such as the S&P 500 and NASDAQ, have been fluctuating, indicating investor uncertainty.
Bullish vs. Bearish Perspectives are evident in the market. Some investors display optimism, driven by strong corporate earnings and technological advancements. Others lean bearish, concerned about inflation and political instability.
Investor Behavior trends, like increased buying in certain sectors or cautious trading patterns, provide a window into the current sentiment. For instance, a surge in green energy stocks might reflect a bullish sentiment in that sector.
Financial analysts and economists offer varied opinions. Some predict a bullish week ahead, citing strong economic fundamentals. Others caution against potential bearish trends due to unresolved geopolitical issues.
Contrasting these expert views with Popular Investor Sentiment, it’s clear that while experts might lean towards a bullish outlook based on data, investors’ sentiments are mixed, swayed by both global events and domestic economic indicators.
For casual investors and traders, it’s essential to balance optimism with caution. Diversifying your portfolio and setting stop-loss orders can mitigate risk. Staying abreast of news and economic reports is also vital for informed decision-making.
In conclusion, the market sentiment for the upcoming week appears to be a blend of bullish and bearish influences. While economic indicators show some strength, geopolitical tensions and sector-specific uncertainties add a layer of complexity. It’s essential for investors and traders to remain informed and agile, ready to adjust their strategies in response to the evolving market landscape.
Remember, the key to successful investing is not just about predicting the market correctly but also about managing risks and adapting to changes efficiently. Stay informed, stay diversified, and, most importantly, stay calm in the face of market volatility.
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Last week, we didn’t get the minimum voters again to have the contest valid. We only need 5 people to validate this 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!
We’re thrilled to bring you an exciting contest where your forecasting skills could win you a fantastic prize – an Amazon or Cash gift card! Get ready to flex your market intuition and join the fun.
Get ready to showcase your market wisdom and take a shot at winning the Guess the S&P 500 Friday Close Challenge. May the most accurate predictor win!
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Our SPX Crumbs Strategy works great so far. I hope it will continue like that for years to come. September was a volatile market. After a strong rally since the end of the bear market in October 2022, the market pulled back. Our strategy sustained that pullback. We made good money even when the market was declining. During November – December, we had an opposite problem. The market rallied hard and call spreads could be a trouble trade. But the strategy held well. It was me who panicked. But at the end of December, all is good and I look into the next year with optimism.
Our SPX account is up +1,384.76% since the beginning of this program.
I dedicated a $3,600 initial amount that will be used to trade SPX PCS (Crumbs) strategy per week. Today, the account is up at $53,451.53.
Our SPX Crumbs strategy is designed as neutral options trading. We select our strikes far away from the market – more than 2 SD (standard deviation) away. The premiums are smaller, but the chance of profit is 99%. Even during last week’s rally (due to better-than-expected CPI report) when the markets rallied more than 2.4% in a single day, our trades remained safe.
Here you can see our 2023 Crumbs trades:
Click on the picture above to see the entire list.
Overall, the strategy resulted in a +1,384.76% gain last month.
| Initial account value (since inception: 12/07/2021): | $3,600.00 |
| Last month beginning value: | $51,553.82 |
| Last month ending value: | $53,451.53 (+2.81%; total: +1,384.76%) |
| The highest capital requirements to trade this strategy: | $9,038.02 |
| Current capital at risk: | $9,038.02 |
| Realized Gain: | $1,462.27 |
| Win Ratio: | 93.75% |
SPX PCS account value
SPX PCS account vs SPX index net liq
SPX PCS account vs SPX performance
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:
Note that if you wish to subscribe to multiple levels, you can only subscribe to one level and send us an email that you want to be added to other levels.
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 comment in the comments section. Thank you!
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Four months are behind us, and they were successful. We had a rough time in September, but the markets started rallying again, and our investing and trading performed great. I made many changes to our trading and investing. The most significant change was to our accounts’ SPX trading and cash management. I was always fully invested in the past, and when the markets hit bear madness, I got struck. And I needed more reserves to navigate the rough waters of the markets. For example, my account drawback in 2020 was only +1.38% (growth), but in the 2022 year-long bear market, the drawback was over -20%. In 2020, I could navigate through it as I had enough cash. But I invested a lot in 2021 and struggled in 2020. I decided to change this and set new rules on creating reserves. I will write about the new modified strategy in my strategy page.
From September to December 2023, our options trading delivered $13,480.00 in premiums. But we failed to complete our 2023 goal. One reason was a consolidation of bad options trades that I had been dragging since the 2022 bear market. The new “Crumbs” strategy is helping to fix this issue.
During the same period, our dividend stocks brought in $2,862.15 in dividends. Despite some dividend cuts (like IEP or MPW) we accomplished our 2023 dividend goal.
Also, our cash to buying power dropped a bit as we continued reinvesting our proceeds:
Our options trading delivered $13,480.00 gains in the last four months. Our net-liq value increased by 10.62% to $80,016.71 value. Our account is up 28.53% YTD and -23.53% from when the bear market started in January 2022. So, there is still much work to be done.
| Account Value: | +$80,016.71 | $8,513.55 | 10.62% |
| Options trading results | |||
| Options Premiums Received: | +$13,480.00 | ||
| 01 January 2023 Options: | +$1,466.00 | +1.97% | |
| 02 February 2023 Options: | $2,754.00 | +10.34% | |
| 03 March 2023 Options: | -$1,462.00 | -2.05% | |
| 04 April 2023 Options: | +$16,410.00 | +8.54% | |
| 05 May 2023 Options: | +$6,942.00 | +9.85% | |
| 06 June 2023 Options: | +$3,116.00 | +4.05% | |
| 07 July 2023 Options: | +$4,484.00 | +5.36% | |
| 08 August 2023 Options: | +$3,498.00 | +4.88% | |
| 09 September 2023 Options: | +$2,573.00 | +4.28% | |
| 10 October 2023 Options: | +$1,930.00 | +3.18% | |
| 11 November 2023 Options: | +$8,915.00 | +12.11% | |
| 12 December 2023 Options: | +$20.00 | +0.02% | |
| Options Premiums YTD: | +$51,026.00 | +63.77% | |
| Dividend income results | |||
| Dividends Received: | +$2,862.15 | ||
| 01 January 2023 Dividends: | +$407.13 | ||
| 02 February 2023 Dividends: | +$731.21 | ||
| 03 March 2023 Dividends: | +$482.14 | ||
| 04 April 2023 Dividends: | +$820.22 | ||
| 05 May 2023 Dividends: | +$590.19 | ||
| 06 June 2023 Dividends: | +$848.65 | ||
| 07 July 2023 Dividends: | +$478.37 | ||
| 08 August 2023 Dividends: | +$795.50 | ||
| 09 September 2023 Dividends: | +$723.17 | ||
| 10 October 2023 Dividends: | +$475.23 | ||
| 11 November 2023 Dividends: | +$762.72 | ||
| 12 December 2023 Dividends: | +$487.28 | ||
| Dividends YTD: | +$7,748.44 | ||
| Portfolio Equity | |||
| Portfolio Equity: | $241,807.20 | +$30,536.50 | +14.45% |
| Portfolio metrics | |||
| Portfolio Yield: | 6.16% | ||
| Portfolio Dividend Growth: | 15.83% | ||
| Ann. Div Income & YOC in 10 yrs: | $197,789.68 | 84.23% | |
| Ann. Div Income & YOC in 20 yrs: | $67,103,467.57 | 29,280.86% | |
| Ann. Div Income & YOC in 25 yrs: | $15,902,258,552.76 | 6,939,013.72% | |
| Ann. Div Income & YOC in 30 yrs: | $47,487,274,419,469.70 | 20,721,260,913.63% | |
| Portfolio Alpha: | 58.02% | ||
| Sharpe Ratio: | 4.87 | EXCELLENT | |
| Portfolio Weighted Beta: | 0.47 | ||
| CAGR: | 185.66% | ||
| AROC: | 66.25% | ||
| TROC: | 4085.65% | ||
| Our 2023 Goal | |||
| 2023 Dividend Goal: | $8,000.00 | 102.03% | Accomplished |
| 2023 Options Income Goal: | $70,000 | 72.89% | Failed |
| 2023 Portfolio Value Goal: | $96,532.51 | 83.01% | Failed |
| 6-year Portfolio Value Goal: | $175,000.00 | 45.79% | In Progress |
| 10-year Portfolio Value Goal: | $1,000,000.00 | 8.01% | In Progress |
In the last four month we have received $2,862.15 in dividends bringing our dividend income at $8,162.19.
In the last four months, we bought these dividend growth stocks:
– 20 shares of MLPR @ $48.95
We are building up the position of a high-yield stock. MLPR is a leveraged ETF measuring the performance of energy MLPs, currently yielding 9.75%. The ETF is not optionable.
– 20 shares of OHI @ $30.96
We owned 180 shares. Adding 20 new shares rounded our position to 200 shares. We also opened a new covered call against the new set.
– 10 shares of MCD @ $286.24
We only owned one share. It was a placeholder, a reminder to accumulate this stock, but we still need to do that. This purchase increased our position to 11 shares. We plan on accumulating until we reach 100 shares.
– 200 shares of MPW @ $4.86
We now own 400 shares of MPW, and we are selling covered calls against the position. Investors are bashing the stock and predicting its demise, but this stock will recover and perform well soon. As its clients (hospitals) crashed during the COVID-19 mess and started recovering (and many already did), MPW will improve, too.
– 90 shares of O @ $49.23
We now owned 110 shares. This addition increased our holding to 200 shares. I have a fair value of $52 a share, so any purchase below that price is a steal. I plan on adding more shares under the $52 price. I also added a new covered call.
Here is a chart of our account equity showing our accumulation goal and the value of all stocks. It shows a nice upward-sloping chart as our equities grow. The growth is a result of our options trading and using premiums to buy dividend stocks:
Our account almost recovered our pre-bear market equity value. Our net-liq is down due to open options still being underwater. But I am optimistic about 2024, and this will improve next year, too.
Here you can see the dividend income those equities pay us every year:
In the last four months, we bought the following growth stocks and funds:
95 shares of SGOV @ $100.41
This fund is our second cash parking ETF. We will not sell this fund ever. We aim to raise our net-liq to $175,000 to apply for portfolio margin (PM). This fund will hold the net-liq value above the minimum requirement for PM, so it will not get suspended if it drops below. That would be catastrophic.
In the last four months of 2023, our options trading delivered a gain of $13,480.00.
We received $2,862.15 in dividends in the last four months. Our portfolio currently yields 6.21% at $80,016.71 market value. I am happy with this progress as I am nearing $1,000 monthly in dividend income. As of today, our projected monthly dividend income is $763.83 (the real income is $680.18, but that is because our new holdings still need to pay the dividend). Note that these numbers are averages. One month, we get less; another month, we get more income.
Our projected annual dividend income in 10 years is $206,900.71. However, that projection is if we do nothing and let our positions grow without adding new positions or reinvesting the dividends.
We are also set to receive a $9,165.96 annual dividend income ($763.83 monthly income). We are 4.43% of our 10 year goal of $206,900.71 dividend income.
The chart above shows how our future dividend income is based on the future yield on cost and what dividend income we may expect. The expected dividend growth depends on what stocks we add to our portfolio and the stocks’ 3 years average dividend growth rate. It is interesting to see what passive income we may enjoy 10, 20, 25, or 30 years from now.
Our non-adjusted stock holdings market value increased from $211,270.70 to $241,959.11 in the last four months.
In 2023, we planned on accumulating dividend stocks, monetizing these positions, using the HFEA strategy, and using SPX trading. We plan to raise more of our holdings to 100 shares to sell covered calls. We continued rebalancing our options trades and released buying power significantly. That allowed us to start repurchasing shares of our interest.
We aim to accumulate 100 shares of dividend growth stocks we like and then start selling covered calls or strangles around those positions. We also planned on reinvesting all dividends back into those holdings.
Our options trading delivered a 4.99% average monthly ROI in September to December 2023, totaling a 63.77% ROI YTD. We exceeded our 45% annual revenue goal in selling options against dividend stocks.
Our entire account’s net-liq is still down -23.53% from when the bear market started. However, in 2023, our account is up 28.53% YTD. Our goal for 2024 will be mostly to accumulate cash.
Our trading averaged $4,252.17 per month this year. If this trend continues, we will make $51,026.00 in trading options in 2023. As of today, we have made $51,026.00 in trading options. The income from options selling is below our projected goal. Next year we will strive for a better performance.
The chart indicates how choppy the market and our account were last year. However, I expect the next year to improve (unless we hit a recession).
In the last four months, S&P 500 grew 64.36% since we opened our portfolio while our portfolio grew 44.93%. On YTD basis, the S&P 500 grew 31.63% and our portfolio 35.45%. We are beating the market by +3.82%.
The numbers above apply to our stock holdings adjusted by options premiums.
Our stock holdings are slightly outperforming the market. Hopefully, this trend will improve, and we will do better than S&P 500. However, our portfolio has performed better in bear markets so far. In 2022, we outperformed the S&P 500 by 11.73% (it lost less than the market).
Our 10-year goal is to grow this account to $1,000,000.00 value in ten years. We are in year two, and we accomplished 8.01% of that goal.
Our 6-year goal is to reach a $175,000 account value to be eligible for portfolio margin (PM), and today (in year two of this goal), we accomplished 45.79% of that goal.
Our 2023 year goal is to grow this account to a $96,532.51, and today we accomplished 83.01% of this goal. Unfortunately, we failed to achieve the 2023 account value goal.
We planned to make $8,000.00 in dividend income in 2023. As of today, we received $7,748.44. We also accumulated enough shares to start making $9,238.09 a year. Our monthly projected dividend income is $769.84, and our current monthly dividend income is $645.70.
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