Trade The Journey

Trade The Journey

Preparation II

Top of the Morning! Is it too early to proclaim that the Crypto bulls are back?

Maybe but I like that Bitcoin is reapproaching the fifty-three thousand dollar level and will have to grind hard to make it above the sixty thousand dollar level. Dogecoin breached above the thirty-cent level, and Etherum is looking to break above four thousand. Litecoin is currently at two-hundred and twenty-five dollars.

Crypto is a risk-on type of asset, although its more widespread mainstream acceptance. I have used crypto to purchase some items and services. It was fast and completely anonymous. Without exchanging personal information, I could make a purchase and maintain the same trust as I do when using a debit card.

My only issue with the transaction is that it costs more with the fees than a purchase with a debit card.

The Russell 2000 made it’s way back up towards the top of its sideways channel. The Nasdaq and S&P 500 both made new all-time highs during the week before fizzling out toward the end of the week. The Dow Jones drifted sideways throughout the week and ended the week without much action.

The August employment report wasn’t as positive as analysts forecasted, although labor costs rose. Will this report derail the FED’s plan of tapering soon rather than later?

Last week’s trade was a vertical spread trade with Ford. I opened the trade by selling the October 13 put and buying the October 14 put. For the trade to be profitable, Ford had to remain below $14.55. The $0.55 was the credit received for opening the credit spread.

Delta: 22.46
Gamma: 0.24
Theta: -0.04
Vega: 0.05

Looking at the greeks, I can assume that this trade has a low probability of being profitable. I seldom buy spreads and prefer to sell spreads, but this time I decided to buy.

My initial Risk was: $25
My potential Profit was: $150

At $12.89, the greeks of the position are:

Delta: 22.21
Gamma: 4.70
Theta: -0.11
Vega: 0.28

The position has turned into a downward moving position, and as it goes higher, the gamma will help turn the position further bullish. My theta is still negative, indicating that the spread would lose $.11 as each day passes. The vega has increased, indicating this position will respond positively to volatility.

Before $13.45, this spread will begin to profit from the upward movement. $13.45 is a significant resistance level for Ford, and it held for quite some time. Ford failed to break through and instead drifted downward towards a support level at $12.57.

Fortunately, I did not place this trade. It would have been a losing position thus far.

This spread position still has a couple of weeks to go before it expires. Implied volatility has turned upward, while historical volatility has shown little to no action. Using my thinkorswim platform, I see that if I placed this position today, $13.12 would be by my breakeven.

Below is Ford and the S&P 500 automobile industry chart:

From the chart, you can see the automobile industry stalled at the August highs. However, it looks like the 50 SMA will cross above the 200 SMA. I’d say the trend looks likes it is going to continue upward.

According to a Baron’s report, High prices and low inventory could lead to a buyer’s strike, which means that buyers will forego purchasing a new car until prices come down. The semiconductor shortage is the root of the problem. August’s new vehicle sales came in below expectations due to the points listed above.

Preparation ~

Last week I discovered the Real-Time Data (RTD) function in excel. This function allows you to link with a trading platform like thinkorswim and have live data imported into your spread sheet. Thinkorswim has to be open in order for the RTD function to work.

While in the thinkorswim platform, go to the quotes section and click on the menu section. Once there click, on the excel export to excel selection. Pictures below:

For the RTD function to work on Excel, I have to run excel as an administrator. Once you open a blank worksheet, just click on the first cell at the top and click paste.

Once the data is in your worksheet, you can see the function within the cell. The “Description” and “.A210817C180” can be changed to match the data you’re seeking and the equity/option/future or linking the data.

I’m a big fan of excel because it allows you to aggregate and analyze data. I believe that there are patterns within data.

I also have some option data within the spreadsheet to give me a general sense of the indices have listed. I have the Dow Jones,  Nasdaq 100, economic Data, and S&P 500 listed within this spreadsheet.

For the indices, I had to manually enter the Put Sizzle and Call sizzle volume for each stock but I feel it’s worth it. With color columns based on an increasing Put/call ratio, I can quickly identify stocks that have a bearish forecast.

For options, I prefer to stick with equities that are liquid, meaning they have a large trading volume.

The RTD function also allows you to import option data to your spreadsheet.

The option spreadsheet has everything I need to track my positions. I found the format for this spreadsheet online and then designed it. Now, I’m working on designing profit/loss charts for the option positions within this spreadsheet.

During the day, you can see the numbers moving as the market moves. I must admit it’s cool to watch.

Besides the colored columns, you can also use the functions and charts to further analyze the data.

Within the coming months, my job workload will significantly increase for at least a year, while learning the new position. This spreadsheet will assist me in the coming months.

Cash-Flow for the previous week:

This past week was relaxing. I spent very little besides what was needed. I did forget to pay a credit bill but I was well within the payment date before being reported as late to the credit rating agency.

I received a steep late payment fee. To me, the most important thing about this situation was that the late payment is not on my credit report. A ding on my credit report lowers my credit score and my on-time payment percentage which is now 100%.

Reason: Sustained effort.

Leave a Comment

Your email address will not be published. Required fields are marked *