Trade The Journey

Trade The Journey

Trade Review: Week of January 20


Trading Asset: SPY (S&P 500 ETF)

Trade Strategy: Vertical Call

Trade Expiration: 1/19/2024

Trade Leg 1: Buy $473 call

Trade Leg 2: Sell $476 call

Premium: $6.32

Profit/Loss: $0.60

Hypothesis: The SPY’s recent volatility, notably its struggle to consistently exceed the 474 mark, suggests a cautious market. The upcoming CPI and PPI data, along with bank earnings, might be the catalysts needed to energize the market and propel it upwards.

Hypothesis Explained: Lately, the SPY has been oscillating within a narrow range, leading to a loss of almost my entire premium due to the market’s sideways movement. Despite this setback, the onset of earnings season and pivotal economic reports give me a bullish outlook.

Trade Management: The past week’s trading presented challenges, with SPY grappling to breach the $476 resistance. Fluctuating interpretations of Federal Reserve statements and adjustments in market expectations for March made the trade’s outcome uncertain, especially with the unexpected rise in retail sales. Midweek, my position was down nearly $300, but observing some resilience around the 474 level, I decided to maintain my position in the market.

As SPY began its recovery, it seemed I was on track to realize the full potential of the spread. However, a forgotten limit order at $1.73 led to the closure of my position just as the market was gaining momentum, leaving me to observe from the sidelines as SPY reached new heights.

Trade Review: A simple oversight resulted in missing out on substantial profits and recovering previous losses. This experience underscores the importance of real-time technical analysis in my trading strategy. It’s a reminder of the need for more meticulous market movement analysis and improved stop-setting for future trades. My trading platform’s limitation in setting stops to automatically exit trades remains a challenge, often necessitating quick, on-the-spot decisions.

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