Trade The Journey

Trade The Journey

Trade Review: Week of May 12th

Trading Asset:

SPY (S&P 500 ETF)

Strategy: Vertical Spread

1ST Spread (SPY)

Leg 1: Buy $517 Call

Leg 2: Sell $520 call

Premium: $3.21

Profit/Loss: $3.24

Total Premium: $3.24

Hypothesis: No major economic data, market bound to be volatile as there are no real catalysts.

Hypothesis Overview: As earnings season winds down, with inflation reports on the horizon next week and a lack of significant economic data this upcoming week, the markets may lack clear direction. This could present an opportunity to capitalize on short-term fluctuations.

Trade Management Insights: This trade began positively and maintained its momentum throughout. During weeks with significant economic or earnings reports, market sensitivity can heighten, making it susceptible to swings from unexpected news or distinct technical patterns. Fortunately, the sharp decline in consumer sentiment did not impact my trade, as I had already exited my position. Although there were some volatile moments where  SPY retested its opening levels or pulled back slightly, nothing justified an early exit. I managed to enter at a reasonable price and secure a decent profit. Next week could bring heightened volatility due to upcoming inflation reports.

Trading Review Reflections: The past trading week was notably smooth. The SPY gained momentum, boosted by the previous week’s performance and an initial claims report that raised hopes for a rate cut. While some might attribute this to luck—given the report’s favorable implications for a bullish stance—I consider it a reflection of skill in navigating less favorable conditions without significant losses.

Profitable trades offer valuable lessons, but so do less successful ones. One of my goals is to mitigate the impact of recurring drawdowns. April was a challenging month where my results mirrored the broader market’s performance; while not terrible, there is room for improvement. To surpass market performance, enhancing my position management skills is essential.

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