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23rd Feb. Critical levels reached.

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Written by   33
1 month ago

Broad Market Sentiment

Over the last week there has been broad market weakness. As price trades right now, we're in the sixth day red day in a row on major indexes. Many stocks have seen sell offs. Including favourites like TSLA . "Meme" stocks are down significantly from their highs. Markets are now reaching support levels. A more bullish sentiment may return to the markets.


I am bullish and buying into the dips today. If support levels break I'll exit my positions early to keep losses smaller but if the support levels hold good entry points are available today.


Watchlist

CCIV - Down significantly from the high after news. On a support level. Might return to the highs but even if not it might stay on the support for a while whilst buyers and sellers duke it out. Good opportunity to sell puts. Opportunities to gain in vega, delta and theta selling cash secured puts.


SPY - Solidly down for multiple days in a row and currently trading the day close to the futures low. If the bulls come in on the support level they can drive the market up in one or two days back to the high. A break of the high can put us into another up-trending breakout leg and a move towards 400 on SPY.


Risk assessment

Markets have been quite bad recently, and with the way things have been recently after a period of markets being quite bad they then start to turn quite good. Buying on the supports offers good opportunities but if the supports break it will be best to exit bullish positions to avoid risk of fast losses.


Trade Plans

Charting analysis

CCIV - Now returned to the base where it started the big false breakout. If this is going to recover I'd expect to see it in three stages.

1 - A strong move up from the low. About 7 - 10%.

2 - A range for a while (This can be days or weeks. Just depends)

3 - Price starting to up-trend towards the highs (Having some fast drops on the way).


I think if support is made on this level there will be a new high. It will be a bit above the last high but after this high there will be a bigger fall and CCIV will trade under $30. If a new high is made in this I may have interest in taking some sort of short position. Probably around the $75 - 80 price. For now I am going to sell puts to benefit from a rise or range.


Buy/Sell levels

Buy level $33


Breakout levels

Good for bulls - $45

Good for bears - $30


Stop loss levels

If the market goes under $29 I will take steps to reduce my position and manage my loss.


Options selection

Selling put options with time on them to gain intrinsic value. I think sold puts can gain in vega, delta and theta. I am selling them ATM.


Selling - 16th Apr $35.00 Put .

Entry price $33

Strike - $35


Net credit $720

Trade Exit Plans

Planned trade length

To, or close to, expiry. If we see moves like the targeted ones explained above.

Exit at predetermined profit ($)

NA

Exit at predetermined loss ($)

$31.50

Exit at predetermined loss (Stock price)

NA

Exit at predetermined profit (Stock price)

$70


Options Summary

Options bought - None. May buy SPY calls in coming days.

Options sold - CCIV put

Premium paid - NA

Premium collected - $7,200

Target return - $7,000

Breakeven at expire - $27.80

Maximum exposure - $2,780


Additional Comments

I may add more bullish positions on either an index tracker or individual stocks in the coming days. I think the market is getting close to turning bullish. Until there are better signs of buyers I do not want to buy options and start paying theta. I'd prefer to sell them and collect some theta which may later fund some more aggressive call options.

I think a bigger move down is coming in the markets. But not quite yet. If we see spikes of S&P500 into 4,000, Bitcoin into $70,000 and rallies in the "Meme" stocks - watch out. That might be a good time to bank some profits.

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Written by   33
1 month ago
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Comments

Can you mention more risk factors??😍😍

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1 month ago