I’m going to keep the intro short today as we have an upcoming subscriber-only webinar this week when I plan to touch on the current state of the market, our current trades, and some potential upcoming trades. If you wish to attend or receive the recording of the webinar, please click here to sign up.
Current Portfolio
| Open Trades | |||||||
| Open Date | Ticker | Strategy | Trade | Open Price | Current Price | Current Probability | Delta |
| 10/3/22 | SPY | Bull Put | November 18, 2022 325/320 | $0.54 | $0.20 | 92.51% | 1 |
| 10/4/22 | IWM | Iron Condor | November 18, 2022 198/203 – 143/138 | $0.64 | $0.30 | 95.14% – 94.20% | 0 |
| 10/6/22 | SPY | Bear Call | November 18, 2022 412/416 | $0.43 | $0.32 | 90.77% | -1 |
| Closed Trades | |||||||
| Open Date | Closed Date | Ticker | Strategy | Trade | Open Price | Closing Price | Return |
| 6/2/22 | 6/13/22 | SPY | Bear Call Spread | July 15, 2022 440/445 | $0.70 | $0.05 | 14.94% |
| 6/8/22 | 6/17/22 | XOP | Bear Call Spread | July 15, 2022 190/195 | $0.70 | $0.04 | 15.21% |
| 6/22/22 | 7/13/22 | SPY | Bear Call Spread | July 29, 2022 405/410 | $0.75 | $0.35 | 8.70% |
| 6/30/22 | 7/25/22 | IWM | Iron Condor | August 19, 2022 195/200 – 145/140 | $0.70 | $0.34 | 7.76% |
| 7/8/22 | 7/28/22 | GLD | Bull Put Spread | August 19, 2022 155/150 | $0.60 | $0.16 | 9.65% |
| 7/14/22 | 8/11/22 | SPY | Iron Condor | August 19, 2022 417/412 – 335/330 | $0.70 | $4.10 | -68.00% |
| 8/1/22 | 8/29/22 | SPY | Bear Call Spread | September 16, 2022 439/444 | $0.70 | $0.07 | 14.42% |
| 8/11/22 | 8/29/22 | DIA | Bear Call Spread | September 23, 2022 350/325 | $0.75 | $0.08 | 15.47% |
| 8/11/22 | 9/8/22 | IWM | Iron Condor | September 23, 2022 220/215 – 173/168 | $0.77 | $0.57 | 4.17% |
| 9/7/22 | 9/9/22 | QQQ | Bull Put Spread | October 21, 2022 260/255 | $0.62 | $0.30 | 6.84% |
| 9/9/22 | 9/15/22 | SPY | Bear Call Spread | October 21, 2022 430/435 | $0.75 | $0.25 | 11.11% |
| 9/13/22 | 10/17/22 | IWM | Iron Condor | October 21, 2022 208/203 – 163/158 | $0.77 | $0.30 | 10.40% |
Volatility Talk
The VIX continues to swing back and forth between the range of 28 to 35. However, this week rather than testing the upside portion of the range we shall see if the VIX is able to breach the downside at 28. A move below 28 and we could see this recent rally have some legs that could carry into the midterms and potentially beyond.
Weekly High-Probability Mean Reversion Indicator
Below is my watch list of ETFs and stocks with the most liquid options headed into the week of October 24, 2022.
Here are the various levels I use to determine if an ETF is in an oversold or overbought state.
| Very Overbought | greater than or equal to 80.1 |
| Overbought | 60.1 to 80.0 |
| Neutral | 40.1 to 60 |
| Oversold | 20.1 to 40.0 |
| Very Oversold | less than or equal to 20.0 |
Each week I also include the current implied volatility (IV) and IV Rank. I look for an IV rank above 40, preferably higher.
ETF Watch List – Trade Ideas
| Ticker Symbol | IV | IV Rank | HPMR Oversold – Overbought | |
| ARK Innovation ETF | ARKK | 68.1 | 55.9 | 44.4 |
| Proshares Bitcoin ETF | BITO | 71.2 | 14.8 | 46.8 |
| SPDR Dow Jones | DIA | 27.2 | 68.3 | 70.4 |
| iShares MSCI Emerging Markets | EEM | 29.3 | 46.4 | 52.1 |
| iShares MSCI EAFE | EFA | 28.1 | 52.4 | 58.3 |
| iShares MSCI Mexico ETF | EWW | 30.4 | 55.1 | 73.6 |
| iShares MSCI Brazil | EWZ | 52.7 | 85.4 | 75.4 |
| iShares China Large-Cap | FXI | 46.3 | 51 | 31 |
| Vaneck Gold Miners | GDX | 51.3 | 64.4 | 58.3 |
| SPDR Gold | GLD | 18.9 | 25.6 | 59.1 |
| iShares High-Yield | HYG | 19.5 | 62.3 | 54.2 |
| iShares Russell 2000 | IWM | 34.3 | 71 | 54.9 |
| SPDR Regional Bank | KRE | 36.1 | 46 | 44.1 |
| Vaneck Oil Services | OIH | 54.3 | 47.7 | 80.2 |
| Invesco Nasdaq 100 | QQQ | 35.5 | 77.4 | 58.2 |
| iShares Silver Trust | SLV | 37.9 | 54 | 55.6 |
| Vaneck Semiconductor | SMH | 45.8 | 73.6 | 56.8 |
| SPDR S&P 500 | SPY | 29.7 | 72 | 59.6 |
| iShares 20+ Treasury Bond | TLT | 31.3 | 106.8 | 12.1 |
| United States Oil Fund | USO | 46.2 | 30.6 | 51.2 |
| Proshares Ultra VIX Short | UVXY | 104 | 11.5 | 42.8 |
| CBOE Market Volatility Index | VIX | 89.5 | 4.9 | 37.6 |
| Barclays S&P 500 VIX ETN | VXX | 73.3 | 16.7 | 42.3 |
| SPDR Biotech | XLB | 33.4 | 62 | 61.7 |
| SPDR Energy Select | XLE | 41.1 | 53.6 | 75.4 |
| SPDR Financials | XLF | 31.8 | 49.4 | 58.8 |
| SPDR Utilities | XLU | 31.3 | 75.8 | 43.4 |
| SPDR S&P Oil & Gas Explorer | XOP | 51.7 | 32.7 | 65.9 |
| SPDR Retail | XRT | 45.4 | 62.5 | 51 |
Stock Watch List – Trade Ideas
| Ticker Symbol | IV | IV Rank | HPMR Oversold – Overbought | |
| Apple | AAPL | 41.8 | 68.8 | 62.3 |
| Bank of America | BAC | 39.7 | 50.6 | 70.2 |
| Bristol-Myers Squibb | BMY | 28.4 | 50.7 | 62.7 |
| Citigroup | C | 41.4 | 47 | 59.7 |
| Caterpillar | CAT | 42.2 | 70.9 | 70.6 |
| Comcast | CMCSA | 49.6 | 70.7 | 52 |
| Costco | COST | 33 | 35.4 | 56.5 |
| Cisco Systems | CSCO | 42.1 | 65.6 | 69.8 |
| Chevron | CVX | 40.2 | 68.2 | 78.4 |
| Disney | DIS | 46.5 | 49.2 | 65.7 |
| Duke Energy | DUK | 32.7 | 58 | 41.7 |
| Fedex | FDX | 41.1 | 47.8 | 44.4 |
| Gilead Sciences | GILD | 30.7 | 46.6 | 71.8 |
| General Motors | GM | 55.2 | 70.6 | 62.1 |
| Intel | INTC | 59.5 | 91 | 59.5 |
| Johnson & Johnson | JNJ | 21.4 | 31.4 | 69.4 |
| JP Morgan | JPM | 36.4 | 50.4 | 74.3 |
| Coca-Cola | KO | 28.9 | 70 | 51.3 |
| Altria Group | MO | 31.7 | 59.4 | 55.4 |
| Merck | MRK | 27.2 | 25.1 | 75.1 |
| Morgan Stanley | MS | 39.3 | 50.8 | 52.2 |
| Microsoft | MSFT | 41.1 | 64.5 | 60.3 |
| Nextera Energy | NEE | 40.2 | 72.6 | 33.8 |
| Nvidia | NVDA | 69.9 | 62.5 | 58.6 |
| Pfizer | PFE | 34.8 | 45.6 | 66.5 |
| Paypal | PYPL | 70.6 | 70.5 | 42.3 |
| Starbucks | SBUX | 43.1 | 74.4 | 54.9 |
| AT&T | T | 31.6 | 44.5 | 79.5 |
| Verizon | VZ | 32.3 | 58.2 | 29.7 |
| Walgreens Boots Alliance | WBA | 38.5 | 43.4 | 66 |
| Wells Fargo | WFC | 39.7 | 33.6 | 67.8 |
| Walmart | WMT | 32.9 | 72.9 | 69.4 |
| Exxon Mobil | XOM | 39.8 | 54.9 | 75.6 |
Weekly Trade Discussion: Open Positions
*Portfolio updated every Monday
Bull Put: SPY November 18, 2022, 325/320 puts
Original trade published on 10-3-2022 (click to see original alert)
Background: At the time of the trade, SPY was trading for 364. We sold the November 18, 2022, SPY 325/320 bull put spread for $0.54 with an 82.33% (downside) probability of success. The expected range was 337 to 392.
Current Thoughts: SPY is currently trading for 374.29 and our bull put is worth $0.20. Our probability of success stands at 92.43% and the probability of touch is 14.87%.
With 25 days left, we are in good shape as we have almost 50 points of cushion to the downside, or 13.3%.
Iron Condor: IWM November 18, 2022, 198/203 calls – 143/138 puts
Original trade published on 10-4-2022 (click to see original alert)
Background: At the time of the trade, IWM was trading for 174.86. We sold the November 18, 2022, IWM 198/203 – 143/138 iron condor for $0.64 with a 90.48% (upside) and 90.49% (downside) probability of success. The expected range was 160 to 190.
Current Thoughts: IWM is currently trading for 172.70, and our iron condor is worth $0.30. Our probability of success stands at 95.20% on the call side and 94.17% on the put side.
With 25 days left until expiration, our November IWM iron condor is in great shape at the moment. Our probabilities of success, on both sides, remain incredibly high and if IWM manages to stay around this area over the next week or so we should have the opportunity to take off our trade early for a nice profit.
Call Side:
Put Side:
Bear Call: SPY November 18, 2022, 412/416 calls
Original trade published on 10-6-2022 (click to see original alert)
Background: At the time of the trade, SPY was trading for 374.50. We sold the November 18, 2022, SPY 412/416 bear call for $0.43 with an 89.44% probability of success. The expected range was 348 to 401.
Current Thoughts: SPY is currently trading for 374.29 and our bear call is worth $0.32. Our probability of success stands at 90.93% and the probability of touch is 18.32%.
With 25 days left, our SPY bear call spread is in good shape. There is a good chance I will take this spread off early for a small profit. We still have 37 points of cushion to the upside, or 9.9%.
The next Cabot Options Institute – Quant Trader issue will be published on October 31, 2022.
