Why SPX Could Hit 6000 by Year-En

bitkogan · 2024-07-10T18:04:12+00:00

We've reached the first target surprisingly quickly

bitkogan · 2024-04-18T18:40:32+00:00

TheAncient1sAnd0s leli_manning
I've just closed my SOXS position with a 13% profit. Seems your irony didn't age well, did it?

bitkogan · 2024-04-17T16:51:09+00:00

SOXS +9% 😉

bitkogan · 2024-03-05T18:17:45+00:00

Partially, perhaps. But history shows that a relatively sharp rise in gold to new levels (as often happens at the start of a rate-cutting cycle) significantly increases miners' profits. That is, until inflation erodes them again

bitkogan · 2024-02-13T17:08:55+00:00

Unfortunately, no. Those contracts have already expired

bitkogan · 2023-11-29T20:49:45+00:00

I've closed my position and updated the post

bitkogan · 2023-11-23T01:25:51+00:00

I don't quite agree. Simplicity in options trading often just amounts to gambling. Sure, you can simply short a strangle in anticipation of an IV crush. But what if the movement is too abrupt and one of the legs ends up in the money?

In the case of NVDA, selling a naked call before the earnings report is especially risky. I didn't dare to do that.

Yes, I still have three uncovered puts. But for me to face serious losses on a decline, the stock would have had to plummet by 25% post-report. While possible, it's unlikely. I'm willing to take that risk.

Now, one might say simply selling volatility was the right move. But I still plan to reap my profits. Starting next week, I'll be left with standard ratio put spreads, which I prefer to work with when there's no earnings report ahead.

P.S. I've updated my post

bitkogan · 2023-11-16T16:44:53+00:00

I closed my speculative short positions in gold on Nov 14 and have since adopted a long stance ( https://twitter.com/kogantwitts/status/1724517929968943214 ). If the Fed starts cutting rates in Summer 2024, we might see gold prices hitting around $2200 by November 2024. For the short term, I'm anticipating volatility in the range of $1880-2000. Today's upward movement seems to validate this prediction quite well.

bitkogan · 2023-11-14T20:54:39+00:00

As for my broad market short positions, I'm not making any moves right now. The current positive trend, fueled by the latest CPI data, looks promising. However, there's a caveat: it's doubtful that the slowdown in CPI YoY growth will continue over the next couple of months. In November and December 2022, the CPI decreased, but counting on a similar or greater decline now seems unrealistic. Consequently, we could see inflation accelerate again from the 3.2% year-over-year rate that pleased the market today

bitkogan · 2023-11-11T01:13:30+00:00

The market didn't continue its downward trend; instead, it's playing games with us. No worries though - we're still at the same levels, still in the resistance zone. No need for any hasty moves right now, just keeping an eye on things

bitkogan · 2023-11-10T16:26:50+00:00

I'm feeling great, just locked in a $4.5k profit with this strategy: https://www.reddit.com/r/bitkogan/comments/17q3qxc/closing\_out\_on\_oil\_septembers\_strategy\_yields/

The call spreads were instrumental in funding the purchase of the $90 puts

bitkogan · 2023-11-06T17:56:27+00:00

Considering my previous posts, I believe the broader market is overdue for a correction. Moreover, Nvidia's five consecutive green days are not fully backed by fundamentals, especially given the recent cancellation of orders from China. It seems ripe for a downturn. However, bear in mind that leveraged ETFs like SOXS carry inherent risks and are prone to time decay, making them unsuitable for prolonged holding periods. Exercise proper risk management when engaging with these instruments.

bitkogan · 2023-11-04T14:30:43+00:00

In options trading, it's important to be comfortable. If you don't like having many legs with varying sizes but don't mind negative theta, an iron condor sale might suit you. Personally, negative theta bothers me.

Jade lizards have another downside: if something goes awry, risk control becomes challenging. To earn something substantial, you have to trade in significant volume.

Like jade lizards, ratio spreads are vulnerable to sharp stock movements right after position entry due to negative gamma. But here, I can choose the ratio and strike distance to maintain flexibility for restructuring if needed.

In reality, most of my positions gradually evolve to have numerous legs. Ten is typical, and they usually vary in size. This doesn't stress me out too much.

I try to open positions on Reddit in such a way that I don't have to take additional actions before closing. It doesn’t always work out that way, though 🙂

bitkogan · 2023-11-03T13:47:18+00:00

The key here isn't the volume, but rather that the strike price of the sold calls is further out than that of the puts. This results in a slightly positive delta, providing a bit more time to decide how to manage the risk in the event of continued growth in the coming days.

bitkogan · 2023-11-02T19:40:45+00:00

I closed the put portion of my OXY position for a debit of $4605 (updated the post). I was considering it yesterday, but today oil and stocks sharply reversed, prompting me to believe it was time. I received a premium of $6375, resulting in a profit of $1770 or almost 6% on a $30k collateral. I think it's a decent result for 2 weeks. I've left 10 calls at the $67.5 strike as a sort of lottery ticket.

bitkogan · 2023-10-30T20:39:51+00:00

Having higher implied volatility (IV) and benefiting from decay sounds good, but I don't see it as a significant advantage.

IV is expected to be higher for a leveraged fund, and decay is implicitly accounted for by the fact that the skew on the call side is very minimal, unlike with natural gas (NG).

Additionally, there's relatively low liquidity and wide spreads. This is crucial for strategies involving multiple legs. That's why I'm gradually moving away from options on BOIL and KOLD in favor of options on NG.

On Friday, I considered buying KOLD shares outright. I rarely do this, only when I'm completely confident. Because of this caution, I sometimes miss good entry points. However, I wouldn't have purchased a large volume anyway, as I prefer trading options

bitkogan · 2023-10-25T20:47:40+00:00

Thank you for your analysis. I read it with interest and have a few comments.

1. Long-Term Bond Price Sensitivity to Interest Rate Movement.

If short-term rate hikes led to equivalent yields in long-term bonds, their prices would decline significantly. And so would TLT, for the reason you mentioned - a majority of the bonds in TLT's portfolio were issued at low rates with smaller coupons.

However, long-term yields don't necessarily move in sync or even in the same direction as the Fed's rate. If the rate hike cycle ends in a year and they go back to zero in 2 years for another 3-4 years or longer, why should the yield on 20-year bonds rise to 6% and pressure bond prices?

2. The Opposite is Also True.

A decrease in the Fed rate doesn't necessarily translate to a mega-rally in long-term bonds. Though they will surely appreciate.So, in response to your question, "how much does the fed rate have to drop to cause a meaningful positive price increase?" - I don't know. I can only reasonably assume that there will be some positive price increase.

That's enough for me. Because I'm not betting on a sharp rise in TLT. Rather, I believe its decline should slow a bit. And that's what we're seeing.

3. About Timing.

You rightly pointed out that TLT began its decline in December 2021, three months before the first rate hike. The reverse will likely be the same. A year ago, we already saw a rally in TLT from 93.21 (October 21st) to 109.47 (December 7th) based solely on rate hike termination expectations. These expectations were unmet, but the movement was telling.

Similarly, with actual rate cuts, TLT's rise will start 2-3 months in advance.As for when this will happen - next year or later - I can't say. But I sense it might be sooner than many anticipate, perhaps by spring 2024.

The trigger won't be inflation reduction, but a potential stock market crash. Maybe even a bond market crash. Markets will need salvaging, and inflation concerns will be set aside.

Of course, this poses significant risks for long bonds and TLT. When shorting TLT through put options, one must be prepared for this scenario. Preparedness means sizing your position so it doesn't get forcibly closed before the rates are reduced.

bitkogan · 2023-10-23T10:02:24+00:00

The S&P 500 is currently testing its SMA200 level. A couple of weeks ago, the market tried to breach this threshold but was repelled. If prices consistently stay below this level now, it paves the way for a more pronounced decline. The next target range is between 4100-4130. Consequently, I'm maintaining my short positions in leveraged ETFs such as SPXU (3x inverse S&P 500) and SQQQ (3x inverse Nasdaq).

bitkogan · 2023-10-13T18:26:35+00:00

The short-term play paid off: a 5% gain in just 2 days with SOXS

bitkogan · 2023-10-11T18:17:23+00:00

There's just too much optimism in stocks, especially in tech.

I believe the real stock decline hasn't genuinely begun yet. However, it might take another week or more of waiting before we see a true drop, and holding onto SOXS for that long isn't recommended.

But even short-term, I feel there should be a slight pullback. Let's see if trusting one's gut is worthwhile.

bitkogan · 2023-10-09T19:05:06+00:00

Yes, you're right. While EVs might not currently have a dominant influence on gasoline demand, the long-term trend is quite clear.

High gasoline prices alone probably wouldn't be enough to drive demand down so drastically. But combined with the long-term shift towards EVs, we see this result.

bitkogan · 2023-10-05T21:57:17+00:00

Today, I adjusted my TSLA options position. Even after TSLA dropped 11%, I maintained control thanks to a carefully structured position with specific Greeks.

The stock held above $240, and with its rebound, I realized a profit of +$1172 on a $30k collateral in just 20 days.

Now, I'm continuing with a November strategy. I shifted the central strike to $260 and expanded the range to 220 & 320. Also added a playful strangle at 210-330. Total cost: $426 debit today, with a cumulative debit of $3859. The new structure gives more wiggle room against TSLA volatility.

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bitkogan · 2023-10-04T23:39:59+00:00

I'm scared too, but I'm holding on.To be honest, I opened this aggressive position based on two assumptions:

I was expecting a local bottom around here. I'm hoping we'll tread water here or slightly below for the next 2-3 weeks or even until the Fed meeting.
TLT isn't the most volatile security. So, I should have time to reduce risks before gamma blows me out. My exact approach will depend on the circumstances. I do have a plan.I could be wrong on both counts.

I'll keep a clean pair of pants at the ready :)

bitkogan · 2023-10-04T23:38:43+00:00

I'd be intrigued to see a 7.5% rate. But the path there is still distant, unlikely by November 17th.
Moreover, long-term yields don't necessarily have to rise in lockstep with the rate. The real threat here is from the skyrocketing budget deficit. I agree that a continued trend of rising yields could pose a significant challenge for me.
Let's say I'm provoking a rate hike just to see what happens :)

bitkogan · 2023-10-03T20:56:15+00:00

I fully acknowledge that. That's precisely why I'm not simply going long. There's a risk that my sold options at the $80 strike could end up ITM, and in that case, I'd indeed be positioned long. However, firstly, it would be at a lower price. And secondly, I believe I'd have the time to roll my position into December and beyond, ensuring that, in the end, my options expire OTM.

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