Results: stuck in a rut
Good precision (<2%), wrong direction last week.
Quick summary:
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Markets took a turn down on Friday, ending 6 consecutive up weeks
We were good on precision on both DJI and SPX, but wrong on direction
Losses contained, still up 60% in 2022
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Last week’s accuracy & precision
Another so-and-so week. Decent accuracy (DJI, SPX and AAPL all within 2%), but wrong direction once again. Just when the market finally turns, our directional prediction gets it wrong :)
Last week the Fed minutes came out (a non-event actually, nothing of significance was revealed to investors) and although the initial reaction was positive, and Thursday’s trend seemed to have gone right in our direction, the Friday sell-off reversed the gains and the week finished lower.
We still managed to pocket the premium from the DIA iron condor, and closed the SPY condor at breakeven, but the losses from the calls (limited at 50%) pushed us into the negative for the third consecutive week. It was, once again, a small loss (-$173).
This is the most important thing. We’re not always right, but when we miss, the negative impact on the portfolio is very low. One good week erases all the losses from the past month.
Performance: losses endured but contained
As mentioned last week, we opened the following positions:
…this week we're trading 422/423 to 435/436 SPY 19/08 iron condor (10 contracts) for $360 immediate gain. No separate legs this time, because the asymmetry was really unfavorable.
In addition, we are buying a call for upside protection, 1 SPY 423c 19/08 for $5.08.
For DIA we are trading the following iron condor: 335/336 to 344/345 DIA 19/08 (10 contracts) for $300 immediate gain. We are also buying 1 DIA 19/08 335 call for $4.55. Stop loss is at 50% for all.
The calls were closed at a $488 loss. The SPY condor was closed at breakeven, while the DIA condor was closed to capture a $295 premium.
But we also had a VIX-related trade, if you recall:
Finally, we sold 100 VXX contracts, at $21.4 per share. That is a total exposure of $2,140 on this trade, where we accept only a 5% loss.
We bought back VXX at $21.2 per share, and hence made $20 on this trade. This week we might switch VXX with UVXY, there’s a bigger risk-reward here.
The total loss of the week was -$173. Given that we risked about $3000, this is a loss contained at 5% of our overall exposure for the week (and 0.05% of our total portfolio).
Our overall performance is now at +234% return since we started this competition, and +60% in 2022. Still the best. And most importantly, not going down too much even when we’re wrong.
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