Predictions for Friday, August 19th 2022
Quick summary:
Markets expected to finish slightly higher this week (compared to Wed
open)Trading SPY condors at 422/423 to 435/436 and SPY call at 423
Trading DIA condors at 335/336 to 344/345 and DIA call at 336
No separate legs this time, just the regular old iron condors
Watch this tutorial video to see how we trade this and how to
interpret our predictions:
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Our weekly predictions are here, available exclusively to our subscribers (competition participants get it a day and a half earlier if they leave their email), for Friday, August 19th 2022 (4pm EST; at market close). Keep in mind that our accuracy is much better for low volatility assets, so interpret the predictions with caution. For an overview of our accuracy thus far, see here.
Our estimate for the Friday close for our 5 major indicators and 2 stocks this week is the following:
As we mentioned last time, we will now make our directional predictions with respect to Wednesday open - this makes much more sense given that we make our trades after the start of trading on Wednesday with the Friday being the main comparison.
If Friday close > Wednesday open = we go long (buy calls)
If Friday close < Wednesday open = we go short (buy puts)
With the corresponding 50% stop-losses as usual.
Yesterday the markets survived the FOMC minutes scare. They opened lower, rallied a bit after the minutes got published, but then finished at about the same level as where they opened. The minutes were really unsubstantial this time. A non-event.
But our prediction was made before they came out, before the markets opened on Wednesday. The end-of-week expectation is basically a continuation of the consolidation of the S&P and the DJI. Yes, slightly higher than yesterday, but most likely no big move. In case the rally carries on strongly, we benefit. In case the bear rally abruptly ends today or tomorrow, we lose (as always, a limited amount).
How did we trade this?
As per our predictions, 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. We would risk >$900 to gain <$100 on the call spreads which is unacceptable. This way we are risking $660 - actually only $330 which is our stop loss - to gain the full $360 premium. Not ideal, but that’s how the prices are set up this week. Not much to do about it.
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.
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. The explanation is here.
DISCLAIMER: This prediction survey is still in its testing phase. Neither the survey nor its results act as investment advice of any kind, nor should they be considered as such. The results of the survey need not correspond to actual market preferences or trends, so they should be interpreted with caution. Oraclum bears no responsibility for your investment choices based on these predictions.
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