Predictions for Friday, July 22nd 2022
NOTE: last prediction before a 2-week break
Quick summary:
NOTE: after this week, there is a 2-week summer break, we are back on August 9th
Markets expected to finish lower this week
Trading SPY condors* at 381/382 to 396/397 and SPY put at 396 (July 27th expiry)
Trading DIA condors* at 308/309 to 320/321 and DIA put at 320 (July 29th expiry)
Watch this tutorial video to see how we trade this and how to
interpret our predictions:
*NOTE: We changed the way we buy the condors - one leg at a time, instead of all together. In the video, this simply means we first trade the bear call spread, and then the bull put spread, with individual stop-losses on each.
See the explanation in the final section of the post as to what this means.
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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, July 22nd 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:
It’s becoming harder and harder to pick up the right market direction amidst choppy bear market rallies. Last two weeks we got it wrong, this one we are seeing lower values than the Tuesday close, but higher than the Monday close. Next week is the FOMC meeting, so there might be additional surprises (usually on the upside as uncertainty is reduced immediately after the meeting), but the general direction is very unclear.
Nevertheless, this week we are looking at lower values than the Tuesday highs (when the markets rallied over 3%) across the board (except for the VIX, and interestingly - TSLA, due to its earnings that were announced yesterday). These will all be higher than the Monday close, so in essence, we expect more choppiness throughout the week.
How did we trade this?
This week we tried something new, and instead of the usual Friday expiry we bought options that expire a week from now for SPY (July 27th), and 10 days from now for DIA (July 29th - no possibility of buying it mid-week for DIA).
Why? In order to lower the impact of theta decay on the positions, enabling us to limit losses even more. On the other hand the upside is not really limited at all.
We traded 381/382 to 396/397 SPY 27/07 iron condor (10 contracts) for $620 immediate gain ($420 from the call leg, $200 from the put leg). As last time, we bought separate legs of the condor - a bull put spread (381/382) and a bear call spread (396/397), and placed stop losses of 50% on each.
We are buying a put for downside protection, 1 SPY 396p 27/07 for $7.6.
For DIA we are trading the following iron condor (again with separate legs): 308/309 to 320/321 DIA 29/07 (10 contracts) for $620 immediate gain ($180 for the put leg, $440 for the call leg).
We are also buying 1 DIA 29/07 320p for $5.6.
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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