Predictions for Friday, June 17th 2022
Quick summary:
Markets expected to go down again this week
Buying puts for downside protection
Trading SPY condors at 363/364 to 378/379 and SPY put at 379
Trading DIA condors at 299/300 to 309/310 and DIA put at 310
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, June 17th 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:
The bear market was brutal last week, and we’re anticipating more of the same this week, particularly after the FOMC meeting yesterday which saw interest rates go up by 75bps! The reference interest rate is now at 1.75%, and will be 2.5% already next month. The end of year expectation is to have it at 3.5%, maybe even 4%. A recession is coming, no doubt (I will write about this for Saturday’s long read).
Also, don’t forget this week is the opex expiry week (monthly options expire on Friday - a huge number of 4000 SPX calls will finish worthless). This is likely to drive huge volatility again on Friday.
As for our predictions, everything is expected to finish lower, except for, obviously the VIX (volume going up). Yesterday’s post-FOMC rally is very similar to what happened in May when the Fed hiked 50bps. A 3% rally was followed by a brutal day for equities (down 4-5%). Same thing is happening now.
How did we trade this?
We traded 10 SPY 17/06 iron condors, ranging from 363/364 to 378/379 for $620 immediate gain.
In addition, we bought one SPY 379 17/06 put for $7.41 per contract.
Similar play for DIA 17/06, where we traded the following iron condor: 299/300 to 309/310 (10 contracts) for $560 immediate gain, and one DIA 17/06 put at 310 bought for $6.1.
If the market continues to decline, to finish within our condor C.I.s, we stand to make a hefty profit once again on both the puts and the condors. If it breaks the C.I.s, then we once again profit handsomely from the puts, offsetting the condor losses. The only way we lose money is that Friday delivers an unexpected 2-3% rally.
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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