Predictions for Friday, November 11th 2022
Quick summary:
Markets predicted to finish lower this week
This basically means we were expecting CPI overshooting today
Our advice was: if you want to play it safe, don't put positions on until after the CPI report comes out
Trading SPY condors at 368/369 to 385/386 (separate legs!) and SPY put at 385
Trading DIA condors at 319/320 to 332/333 (separate legs!) and DIA put at 332
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, November 11th, 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:
We already reached these levels yesterday for SPX and DJI. The midterm elections provided additional uncertainty and the crypto market collapsed, so a sell-off ensued. We locked in the higher stop-losses (see below) in anticipation of more turbulence today post CPI.
And the CPI number came in lower than expected today, at 7.7% (vs 8% consensus), which means we will be forced to close our short positions. We are only leaving the macro plays open, and its call hedges.
Regarding BTC, the predictions came in before yesterday’s crypto mayhem (when Binance walked away from their FTX bailout announcement). The expectation was that BTC would bounce back by the end of the week. That possibility seems remote now, but we’ll see what happens.
How did we trade this?
As stated in the summary, we warned our users to be on the safe side and wait for the CPI report to come out.
We, however, did open our positions as usual yesterday, benefiting immediately from the decline. We are however standing by to buyback all positions and net out zero for the week in case the CPI surprises us.
As per our predictions, this week we are trading 368/369 to 385/386 SPY 11/10 iron condor (25 contracts) for $1300 total premium. We are trading separate legs, because of the potential event impact from the CPI report. This means that each leg has a 50% stop-loss. We are buying a put for downside protection, 2 SPY 392 puts 11/10 for $8.35. Stop loss also at 50%.
For DIA we we are trading the following iron condor: 319/320 to 332/333 DIA 11/10 (25 contracts). Also, separate legs. Total premium is $1150. We are also buying 2 DIA 11/10 332 puts for $5. Stop loss is at 50% for both.
The portfolio is at 53,017 USD, so the allocation is $5308 for options, $21,325 for long-short positions in each of these:
SPY short: sold $6636 worth of SPY shares (at $379.2 per share)
DIA short: sold $6636 worth of DIA shares (at $329.1 per share)
UVXY long: bought $7963 worth of UVXY shares (at $9.83 per share)
NOTE: As of yesterday’s close we were in the green for each of these positions. We are ready to shut them down today in case of a major post-CPI rally (like the one last time) to be at net zero for the week in case we get it wrong.
We already closed the bull put spreads of both DIA and SPY to take the full premiums there ($400 each). This offset the losses from the bear call spreads ($750 each, the markets moved fast against both positions). Puts still waiting to get filled on their stop-losses.
Macro positioning: short $10.6k in SPY and $10.6k in QQQ (no change in position plus the usual March 2023 calls as hedges).
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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