Predictions for Friday, October 21st 2022
Quick summary:
Markets expected to finish higher this week
Trading SPY condors at 362/363 to 378/379 and SPY calls at 363
Trading DIA condors at 299/300 to 310/311 and DIA calls at 300
Portfolio positioning: same direction for long-shorts, macro remains short with hedges (see below)
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, October 21st, 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:
After last week’s turbulence, this one is likely to be less volatile. We are, for the first time after 8 weeks, predicting a reversal of the negative trend and a slight bounce back of the markets (which started on Monday actually). So for the first time in a long while we are buying calls and expecting markets to finish higher. One of these predictions has arguably already gone wrong - TSLA. Even though it beat earnings, it missed its revenue target, so the stock went down 6% today. We were expecting it to end up at least 10% higher - which it would have had the earnings report been better. However, the rest of the market should hold on to the gains and end the week higher.
How did we trade this?
Once again, to remind you of our portfolio approach from now on, our portfolio size is $48,226 (calibrated with respect to last week’s results), meaning that our options positions are now lower, but still make up only 10% of the portfolio (a maximum of $4827 exposure).
This week we're trading 362/363 to 378/379 iron condors for $1,080 premium (25 contracts). The stop loss, i.e. the buy-back is at $1600 (max loss is $520).
We are buying a call position, 2 SPY 363 calls 21/10 at $7.6 for which the stop limit is at $3.5.
NOTE: when the market jumps, please make sure to lock in some profits by raising the stop limit. After today’s price action, we have raised the stop-limit to $6 (and will keep raising it before tomorrow’s open). Same for DIA calls.
For DIA we are trading 299/300 to 310/311 iron condors for $1,050 premium (25 contracts). The stop loss, i.e. the buy-back is at $1,600 (max loss is $550).
We are also buying 2 DIA 21/10 300 calls for $6.15. Stop limit is at $3. (also raised to $5 after today’s price action, and will continue to raise it before tomorrow’s open)
For the other part of the portfolio, $19,306 (40%) is allocated towards long-short positions in the following:
SPY long/short: bought $6033 worth of SPY shares (at $368.7 per share)
DIA long/short: bought $6033 worth of DIA shares (at $305.2 per share)
UVXY long/short: sold $7240 worth of UVXY shares (at $12.4 per share)
Macro positioning: Short $9.65k in SPY and $9.65k in QQQ (no change in position). Plus the usual hedges ($900 for each Jan 20% OTM call).
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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