Predictions for Friday, October 28th 2022
Quick summary:
Markets expected to finish lower this week (compared to Wed open)
Trading SPY condors at 370/371 to 385/386 and SPY put at 385
Trading DIA condors at 306/307 to 319/320 and DIA put at 319
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 28th, 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 tech earnings are in focus this week. MSFT, GOOGL, META all missed earnings estimates and their stocks plummeted (the first two yesterday, META today). AAPL and AMZN come out after trading today. Unless they beat significantly and pull the markets up, we’re looking at a lower end of the week for the main indices. Or at least, that’s the expectation. Yesterday markets did finish lower, but had a very strong intraday move up - especially DJI, which almost killed all our put positions. So we need to keep a close eye on markets today. If we get stopped out again, we will consider reengaging the puts on Friday if AAPL and AMZN miss their earnings as well. If today finishes lower however, get ready to raise the stop-loss for SPY puts.
How did we trade this?
Once again, to remind you of our portfolio approach from now on, our portfolio size is $50,526 (calibrated with respect to last week’s results), meaning that our options positions are back to over $5000, but still make up only 10% of the portfolio (a maximum of $5,052 exposure).
As per our predictions, this week we're trading 370/371 to 385/386 SPY 28/10 iron condor (25 contracts) for $1,200 premium.
The stop loss, i.e. the buy-back is at $1850, if the condor breaks. We are buying a put position, 2 SPY 385 put 28/10 at $4.82 for which the initial stop loss is at $2.4.
NOTE: when the market drops, please make sure to lock in some profits by raising the stop limit.
For DIA we are trading the following iron condor: 306/307 to 319/320 DIA 28/10 (25 contracts) for a premium of $1,125. The stop loss, i.e. the buy-back is at $1700, if the condor breaks. We are also buying 2 DIA 28/10 319 put for $3.07. Initial stop loss is at $1.5.
For the other part of the portfolio, $20,210 (40%) is allocated towards long-short positions in the following:
SPY short: sold $6315 worth of SPY shares (at $382.2 per share)
DIA short: sold $6315 worth of DIA shares (at $318.4 per share)
UVXY long: bought $7578 worth of UVXY shares (at $11.1 per share)
Macro positioning: short $10.1k in SPY and $10.1k in QQQ (no change in position plus the March 2023 calls as hedges, bought on Monday).
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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