Predictions for Friday, September 30th 2022
Quick summary:
Markets expected to continue going down this week
NOTE: the majority of our predictions were made before the BoE
announcement of going back into QE earlier today.Trading SPY condors at 354/355 to 369/370 and SPY put at 370
Trading DIA condors at 284/285 to 296/297 and DIA put at 297
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, September 30th, 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 going to be a volatile week, this one. The Wednesday futures first went down sharply but then reversed on the news that the Bank of England (BoE) decided on a new round of QE by buying UK government bonds to lower their yields, allegedly in an attempt to prevent margin calls of quite a few UK pension funds. Why? Well, a bunch of pension funds were given margin calls by their banks which forced them to liquidate their assets - mostly UK government bonds (gilts), so the BoE had to step in and intervene.
Buying government bonds during a 10% inflation in the country in order to prevent the pension funds from being margin called? Sounds like a really desperate intervention if you ask me (it did lower the yields, but the GBP kept going down).
Most of our predictions were made BEFORE all this happened, and the consensus view was that markets are still heading lower. Even when isolating only those who made their predictions AFTER the BoE event, the verdict is unchanged - going down.
So was our reaction.
How did we trade this?
As per our predictions, this week we're trading 354/355 to 369/370 SPY 30/09 iron condor (10 contracts) for $560 premium. The stop loss, i.e. the buy-back is at $810, if the condor breaks. We are buying a put position, 1 SPY 370 put 30/09 at $7.3 for which the stop loss is at 50%.
For DIA we are trading the following iron condor: 284/285 to 296/297 DIA 30/09 (10 contracts) for a premium of $440. The stop loss, i.e. the buy-back is at $650, if the condor breaks. We are also buying 1 DIA 30/09 297 put for $6.1. Stop loss is at 50%.
Similar to last week, no automatic take-profits assigned. We wanna try to exploit the potential downside volatility, and given our downside cap, there is a decent positive asymmetry here.
Notice that we allowed ourselves a larger leeway this week, as the pricing was good enough on the condors to exploit this.
No UVXY this time, the range was too small.
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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