Results: most profitable week yet!
And another 7/7 correctly predicted directions
Quick summary:
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Last week’s performance: 7/7 for direction, but with higher errors
We lost money on the condors, but gained a lot on the hedges
We are up 68% in 2022, while the S&P is down 21%
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Last week’s accuracy & precision
The bear market rally of the past two and a half weeks is obviously finished. It pushed S&P close to 4200, but then in just three days (Thursday, Friday, and yesterday), it whipped out all of those mini-gains and sent the S&P down to 3750 yesterday, marking a new 52-week low. The S&P is now down 21% from its peak, and we are officially in a bear market. Just like the yield curve announced when it briefly inverted in late March.
This clear sense of direction also helped the BASON in its weekly performance. We have our third week this quarter where 7/7 indicators were correctly predicted in terms of direction. A correctly predicted direction means that we had directional hedges (put options in this case) which would bring us big profits in case we break the lower confidence intervals for our S&P and DJI predictions. This is just what happened, and we had our most lucrative week yet (more on that below).
One might say that Friday’s inflation numbers which sent markets down on a spiral was what made our week profitable, but even if inflation numbers came out lower, we would have still made decent returns. Thursday’s sell-off already made sure we were at least doubling our money on the puts, while SPY and DIA were trading close to their lower confidence interval. So if inflation surprised on the downside and markets shot up, the puts would have been sold automatically to take profits (albeit not 100% gains, but more like 40 or 50% gains), while the condors would have easily finished in the money. Total profits would have been only slightly lower ($1000 to $1500 instead of $2700).
This is what the BASON is all about - we either have to be right on direction, or have a <2% error to earn money. We only lose money if both are wrong - wrong direction and big errors (this happened a few times, but >80% of the time the performance is really really good).
Performance: biggest gain yet!
We traded 10 SPY 10/06 iron condors, ranging from 405/406 to 419/420 for $480 immediate gain.
In addition, we bought one SPY 420 10/06 put for $6.23 per contract (reached $9 at close yesterday).
Similar play for DIA 10/06, where we traded the following iron condor: 323/324 to 333/334 (10 contracts) for $440 immediate gain, and one DIA 10/06 put at 334 bought for $4.2.
As we’ve informed you on Twitter we sold the puts at a massive gain last week on Friday: 363% gain for SPY, and 335% gain for DIA.
In dollar terms, we bought SPY at $6.23, sold it at $28.9, making a profit of $2,267. We bought DIA at $4.2 and sold at $18.3, making a profit of $1,140. We closed the condors immediately after open to limit its losses. We lost $398 on the SPY condor and $305 on the DIA condor.
Altogether, the weekly profits were $2,704, biggest weekly gain since we started the competition.
Our overall performance is obviously even better; we’re up 251% overall, and up 68% in 2022, with S&P500 being down 21% in 2022, and 7% since we started this competition.
Once again, bull market or bear market, the BASON makes money!
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