Results: not great, not terrible
Missed direction, small errors, small profits
Quick summary:
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Last week’s performance: missed direction, small errors, small profits
We lost money on the calls, but gained on the condors
We are still up 55% in 2022, while the S&P is down 14%
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Last week’s accuracy & precision
To sum it up in one meme:
It started with a sell-off on Wednesday and our calls dropping over 50% in value. This was followed by a decent rebound on Thursday, sending us very close to our targets for all 7 indicators. By the end of the day, the calls regained almost all of their lost value from Wednesday, and the condors were well in the money. This is typically when we introduce stop-losses on all positions. And good thing that we did, since by Friday’s open, the calls reached their limits and were sold at a loss. An hour before close, we closed the condor positions to pocket a small profit and offset the losses from the calls.
Notice an interesting paradox here. Two weeks ago, we predicted a correct upward direction for all indicators, but bought puts for protection instead of calls, and were surprised on the upside (and lost money despite having 7/7). We opted for such a strategy because we are in a bear market, so the obvious protection is on the downside. Last week, we did the opposite, and were caught back surprised on the downside. It’s still our mistake, no doubt, but it’s more a reflection on our trading rather than BASON’s performance.
Altogether, the missed direction costs us this week, but the errors were still decent on most indicators, particularly for the Dow. Oddly enough, TSLA was almost exactly at our price target on Thursday’s close, but Musk’s comments on Friday about firing 10% of the workforce sent it downhill. Oh well, one must embrace such uncertainty :)
Performance
As explained above, we took a directional hedge on the upside and were caught surprised in the other direction.
…10 SPY 03/06 iron condors, ranging from 411/412 to 426/427 for $460 immediate gain.
In addition, we bought one SPY 411 03/06 call for $6.77 per contract.
Similar play for DIA 03/06, where we traded the following iron condor: 326/327 to 335/336 (10 contracts) for $330 immediate gain, and one DIA 03/06 call at 326 bought for $7.25.
SPY call was sold on Friday open at $4.32 (loss of $245), and the DIA call was sold at $5.77 (loss of $148). The condors did better, even thought SPY was dancing dangerously close to the bottom confidence interval before we sold it.
DIA was closed at a profit of $314, while SPY was closed at a profit of $115.
Altogether, just enough to barely make a profit (after brokerage fees) of $36 for the week. Small, but we’ll take it!
Overall, this didn’t really affect our performance much, we’re still 224% up overall, and 55% up in 2022, with S&P500 being down 14% in 2022, and 2% since we started this competition.
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