I woke up super early suddenly. An idea struck me like lightning and there was no way I could stay in bed, let alone stay asleep.
Let’s back up. This whole week has been red days on the stock market. I had a ton of put credit spreads open from last week – some I had to roll out in order to not lose money. Yet this week continued to be rocky and stocks like TSLA, PTON, and WKHS. Yes, I know, these are all high volatility underlying so it’s my own fault for not managing risk, I know, I KNOW!!
Ok, back to waking up suddenly. It occurred to be that I’ve been so bullish on all these underlying stocks that I was really resistant to the fact that they are on a bearish trend. And I should be trading accordingly.
So it’s 4:45 and I hopp onto TastyWorks and began to plan where I think viable Call Credit Spreads would make sense for my ~1 week expiration options. I leave plenty of breathing room for recovery because I am still at the core bullish on these stocks.
Another thing to note is that the stock market is absolutely crazy right now. Nothing is making sense. Obviously everything is at an all time high, but that’s been happening for years now.
What doesn’t make sense is the fact that positive earnings results have already been priced in (okay this kind of makes sense). But then when the actual earnings come in slightly higher than expectations, the stock slides down.
So back to being awake in the dark. I’m impatiently waiting for the markets to open. But then I have to keep waiting for the stocks to creep up. While it’s impossible to really guess where the peaks and troughs of the day will be, you need to make a plunge when there’s a rise to pop on those Call Credit Spreads. You really shouldn’t put them on when the stock is at a low if you can help it.
So why was this such a big deal?
In effect, I had created Iron Condors – which is basically a Credit Spread sandwich where the middle is juicy juicy premiums.
It seems to me now that this was an obvious thing to do, but it really highlights that in both trading and in life – tunnel vision is a thing.
So remember to keep your eyes and mind open.