2021-02-07 Sunday

WEEKLY MARKET OVERVIEW

The last painful week of January has been completely forgotten with the market not only recovering completely from the losses but also pushing to a breakout of all-time highs that so far has been successful. We’ll be opening next week in deep overextension on the upside, and after such monstrous weekly gains, a new pullback (or at least a consolidation period) can be behind the corner.

SPY

Weekly performance (Week 5/2021)
– SPY (S&P500) +4.77%
 QQQ (Nasdaq100) +5.34%
 DIA (Dow Jones Industrial) +3.91%
 IWM (Small Caps) +7.83%

After the previous week’s spikes, volatility (VIX) has been free-falling towards the 20 levels. Also in this case more consolidation inside this range can be ahead of us.

VIX

WEEKLY TRADING JOURNAL

On the 02/05 expiration I had only 6 positions to manage: 3 cash-secured-puts (CSP) and 3 covered calls (CC).

ETSY was up strongly on Thursday and getting overextended to the upside. I decided to close the CSP one day ahead of expiration for just a $0.05 debit to take any risk off the table. I was able to keep 97% of the premium in just 3 days for a 110% annualized return.

ETSY

In two months this is the fourth CSP I played on SWK and all on the $170 strike price. This time once again the trade worked very smoothly expiring worthless for a 100% profit. The wheel strategy is so powerful that can be used with so much success also on boring stocks like this one that has been basically going nowhere for quite a bit of time.

SWK

After the recent pullback ADI has been trapped in an horizontal consolidation and I was assigned on it after the close on Friday. Not a big deal as the stock is already above the break even line and I am ready to sell CC on the way up.

ADI

On 01/29 I was assigned on 3 cash-secured-puts and had to buy 100 shares of CAT, JPM, and TGT. After just one week I have been able to get rid of all of them. I made money initially from the sale of the CSP, then on the sale of the CC, and finally on the price growth when I was assigned on 02/05 after the close and had to sell the shares for a profit. This is Wheel Strategy 101, allowing to profit from a single stock in multiple ways during a short period of time.

CAT
JPM
TGT

The total premium collected for the week has been $921 (net of brokerage fees) with an average holding period of just 6 days and an annualized return of 79%. On top of it, I gained a total of $600 from the price growth of the shares from the 3 covered calls that closed above the strike price on Friday. 

About 67% of my wheel strategy portfolio is now in cash and ready to be deployed on new CSP as soon as new opportunities will come along.

If you are interested to follow my trades in real-time you might consider joining my FREE Discord Server where I share my personal trading journal via instant private feed.

In case you have any questions just send me an email at info@thewheelstrategy.com

Take care and trade wisely

Gianmarco