Happy Sunday!
This past week was a lesson in risk management and a reminder that volatility is always lurking under the surface.
I think some people definitely lucked out that the volatility was short-lived. If we had 5 straight down days with the VIX hovering at 40, there would have been a lot of forced liquidations going on.
In this portfolio, however, I've been saying for months that I've been waiting for volatility to come back - and in the last 2 weeks I've opened 10 new positions and look forward to sharing their results with you as time goes on.
This week:
$52 profit in Hershey (HSY)
$85 profit in Apple (AAPL)
$52 profit in HSY
Sometimes trades turn profitable very quickly (like the AAPL trade in the section below), but sometimes they also take a really long time to come good.
This trade in HSY belongs in the latter category.
I sold a cash-secured put in HSY at the $185 strike and received $102 in premium upfront. The trade didn't hit my profit until 3 days prior to expiration.
Like the screenshot says, this was a textbook example of what I call a “floundering trade”, and when that happens the strategy says to stay put until it sorts itself out.
And that's what I did, with every weekend's portfolio review saying some variation of “I'm going to give this trade more time”, which eventually works out - even it it takes it right down to the wire.
If you're somewhat familiar with options, you can join my private community and get updates like these in my portfolio (not recommendations!).
Beyond just trade entries and exits, I also explain my rationale behind each decision so you can understand why I'm taking certain actions.
$85 profit in AAPL
As I alluded to in both the intro and the HSY trade above - sometimes you get the perfect set up with a stock's movement and volatility that presents a great opportunity and quick profit, which is what happened in this AAPL trade.
On Tuesday, the market was feeling a little calmer after the hysteria the previous day.
However AAPL wasn't quite joining in the rally, instead trading down something like 4% at the open.
I decided it was time to take a position in AAPL, selling the $165 cash-secured put for $135 credit.
The next day, the market decided the Monday's selling was overdone and AAPL rallied, my profit target got hit and I paid $50 to close the position, locking in $85 in realized profits or 63% of max profit - in 1 trading day.
This makes it 4 wins out of 4 in AAPL this year, with $409 in realized profits.
In 2023, it was 10 wins out of 10 with $903 in realized profits.
You can read about my previous trades in AAPL at the link below.
Closing thoughts & useful links
I'm a little disappointed that Monday's volatility dissipated so quickly. However I'm going to use this period to manage my positions and take reasonable profits off the table in anticipation of the next wave of volatility.
Of course - when that occurs is anyone's guess. I don't like spending time and effort trying to figure out where the market is going, or whether I'm “bullish” or “bearish” on any stock.
I prefer to see what opportunities the market is providing and making a plan to make the most of those opportunities.
Have a good weekend!
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This article is for educational purposes only. This is my own portfolio which is being managed according to my goals and risk tolerance. Your situation is likely different and you should do your own due diligence before investing in stocks or options.