To The Moon

After a very exciting Friday, what will happen this week?

August trading will closed on Wednesday. The return of S&P500 in August was still-1.76%until last Friday.

I think the trading tone laid by Powell's hawkish remarks last Friday will become the main theme in next two weeks, until August CPI data comes out which gives Fed's clearer guidance. Don't be optimistic for the CPI, because of gas price rise sharply.

So I traded some Sell Calls and Puts after the market fell last Friday.

Sell Calls on BABA & QQQ & ARKK; and Buy Puts on IWM.

Sell Calls on $Alibaba(BABA)$, due to China and U.S. signed the auditing cooperation agreement on Friday, which was regarded as the landing of rumors on Thursday. BABA rose by nearly 8% on Thursday and rose by 5% pre-market on Friday. I think the most of the good news was price-in on Thursday, and the stock price may "Sell in News" on Friday. The two big resistance levels MA50 and MA200 are $102 and $110 respectively. I judged that it was impossible to break two at a time, so I Sell Call @ 110.​QQQ / IWM and ARKK have similar logic. I was choosing who was best for shorting, Buy Puts directly.

Usually I think $ARK Innovation ETF(ARKK)$ is the best short target in a bear market. I have said it several times before. But why Sell Calls this time? Because after reading the whole speech, ARKK has fallen by 4.5% and QQQ has fallen by 2.5%. Although I think it will continue to fall, but it may rebound. At that time, I don't dare to chase PUTs, and the Puts IV also rose a lot, so I chose to be the option seller, Sell Calls on ARKK @45, and QQQ @320.

As for why IWM was buying PUT directly? Because IWM fell less than QQQ on Friday. And IWM IV didn't make much noise when I traded. If the market keep weak, IWM may make up for the decline, so I bought IWM's PUT after comparing them.

Since the market fell a lot, I will close these three options soon, and I don't want to hold them until expired. In particular IWM Puts, as an option buyer, may consume time value in repeated friction.

Look at the indexes.

The bad thing is that S&P500 has a gap on weekly line. Because it opened lower last Monday and didn't make up for it all week. It looks very 🐻.

Nasdaq and S&P 500 have strong support around 12,000 points and 4000 points. The rebound in this position depends on whether it is a strong rebound or a weak rebound. If weak rebound, I will continue to short. Of course, I personally don't think it will break the new low in June.​What opportunities that I am most concerned about?

Not $Tesla Motors(TSLA)$. I expect to Sell Puts at price of $240 to $250, corresponding to $720-750 before share split.

Not $Apple(AAPL)$. Apple has cashed in too many increases before. The iPhone14 will be coming next week, so it is not particularly good to judge in a short term. I probably Sell Puts around $155 this week. But the main thing is to follow the market.​

I am more confident on two M&A stocks which are $Activision Blizzard(ATVI)$ and $VMware(VMW)$. They will definitely rise back if they drop. of course, unless Microsoft and Broadcom break the contracts.

The acquisition price is $95 on ATVI, but it has dropped to $73.7 on June, which is 77.5% on the acquisition price. I will Sell Puts at price of $78-$75 to take over the shares if the Puts exercise.

The acquisition price is $142.5 on VMW, and the lowest price is $107.7 on June. I am more confident about this case. I will start to buy the shares from $115, which means I will Sell puts at $115, then $110 and $105. If I take over its shares, Sell Calls over $120.