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February 2020 Updates!

Going over this months updates

What's New From February?

Release of the Kraken

After months of silence, the noise has finally returned with a booming force. The end of February brought with it a truly nasty selloff. With the same shocking vigor of the rally leading up to it, this down move has undone several months of gains in the general US stock market. In the time span of a single week, the
dropped as much as 544 points from $3397.50 down to $2853.25... A 16% reversal. Investors scrambled to lock in their remaining profits, which caused dramatic selloffs of anywhere from 2-5% per day. The week closed with a sharp after hours rally leaving the S&P futures around the $2990 handle.
Financial media sources all seem to blame the coronavirus which appears to have originated in China. I myself see no value in attempting to rationalize market moves. What's done is done, and the only question now is how do we seize the opportunities its presented. /VX, the
futures, has skyrocketed to nearly the 30 handle amidst the fear and chaos. This level is just about double its average since last October, and the absolute highest it's been since February of 2018. What this means is that option demand has driven premiums to astronomical levels compared to recent history. If you're an option seller like me who's been waiting for an opportunity like this, the time to sell high seems to have arrived!

Trickier Than It Sounds

Unfortunately, it's not that easy to just sell into chaos. In fact, a market like this can be a little nerve racking because there's no telling when the sell-off will cease. I myself have established several new
positions in an attempt to take advantage of the prices and have found myself playing defense almost immediately on many of them. If you haven't seen my Trade Journal, check it out to see how I've been dealing with this crazy move. If volatility refuses to taper off soon, I could be playing a lot more defense for the foreseeable future. It is for this reason we must always keep our risks small and manage aggressively. I certainly jumped in a bit early, but have saved plenty of capital to battle my way through the storm. Once volatility starts to settle back down is when I expect to see my positions pay off... that is, as long as they aren't blown out of the water first.
At this point, I only have one position (INTC) which has been blown out. It has been
beyond profitability but is also one of my few positions I had established before this volatility explosion. It's bounced around within a nearly $16.00 range and dipped as much as almost 23% in the time that I've had it! It's been a horrible
but I've managed to contain my losses to a fraction of what I could have lost had I been trading outright shares. Many of my other positions have also felt some heat but are still in good standing to eventually turn a profit.

A Toast to Tasty

While we're on the subject of trading in chaos, I'd like to give a quick shoutout to the people over at Tastyworks. The platform performed beautifully in the midst of the craziness this week. I've heard a lot of horror stories about other brokerage firms' technology bogging down because of all the activity. At Tastyworks I never once experienced a single hitch or slow down during the entire event. It's extremely comforting to have that reliability when things are at their craziest.

Introducing the New Food for Theta Shop!

Other than the crazy-ass markets we've had this month, I've also launched a store full of trader gear! It's brand new, but there are already several designs and tons of products to choose from with much more coming down the road. I don't charge anything for my services, so anything you buy would be super helpful to supporting site maintenance and greatly appreciated. The store also allows you to use my designs or upload your own to make totally customized items – I gotta say, it's pretty cool. Click the image below to check it out!

Follow Me on Twitter @foodfortheta

For anyone that's new, be sure to keep up with my latest updates by following me on twitter! Especially now that the market is busy, it's given me a lot to tweet about. New followers are more than welcome so please don't be shy! You can also find a lot of my posts under the hashtag #DIYInvestor.

After the Storm's When the Flowers Bloom

Things got a little crazy at the end of this month, but with movement comes opportunity... There's never been a better time to be an option strategist! Markets are looking harsh right now, but prices will begin to fall into more predictable ranges sooner or later. Regardless of which way the market moves, I'll be glad to not be dependent on any particular direction to earn profit. Whether it goes back up, keeps going down, or stays flat for awhile, there's a way to make money, and I intend to get after it! Trading is an ever-changing obstacle course and I'm happy to navigate through it alongside you all. Thank you for following along!
Until next time,
~ De'Shan

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