The general market has continued it's incredible bounce back through May, with the rallying another 6%. has been hovering around the same levels all month – futures starting the month near 35, and rounding out May just under 29.
Meanwhile, unemployment is through the roof, COVID-19 cases are still surging, and unrest and uncertainty have been common topics in the news. I'm not a guy but I've also been seeing a lot of chit chat about actions the Federal Reserve has been taking to soothe volatility. I won't get into a discussion about good or bad policy because honestly, what do I know about that stuff? What I can tell you is that I'm being extremely cautious about layering on too much risk too soon. What I see in the market does not reflect what I see in the sociopolitical and economic landscape, nor does it reflect what I expect to see in the coming months.
I think we are on the precipice of discovering the longer-term affects this pandemic will have on individual health as well as the economy. I'm trying very hard to stay patient and seek opportunities that excite me rather than make me feel like I'm being suckered into a crappy trade. Don't get me wrong... I have an optimistic outlook for the future. Just, perhaps, not as optimistic as the stock market might be suggesting. I think a lot of positive change and more sustainable health and business practices will arise from this fiasco. I also expect to see some new powerhouse markets emerge from our current problems.
Trading
Trading was slow for me this month. Without any solid pops in it was hard for me to feel right about I actually ended up closing my last major loser leftover from the original meltdown, XLI. Thank God I did, because the way it's moved since would have left me with another mess on my hands. I also took small profits in EWZ and EEM, slowly chipping away at my losses. In my retirement account, I've been cashing out some profitable shares to reduce risk and preserve capital for more opportune circumstances. I'm not sure how much longer we can go without a volatility surge, but to me it seems reasonable to prepare for at least a small pull back.
New Article!
I wrote 1 new article this month about an option strategy called the Iron Condor. It is a that is highly malleable at trade entry, but fairly rigid in terms of post-entry defense. I cover a ton of details in the article, but the strategy itself is actually fairly straight forward - all you want is for the share price to stay within a specific range and option value to decline. It's basically the defined-risk version of a
I will continue to edit and refine my articles, both past and present, as I develop this site further. Please take the time to revisit old concepts as you continue to learn. Looking back, you'll often see things in a new light or construct more complex meaning than you were originally capable of.
Speaking of constructing meaning, I am currently enrolled in a learning experience design class. I just finished the first segment which covers the nature of learning and knowledge. The next segment starts June 1st and is about user experience and user interface design. It's been super enlightening so far. My hope is to find creative new ways to improve the learning experience here at Food for Theta. For now, I'm working hard to generate content and lay everything I understand about options out on the table. My next step will be to put more focus into creating engaging experiences to help you learn at a deeper level. I'm very excited for our future here!
Follow Me on Twitter @foodfortheta
For anyone that's new, be sure to keep up with my latest updates by following me on twitter! 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.
As always, a huge thank you to my followers and fellow traders who've taken an interest in my work, and shared some of your own experiences. Having the chance to interact with you all has helped me become a more knowledgeable trader myself, and I hope the same has been true for you. Trading is a tough business, but being a part of a community tackling similar challenges keeps it fun and interesting. I'm looking forward to this next month of trading as we approach the end of the quarter. Will the market keep up its strength or will we see the return of wild price swings?