Markets go up then down, for a flattish month. There are some waterfalls declines. I get caught in FB Facebook, losing 2% of my account on FB earnings. Overall grade for this option cycle is C.
Here are a few ETFs year-to-date 20222:
SLV silver 4.0%
GLD gold 3.6%
EEM emerging mkt -0.3%
TLT US20 yr -6.7%
SPY SP500 -8.6%
IWM Russell 2000 -10.3%
QQQ Nasdaq 100 -14.2%
My trading account -5.0 for calendar 2022. Not great, but ahead of all the US stock indexes. Many would like market returns without market risk. Unless a person is a wizard, it doesn’t tend to work that way. Lower risk usually translates into lower returns. That means lagging during bull moves, and less of a hit on declines.
Facebook was a big hit. I made some adjustments just ahead of earning, which increased my risk. Oops. I took most of my lumps during the first half hour in the morning after earnings. Thank goodness I am not that stubborn, as FB continued mostly lower. Those that bought that dip saw another big leg down.
Of course we all wish we could time the ups and downs, but it tends to be a few lucky or extremely talented traders that can do that.
A side note, markets are closed on Monday for President’s day. My favorite president is Thomas Jefferson. He wrote the Declaration of Independence, was president, founded the University of Virginia, was a musician. Of course all public figures have flaws. Jefferson tended to spend his money, leaving his heirs next to nothing.
As for the markets, I often say that predictions are for entertainment. While the indexes are not yet in bear market territory, many former high flyers are down more than 50% off their highs. A few large cap tent poles such as MSFT AAPL BRKB are holding up the tent. I continue in what is my new normal of cautious trading, sometimes delta hedging.
An example of delta hedging is owning 5 shares of FB and selling 5 delta calls against that. The small premium isn’t much comfort during a big decline, but better than some other strategies.
