Hi, Geeks.
What's your favorite potential trading strategy for 2023, and under which conditions would you deploy it?
I've had good luck with two very simple ones:
- If it's a company I want to own shares of, whenever there's a drop of at least 7.00% on a single trading day, short puts on it with Δ ≤ 15 and DTE ≅ 30. My favorite underlying for this type of play is PLTR after an earnings crash. You want IV to go high, which would most likely happen after an earnings crash, CPI-induced crash, or JPow press conference-induced crash.
- If it's a company I only want to try trading and don't want to own shares of, use a Short Put Spread ladder trade structure after a sudden 5.00% or more drop below what was a major support level in 2022. This means, for example, using a quantity of one, and running a Short Put Spread on a volatile underlying such as COIN or SE that looks to be bottoming, where the upper striking price is 15% below the spot price, with 30 ≤ DTE ≤ 45. Then, wait patiently and see where the underlying share price is moving. Be very patient. If it moves lower, add another rung to the ladder by repeating the previous play, but with lower striking prices. With each lower rung added, increase the position size. Should the highest rung look like it could get into trouble, exit sooner rather than later. Although this seems very conservative, it's impossible to be too cautious in Q1 2023, in my opinion, especially when earnings start to be announced for Q4 2022, and we approach The JPow's next press conference on Wed 1 Feb 2023 at 2:30 pm ET. The goal is more about poking and prodding the market to see whether there's any stability than trying to make a killing. H1 2023 is likely to be a mess, so now is not the time to make bullish or large bets, only to go after small amounts of money until the market gives us a clear direction.
I'd like to get a group of serious traders together to discuss trading strategies. If you're interested, feel free to DM me.
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