Some social media posts can meaningfully move the markets, especially when the president of USA publishes a potential ceasefire post. Here’s how the Qs (QQQ) moved on a 1 min time-frame, it was about a +3.5% spike. Most of the move materialized in just 5 price bars of 1-min.
Same QQQ chart over a 5min time-frame. Nice flagging pattern (digestion) after a large up move.
Prior to the ceasefire post, the markets had gapped down overnight with the VIX hitting 30 on its second spike (first major spike on 9 March overnight with a high of 35, chart below). Reacting to the presidential post, VIX made an intraday low of about 20 (a -32% move) before reversing again in search of some equilibrium in this epic madness.
Given this context of market volatility, the portfolio I manage has remained rather resilient, clocking new YTD highs in equity value (up +7% YTD vs -4.8% QQQ).
Why is that so? Some observations:
- Small position size of mainly short puts (high IV helps harvesting of fat option premiums), max commitment of about 50% portfolio cash.
- Low delta strike selection with weekly or 2 week expirations.
- Sold stocks (assigned last Friday) in pre-market after the “ceasefire” news broke out, booking tactical gains. This can be attributed to luck.
- Shorting puts on intraday lows and taking profits on up swings (range bound/flagging market). Tiny day trades on TQQQ.
Leave a Reply