This week presented an opportunity to enter a wide Iron Condor trade to net a great premium as the GEX, or spot gamma index, began to rise and indicate that the market was stabilizing. We traded a wide Iron Condor that involved Selling To Open the 02/03/21 SPY $385C and the 02/03/21 SPY $375P, while Buying To Open the 02/03/21 SPY $386C and the 02/03/21 SPY $374P. We entered this trade netting $.30 premium, or $30 per contract, and risking $.70, or $70 per contract for a 42.8% Return On Investment. This was a wide Iron Condor that we were able to capitalize on because of our market flows analysis, and it ended up being a great mid-week play.

An Iron Condor is a trade to make when you believe that the volatility of the market is about to drop, and we made profit as long as SPY shares closed trading on Wednesday between $375 and $385.

Our trading activity this week was a knock-out across the board, as we secured profits using our classic options trading strategy for Qualcomm, Paypal and eBay. Check out my trade entries:

Now, check out my profits.

QCOM: I invested $4,000 and got a 27.5% Return of $1,100.

PYPL: I invested $5,200 and got a 23.1% Return of $1,200.

EBAY: I invested $4,200 and got a 21.4% Return of $900.

Our bonus play this week was related to my bullish sentiment on the technology sector as we continue earnings season. Most companies are posting great results, and the market had sold off last week because of all of the meme stock insanity, which I thought would be a great time to buy. I set a bullish credit spread, by selling an At The Money Put and buying an Out Of The Money Put on QQQ.

I sold the $315 Strike QQQ Put and bought the $314 Strike QQQ Put dated February 5th. My capital risked was $700, and the total premium collected was $300, for a 42.9% return.

I’m pretty sure there is only one story on everyone’s minds. The MOASS, or mother of all short squeezes, that is happening to GME shares, and by proxy other shares in heavily shorted companies like AMC. The speed of the movement took everyone by surprise, which we discuss in a bit more detail here. One update since our last publication that is worth noting, is that I discovered one of the hedge funds involved in short exposure to GME, Citadel Capital Management, actually drives about 40% of Robinhood revenues by purchasing data that Robinhood sells them related to users positions. A single fractional share of GME traded for $2600 today, and that is when the hedge funds pulled out all of the stops. It seems to make a little more sense now that Robinhood acted to limit buying pressure by disabling the ability to buy GME shares, and with Robinhood caving to the massive capital outflows they faced from restricting GME, it looks like the squeeze is back on.

In the background of all of this, the new Congress and Presidential administration have put forward efforts to pass legislation for Covid-19 Stimulus and infrastructure spending without bipartisan support if necessary. While the market failed to rally on this news today because of the other drama, I believe that we could see very low entry points tomorrow. However, the Gamma Index remains low, and buyers are returning to the general market rapidly, and I believe we can be right back at all time high market levels again next week.

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