Entry 17 Sep 22: My First Two Trades are EWZ

Options Trading Journal Entry 17 September 2022

The first two trades I opened my journey with were both EWZ. This was done in the middle of a bad week for the markets. My philosophy is if you trade bad situations like this you can trade any market. On verra.

September 13 will be remembered as a day investors got slaughtered. All the major indexes were down more than 3.5% that day.

We are still going down. Everything looks very bearish.

 It was also the day I decided to put on my first formal trade.

I had selected EWX, GDX, LYFT, and SNAP and during the week added IWM and C (again) based on IVR ranking I saw in Tastyworks.

I again followed the stocks (and other underlyings) in TradingView (technical analysis) and StockInvest.us during the week. Every day I received Google Alerts which I diligently studied.

I created some ideas for EWZ, IWM, GDX, and C within the limitations I have set myself as for entry rules (I will write about them in a future post). And I tested them in Tastworks and backtested them in Tastytrading’s Lookback backtesting app and entered them during the week in the platform.

In the end, only one EWZ iron condor and one EWZ vertical bull put spread position were opened.


EWZ seeks to track the investment results of the MSCI Brazil 25/50 Index. The fund generally invests at least 80% of its assets in the securities of its underlying index and depositary receipts representing securities in its underlying index. The index is a free float-adjusted market capitalization-weighted index with a capping methodology applied to issuer weights so that no single issuer exceeds 25% of the underlying index weight, and all issuers with a weight above 5% do not cumulatively exceed 50% of the underlying index weight. The fund is non-diversified.

In parallel, I worked on my trading journal spreadsheet where I track all data related to each position. This will remain a work in progress and will be further finetuned. I now have to fill in more than 50 lines per trade, so I need to start culling not really needed information.

And of course, on the other days, when I had time and kept track of my positions in Tastyworks and any news related to my open positions. Although I am not (yet?) a day trader, I every day whenever I have time look at what’s happening in the market.

Now really taking off!

Table of Contents

Market Sentiment 17 September 2022

Every week I start with a review of the current market sentiment.

I mostly used eOption’s Closing Bell 16 September 2022 as the source.

This week was not a good week for the markets. September 13 will be remembered as a day investors got slaughtered. All the major indexes were down more than 3.5% that day.

Stocks fall further on Friday, closing out one of the worst weeks of the year as a profit warning in the transportation sector (Fedex) renew fears about a recession/slowing economy, while investors position themselves ahead of next week’s two-day FOMC policy meeting where another 75-bps rate is widely expected.

Later this week, key inflation reports due with June CPI and PPI reports likely market catalysts.

1. Geopolitical Events and Economic Trends

During the week I capture the most important news. Every weekend before the new trading week I review the current markets, the general geopolitical events, and economic trends determining the sentiment in the world of options trading.

  • The death of Queen Elizabeth II is still deflecting the country from UK’s real and deep economic woes
  • The British Pound fell below the $1.14 level vs. the US dollar today after weak UK retail sales, the lowest levels since 1985
  • Ukraine is still on a winning spree pushing back Russia into a humiliating retreat, but this does not mean the war will be over soon
  • Recession fears in Europe continue to weigh on investor minds; however, the EU – unlike the UK – seems to be dealing better and better with the soaring natural gas and consumer prices
  • Recession fears in the U.S continue to worry investors
  • In Europe, the CAC 40 index ends the week 2.17% lower at 6077.30, falling a 4th straight day, The FTSE 100 Index is down 114.39 points or 1.56% this week to 7236.6.8 and the German DAX down 346.95 points or 2.65% this week to 12741.26, snaps 2-week winning streak. (source: eOption News)

2. VIX Index

The CBOE Volatility index (VIX), or fear index, hit its highest level in two months of 28.45 before paring gains. Today it is down to 26.30 again.

  • A VIX below 15% is very low volatility. A VIX of 15% or below is assumed to be a market at rest. Since the intrinsic nature of the Stock Market is to move up, a VIX close to 15% or lower, it’ll tell us that the broader market is likely to head higher. 
  • Up to 19% VIX means the market is in ‘lull’ mode. 19% is seen as the ‘steady state’ VIX. This arena is not adequate for short premium plays which require high volatility. This is where long calls and puts and debit spreads may be set up. Only when VIX gets closer to 30% selling options become viable.
  • A VIX at 30% or higher means higher volatility. When selling options, you want to be selling out of stocks when the VIX is near 30. This is where credit spreads, short strangles, straddles, short iron condors, etc. can be played.
  • Above a VIX of 40%, this is still the case, but given the extreme volatility, you should be very careful.
VIX 13 Sep 2022

VIX for position sizing

With a VIX 0f around 25, my maximum portfolio capital allocation is 35% of net liq.


< 15






Lowest volatility, all comfortable

Market in ‘lull’ mode

Volatility high

Volatility very high

Volatility and fear levels highest

Maximum portfolio capital allocation






Volatility and the VIX play a very important role in how I size positions and portfolio allocation. Since my focus is on short premium trading, I must strike a balance between exposure to large losses and being able to reach sufficient occurrences.

In 2022 the VVIX Index (VIX Volatility Index) has also traded within a fairly reasonable range (roughly between 83 and 150). The long-term average is 97 and the VVIX is mean-reverting.

The VVIX is nicknamed the “VIX of VIX” because it is calculated using the implied volatility of ATM and OTM options in the VIX itself, using the same calculation method as VIX uses. The index measures the “volatility of volatility, or the “vol of vol.”

Today, the VVIX is trading at about 92.4 up from 85, which measn it is reverting back to the mean.

The VVIX/VIX Ratio

See more in this Tastyworks video.

3. Oil and Gas

The next sectors I look at – to understand market sentiment – are, due to their huge impact on the global economy, metal & mining.

  • Oil prices finished flat on Friday, with WTI crude up 1c to $85.11 per barrel, posting its 3rd consecutive weekly decline amid a resurgent dollar, demand concerns given signs the economy is slowing (FDX warning), and rising interest rate fears ahead of the Fed next week.
  • Gas pump prices in the US move down to $3.69/gallon (national average), 26% below their all-time high in mid-June and at their lowest levels in over 6 months.

4. Gold, Silver, and Copper (Metals & Mining)

The next sectors I look at – to understand market sentiment – are, due to their huge impact on the global economy, precious metals.

  • Gold prices rose $6.20 or 0.4% to settle at $1,683.50 an ounce after falling -1.9% the day prior and settling at its lowest since April 2020.
  • A surge in the dollar and yields have pushed gold lower but bounced today as they eased.

5. Yield Curves

Understanding yield curves also adds to better reading the market sentiment.

This week treasury yields drop along with gold prices.

A yield curve is a line that plots the yields (interest rates) of bonds having equal credit quality but differing maturity dates. The slope of the yield curve gives an idea of future interest rate changes and economic activity.

There are three main shapes of yield curve shapes: normal (upward sloping curve), inverted (downward sloping curve), and flat. Upward sloping (also known as normal yield curves) is where longer-term bonds have higher yields than short-term ones. 

Normal curves point to economic expansion, downward sloping (inverted) curves point to economic recession.

Yield curve rates are published on the Treasury’s website each trading day.

Source: Investopedia

i. The 10-Year Treasury Constant Maturity minus 3-Month Treasury Constant Maturity Yield Curve

The yield curve (T10Y3M) compares the 10-year with the 3-month U.S. Treasury bond yield. It gives insight into bank profitability, which is correlated with economic activity. Historically, the yield curve has been a reliable predictor of economic recessions.

An inverted yield curve has been a good indicator of an economic slowdown ahead. A 10-year-3-month treasury spread approaching 0 signifies a “flattening” yield curve. Furthermore, a negative 10-year-3-month spread has historically been viewed as a precursor or predictor of a recessionary period.

  • The 10-year-3-month treasury spread is at 0.25 so still close to 0 .
  • So for some time now, the indicator has been predicting a recession.

ii. The 2-Year/10-Year Yield Curve

  • In bond markets, the yield on the benchmark 10-year Treasury note ticked up above 3.49% from 3.458% Thursday.
  • The two-year Treasury yield, more sensitive to near-term Fed interest-rate expectations, climbed further above 3.901%, after settling at 3.871% on Thursday, the highest since October 2007.
  • The move over the last month has been astounding, with the 10-yr off lows around 2.6% early August to 3.5% today (and off levels of 1.3% y/y).
  • The 2-yr yield is also up about 100-bps over the last month or so and off levels around 0.2% y/y).
  • The yield curve inversion between the 2s and 10s widened to 45 bps.
  • The overall U.S. and global macroeconomic story is getting worse while the dollar is getting stronger.
  • The 2-year/10-year yield curve spread inverted on April 1, 2022, for the first time since 2019. It is still inverted today.
Inverted yield curve in second half 2022
Inverted yield curve in second half 2022

From SeekingAlpha:

“An inverted yield curve can be an important economic indicator and a likely precursor to a recession. 

When the curve inverts, the longer-dated bond (I am using the 10-year) will offer a lower annual yield than a short-dated bond (I am using the 2-year). This means that investors have bid up the prices on longer-dated bonds to the point where they yield less than short-dated bonds.

An inverted yield curve results from investor concerns about the economy and the stock market. History shows that when the yield curve is inverted, investors tend to be right about economic weakness on the horizon. Since WWII, every recession has been preceded by a yield curve inversion.

Recessions don’t start immediately after the yield curve inverts, however. The inversion tends to precede the recession by 6 to 18 months.

6. Producer Price Index

The Producer Price Index (PPI) program measures the average change over time in the selling prices received by domestic producers for their output. The prices included in the PPI are from the first commercial transaction for many products and some services. Source: Bureau of Labor Statistics (BLS).

PPI 17 Sep 2022
PPI 17 Sep 2022
  • Still going down which is a sign that inflation may be slowing

7. Consumer Price Index (CPI)

The measure that is most often used to measure inflation in terms of consumers is the consumer price index (CPI). Tens of thousands of items, in several categories, are tracked. The basket of products or services is considered each month, and economists and statisticians look for trends. If the CPI rises, it is an indication that prices could be trending higher, with inflation on the rise.

CPI 17 Sep 2022
CPI 17 Sep 2022
  • However, consumer prices are still rising (although the steep slope is weakening slightly)

8. Consumer Sentiment Index

A low CSI index reflects the general (dis-)satisfaction with managing of U.S. economic policies. A high satisfaction rating suggests approval of the current policy management and implies market stability. Surveys of Consumers (umich.edu).

  • Consumers sentiment prelim Sept 59.5 vs. consensus 60.0 and vs final aug 58.2, so up again
  • Current conditions index prelim sept 58.9 (consensus 60.8) vs final aug 58.6; consumers expectations index prelim sept 59.9 (consensus 59.7) vs final aug 58.0.
Consumer sentiment in US 17 Sep 2022
Consumer sentiment in US 17 Sep 2022

9. Put/Call Ratio

  • A Put/call Ratio of below .5 could mean the market is very bullish. Maybe too bullish. It could be an excellent time to sell stocks high.
  • Between 1.0 and 2.0 the Put/call Ratio indicates a bearish market.
  • A Put/call Ratio above 2.0 could mean it is very bearish. It could be an excellent time to consider buying low.
  • Moving sideways if the Put/call Ratio oscillates between 0.5 and 2.0.
  • The put/call ratio went steeply up to 1.2 which indicates a bearish market
Put/call ratio 17 Sep 2022
Put/call ratio 17 Sep 2022

Warning: previous research conducted by tastytrade revealed that the Put/call Ratio is not a reliable trading indicator. To review that research in greater detail, readers can check out this installment

10. DJI, SPX, Russel 2000 Indices, and Main Market Sectors

In general, I look at the main indices DJIA, SPX, and Russell 2000 (IWM) and the level of volatility or ‘market thrashing’ (excessive volatility with significant rising then near proportionate falling in markets’ values within a trading period) : above 1% in any or all of them might indicate indecision in the market.


  • The Nasdaq posts its worst weekly return since January, down around 6%.
  • The S&P 500 (SP500) posted its worst weekly performance since mid-June, slumping 4.78% for the five-day session. The losses came on the back of a solid 3.65% gain last week. 
  • Dow (DJI) is off 3.7% after is advanced 0.8% last week

·      The Russell 2000 Index was little changed down -0.24 points or 0.01% to 1,769.36

Major Stock Market Sectors

I also follow the major market sectors in Barchart.

  • Only Consumer Staples and Real Estate slightly in the plus
  • Energy and Industrial in the last two places.
  • S&P 500 Index going down from 1.53% last week to -0.725 TODAY.
Main Sectors 10 Sep 2022
Main Sectors 17 Sep 2022

11. USD

The DXY, the symbol for the US dollar index, tracks the price of the US dollar against a basket of six foreign currencies that have a significant trading relationship with the US and are also hard floating currencies. The index will rise if the dollar strengthens against these currencies and will fall if the dollar weakens against these currencies.

The DXY now stands at 108.973, slightly down from last week’s 109,609.

  • The U.S. dollar eased off best levels coming off 24-year highs vs. the Japanese yen, the euro battling to stay above parity vs. the dollar, and the British Pound fell below the $1.14 level vs. the US dollar today after weak UK retail sales, lowest levels since 1985.

12. Bitcoin

Bitcoin made a move down from high 22781 on 12 September to 19887 today with a high volume down on 13 September 2022.

Summary Market Sentiment 17 September 2022 (unchanged from last week)

Bull market




Bear market/crash

1. Geopolitical events and economic trends

Positive trends, stable supply chains

Minor market issues, minor supply chain issues

National events, market issues, bad economic data, mini-corrections

Negative indicators, international events, serious market issues, broader market correction (-10%)

The total collapse of the global market, deep recession

2. VIX (VIX)


Lowest volatility, all comfortable


Market in ‘lull’ mode


Volatility high


Volatility very high


Volatility and fear levels highest

3. Oil & Gas (XOP)

Oil & gas

Minor market issues, minor supply chain issues

National events, market issues

International supply chain interruptions, high oil & gas prices

International conflicts involving US, Russia or China, and other main producing countries

4. Gold, Silver & Copper (GLD & SLV & Copper)

Gold, silver, and Copper stable

Minor market issues, minor supply chain issues

National events, market issues

International supply chain interruptions, high oil & gas prices

International conflicts involving US, Russia or China, and other main producing countries

5. US Yield Curve (T10Y3M and US10Y vs US02Y)

Considerably steep curve

Steep curve

Average but still positive curve

Flattening, inverting, and approaching zero

Inverted curve and negative

6. Producer Price Index (PPI)

Lowest price level

Price level higher than normal

Price levels rising fast

The price level is very high

Highest price level

7. Consumer Price Index (CPI)

Lowest price level

Price level higher than normal

Price levels rising fast

The price level is very high

Highest price level

8. Consumer Sentiment Index (CSI)

High consumer confidence

Consumer confidence is less high

Consumer confidence going down

Low consumer confidence

No consumer confidence

9. S&P 500 Put/call ratio (PCR)

Well below 0.5 (very bullish)

Close to 0.5 (bullish)

Between 0.5 and 1.0 (neutral)

Between 1.0 and 2.0 (bearish)

Above 2.0 (severely bearish)

10. Dow Jones (DJI)

S&P 500 (SPX)

Russel 2000 (RUT)

Major Market Sectors (XLE, XLF, etc)

Strong bull market
No real changes in an upward trend

Bullish market
Minor changes in an upward trend

Neutral bullish/bearish market

Increased (negative) changes and “thrashing”

Bearish market

Going down, many negative changes

Bear market

A deep recession or the market is collapsing, or already did so

11. US Dollar Currency Index (DXY)

Very weak dollar versus other currencies

Weak dollar

Neither weak/nor strong dollar

Strong dollar

Very strong dollar

12. Bitcoin (BTCUSD)

Bitcoin rising

Bitcoin rising slightly slower

Bitcoin “thrashing” at the same level

Crypto crashes, market corrections

Bitcoin collapses

No restrictions on trading (except for VIX rules)

Closer watch and reduce trades

More caution needed and reduce trades further

Extreme caution and reduce trades even further

Look to close any open positions and no new trades

This Week’s Economic Calendar

The Federal Reserve’s battle to combat inflation will dominate the conversation next week with the Federal Reserve holding a two-day meeting to set policy. Expectations are high that the FOMC will fire off a full point rate hike at the meeting after the consumer price report for August came in hotter than anticipated. Nomura now expects a terminal rate of 4.50% to 4.75% by February of 2023 before inflation is expected to cool rapidly, especially as the year-over-year comparisons to the war in Ukraine start to come into play. (Source: SeekingAlpha)

On Monday and Tuesday a lot of GB numbers coming in. On Tuesday also the US CPI and on Wednesday the PPI. The EU PPI follows on Friday.

The CPI inflation report for August will be one of the most important ones in the week ahead. The report is expected to show that prices rose 8.1% in August which would mean a second straight month of deceleration. 

Economic Calendar 19 – 26 Sep 2022 (source: Investing.com)

Earnings and Dividend Calendar

Next earnings within 45 days for my selected underlyings.

The first dividends are in December for GDX.

Dividneds and earnings calendar week 19 Sep 2022


Cash Balance 18 September

Week 10-16 SeptemberMonth
Beginning Account Cash Balance$4,527.73$4,527.73$6,019.87
Deposits (Div. & Int.)$0.00$0.00$0.00
Withdraws (paycheck1)$0.00$0.00$0.00
Premiums on Open$57.00$57.00$57.00
Premiums on Close$0.00$0.00-$1,353.08
Commissions Paid-$6.00-$6.00-$116.00
Fees Paid (total)-$0.82-$0.82-$30.10
Dividends/Interest Received$0.00$0.00$0.22
Ending Account Cash Balance$4,577.91$4,577.914,577.91
Total Gain/Loss$50.18$50.18-$1,492.14
At risk-$86

Portfolio allocation

Not started

Last Week’s Options Trading

Positions Closed Last Week


Positions Opened Last week

I will also explain which sources I used and how I researched the options ideas I created for each position I set up (BarChart, Lookback, etc).

Last week I (again) opened 2 new positions.

Options Strategies Count Summary

Defined Risk

Week 10 -16 September


Bull Put Spread (credit)



Bear Call Spread (credit)



Bear Put Spread (debit)



Bull Call Spread (debit)



Short Iron Condor



Undefined Risk

Short Option



Short Straddle



Short Strangle



End-of-Week Active Positions Overview

This Week’s Guidelines

Open Positions Status at Beginning Week

Last week I Opened two new positions in EWZ.

Goals and Schedule

At the end of September, I want to have reached maximum portfolio allocation.

Sunday: set up options strategy ideas and perform backtesting; select at least two options strategy ideas.

Tuesday: open a minimum of 2 vertical spreads or iron condors

Thursday: open a minimum of 2 vertical spreads or iron condors

For this, I need high IVR underlyings.

My Faves IVR and IV%% 18 Sep 20022
My Faves IVR and IV%% ranking of 18 Sep 2022

Options Buying Power and Portfolio Allocation This Week

Based on my current buying power and portfolio allocation rules I determine whether I can open new positions to maximize such portfolio allocation.

Allocation based on VIX


< 15






Lowest volatility, all comfortable

Market in ‘lull’ mode

Volatility high

Volatility very high

Volatility and fear levels highest

Maximum portfolio capital allocation






Cash Balance


Max Portfolio Capital Allocation (Cash Available for Trading)



Portfolio allocation undefined vs defined risk

To be set up

Underlyings Selected for Trading This Week

Based on the criteria for stock selection (high liquidity, high volatility, technical, no earnings/dividends etc.), I have filtered the following ETFs and stocks for this week to focus on: EWX, GDX, IWM, TQQQ and in reserve LYFT, and GOLD since earning are coming up for both of them. And, as always, I will keep an eye on RIOT give the moves in Bitcoin to which RIOT is much correlated.

  • EWZ (high IVR)
  • GDX (high IVR)
  • IWM (high IVR)
  • TQQQ (high IVR)
  • LYFT (high IVR and earnings coming up 1 Nov)
  • GOLD (high IVR but earnings 3 Nov)

I need to revisit this as soon as the market opens again tomorrow.

And I will also check in my BarChart screeners to see whether there are results I can use to set up positions. In a future post, I will explain how I set up the screeners.

This Week’s Rules

This week I will start a post with my entry, adjustment, and exit rules per options strategy.

Vertical Bull Put Credit Spread

14/09/22: Sold – EWZ 28 Oct BPS 27/28 @ 25.00

Screenshot bull put spread

Vertical Bear Call Credit Spread

To be filled in

Vertical Bull Call Debit Spread

To be filled in

Vertical Bear Put Debit Spread

To be filled in

Short Iron Condors

14/09/22: Sold – EWZ 21 Oct Short IC 26/27/34/35 @ 32.00

Screenshot EWZ iron condor

Short Straddles

To be filled in

Other Strategies

To be filled in


So, I have taken off. After three days I am slightly in the red with the bull put spread due to the slump on Friday.

I also am now tracking everything. This is taking much of my time, so I will try to find ways to do this faster.

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