Started last week with a little cherry picking but spent most of the week on the sidelines adding to and adjusting to hedging trades. I just got the feeling that this is not a drill.
Portfolio News
Market Selloff
A wild week last week with two plus days and 3 down days leaving Dow Jones and S&P 500 indexes a little up on the week (but not enough to address the fall the prior week).
Biggest move is in Treasury yields with 100 basis points fall in the time since the first corona virus case appeared in US.
This chart shows the yields across maturities on two dates - green line - day of first US case (Jan 19) - blue line - March 6. That is 100 basis points change. Now a lot of this is computer driven as funds are pulled from stock mutual funds they have to be invested. Into bond funds they go bidding up bond prices
Chart from Cumberland Advisors https://www.cumber.com
Another chart showing the last few days move in the Japanese Yen.
It was not long ago that the shocking GDP numbers crushed the Yen. Well that was until the safe haven trade came back with avengance.
Bought
FireEye (FEYE): Cybersecurity. With price closing at $13.23 assigned on a strike 15 naked put. Breakeven will be $14.86 - some way to go. Writing covered calls on FireEye has been successful - that will be the plan for a long term hold.
iShares Silver Trust (SLV): Silver. I watched 3 Real Vision segments on the weekend about the state of the market before Monday March 2 opening - silver and gold look solid investments as the zero real yield will be better than the negative yield coming to interest rates. Note: these video segments were before the Fed emergency rate cut. Bought a small new holding in one portfolio in Monday trade. Added to that holding with the bounce in price in Tuesday trade. Also bought a January 2022 16/20 bull call spread. With a net premium of $0.99 this offers a 500% maximum profit for a 28% rise from $15.56 close.
Broadcom Inc (AVGO): US Semiconductors. Jim Cramer idea to buy into weakness after Monday pop - added a small parcel
Yamana Gold Inc (AUY): Gold Mining. Jim Cramer idea to add a gold miner - he liked Barrick (GOLD). I stuck with one I know and added a new position to one portfolio at $4.15. What I liked is the way price bounced on a down market day after the prior selling days. I also added a January 2021 4.5/5.5 bull call spread. With a net premium of $0.26 this offers maximum profit potential of 284% for a 32% rise in price from my trade price. Price closed at $4.20 = 5.53% up on the day
Sunrun Inc (RUN): Solar Power. Replaced part of holding assigned on covered call last week - will nibble into this. Covered call written at 1.35% premium and 11% coverage
PIMCO 25+ Year Zero Coupon U.S. Treasury Index ETF (ZROZ): US Interest Rates. Rate cut by Federal Reserve has markets convinced that rates will continue to fall especially if a recession emerges. The long end of the duration curve is expected to be the biggest winner. One of the talking heads suggested this ETF with average duration of 28 years - quite a bit longer than iShares 20+ Year Treasury Bond ETF (TLT)
TJX Cos (TJX): US Retail. Jim Cramer idea to buy into weakness. Added a small parcel and wrote a covered call.
Sold
Invesco Shipping ETF (SEA): Shipping. ETF delisted with 26% loss since August 2016. This had been trading profitably until the start of the US-China tariff war.
Corn Futures (CORN): Corn. One trade closed on trailed stop loss for $2.10 (0.88%) average per contract profit
Shorts
iShares iBoxx $ High Yield Corporate Bond ETF (HYG): Interest Rates. The threat of recession just has me thinking high yield debt markets could crater. With trade time price of $86.10 bought a June 2020 86/82 bear put spread. With a net premium of $1.33, this offers maximum profit potential of 201% for a 5% drop in price. Let's look at the chart which shows the bought put (86) as a red ray and the sold put (82) as a blue ray with the expiry date the dotted green line on the right margin.
Of note is trade time was at the start of the rays with price moving against the trade for a few days and then the big collapse on Friday and Monday. The bad news is I did not have a very large position and profit is capped by the sold put. I could buy that back if I think price will keep dropping. There is another $5 drop to reach the 2016 lows as you can see from a weekly chart below.
SPDR S&P 500 ETF Trust (SPY): S&P500 Index. Monday up day was a good day to tidy up the hedge trades for what I think is coming. With price opening at $298.21, closed out March 2020 315/300 bear put spread for 630% profit since February 21 - one week and one day. Used the proceeds to buy a March 2020 strike 285 put option. This converts what was a put ratio spread into a 285/275 bear put spread - i.e, takes out the risk of price dropping below $275. 285 strike is 5% below trade price.
Let's look at the chart which shows the bought put (285) as a red ray and the sold put (275) as a blue ray with the expiry date the dotted green line on the right margin. Trade entry price is the point of the blue arrow. The trade is looking to protect for a further fall of 7.65% from trade entry. That was hit in two days.
In another portfolio, I added a March 2020 285/270 bear put spread with a net premium of $2.46. This offers maximum profit potential of 1254% for a 14% drop in price from $308.99 open (i.e., a bit more protection). Price was trading close to $300 when I made the trade.
Vanguard FTSE Europe Index Fund ETF (VGK): Europe Index. Up day was a perfect shape of day to fix the trading errors from the week before. With price opening at $52.44, closed out March 2020 56/54 bear put spread for 469% profit since February 21 - one week and one day. Used the proceeds to convert the ratio spread into a March 2020 49/47 bear put spread. Also added in a 51 strike put to match the short 50 strike put. This portfolio now has all long puts matched with short puts consistent with a view that markets could keep dropping. That 47 strike sold put is 13% below $53.14 close on Monday = hedged to there. In another portfolio I matched up the 50/47 ratio put spread by buying 50 strike put options. I felt this is going lower.
Income Trades
6 covered calls written at average premium of 1.11% and coverage of 13.46%. This brings the month to date average to 1.58% and 9.97% coverage. Not many stocks are going to rise 10% apart possibly from Gilead Sciences (GILD) on the back of virus vaccine potential.
Cryptocurency
Bitcoin (BTCUSD): Price range for the week was $1224 (14.4% of the open). Price worked away from support at $8400 and passed through resistance at $8891 in mid week and then collapsed in Sunday trade following a bearish engulfing bar.
3 trades closed on trailed stop losses for $143.61 (1.65%) average per contract profit
Ethereum (ETHUSD): Price range for the week was $56 (25.7% of the open). Price traded around the $222 level for a few days and then pushed higher to test $250 - the selloff looked the same with a bearish engulfing bar and a collapse on Sunday testing right down to support at $201.
2 trades closed on trailed stop losses for $5.35 (2.42%) average per contract profit
Ripple (XRPUSD): Price range for the week was $0.04650 (20.4% of the open). Price moved up to test resistance at $0.24754 and failed there with a big drop right down to resistance at $0.20584
One trade closed on trailed stop losses for $0.0042 (1.82%) average per contract profit
CryptoBots
Profit Trailer Bot No closed trades. VPS provider did not reinstate running services after shutdown.
New Trading Bot Trading out using Crypto Prophecy. No closed trades
Currency Trades
Outsourced MAM account Actions to Wealth closed out 5 trades on AUDNZD for 2.3% losses for the week. No trades open. An ouch day with 4 losing trades on one day short AUD - when NZD fell even harder.
Cautions: This is not financial advice. You need to consider your own financial position and take your own advice before you follow any of my ideas
Images: I own the rights to use and edit the Buy Sell image. News headlines come from Google Search. All other images are created using my various trading and charting platforms. They are all my own work
Tickers: I monitor my portfolios using Yahoo Finance. The ticker symbols used are Yahoo Finance tickers
Charts: http://mymark.mx/TradingView - this is a free charting package. I have a Pro subscription to get access to real time forex prices
March 2 - 8, 2020
Posted via Steemleo