A volatile week offered opportunities to nibble into a few positions especially in Europe. End of week action wiped out all the opportunity - the recession is here. Trades are written up in date order
Bought
PepsiCo, Inc (PEP): US Consumer Goods. Jim Cramer idea to start nibbling away (excuse the pun) at quality stocks with low China exposure
Commerzbank AG (CBK.DE): German Bank. Prices were smashed on Monday. I averaged down my entry price in early trade on Tuesday at €4.00 and sold covered call at 4.40 (2.5% premium)
Allianz SE (ALV.DE): German Insurance. Insurance has been a quiet achiever in Europe and I only recently closed out trades in Allianz. With price trading at a high of the day of €183.33 (about the time of my trade) bought a December 2021 185/200 bull call spread. With a net premium of €6.10 this offers maximum profit potential of 146% for price to get back to where it was on March 5 (i.e., 5 days ago). This is 15% up from Tuesday close of €173.30. A patient trade might have waited for the day to settle first.
Apache Corporation (APA): US Oil Producer. First of the naked puts to bite. Assigned at $25 versus a closing price of $10.79. Price was trading above $25 on March 4 (i.e., 6 days ago). Price has a long way to go to breakeven at $24.44.
Koninklijke KPN N.V. (KPN.AS): Dutch Telecom. Averaged down entry price after price had dropped more than 10% in a week - people will still use their phones. Dividend yield is a solid 5.63% at this level
PostNL N.V. (PNL.AS): Dutch Post. Price has dropped around 40% in a week - this feels like an over reaction. Averaged down my entry price. Dividend yield is a massive 21.93% at this level - cannot see that being held.
ING Groep (INGA.AS): Dutch Bank. Price has dropped 50% from peak - averaged down in one portfolio.
Valaris was Ensco plc (VAL): Offshore Oil Driller. Valaris is one of two offshore oil drillers with a solid enough balance sheet. I had a pending order in to average down entry price as I am expecting to be assigned 200 shares on a 4 strike naked put. I bought 500 shares at $1.03. At market close I added another 1,000 shares at $0.63. I sure hope that balance sheet holds.
Sunrun Inc (RUN): Solar Power. Averaged down in one portfolio in Friday trade and sold an April covered call - got the sold call strike wrong. Brain was not very clear. Will buy it back on the first down day.
Sold
Carrefour SA (CA.PA): French Supermarket. With price dropping from Friday close of €15.60 to Monday open at €14.86, I felt that the chances of price getting back past €15.20 before March expiry on a 15.20/16.20 bull call spread were slim. I closed out part holding of the bought call for a 31% loss since December 2019 . This converts the sold call into a covered call as I am holding the stock. Price dropped further in Tuesday trade to close at €13.98.
Cisco Systems (CSCO): US Network Equipment. Jim Cramer idea to reduce size into an up day. Closed half position for 31% loss since August 2019. Proceeds used to buy back Disney naked puts. 29% loss in another portfolio since August 2019. Income trades had contributed 2.93% and 3.74%.
Direxion Daily MSCI Real Est Bear 3X ETF (DRV): US Real Estate. Short real estate has been a tough trade as interest rates fell. Took the chance of the big selloff on Thursday to close out the small holding I had for a small loss. Trade opened in stages in May and July 2018 and November 2019. I was writing covered calls against this but my broker stopped that trade avenue. Net profit including income trades was 0.86%. The selloff made for a lucky escape.
Shorts
Change in Hedging Strategy
Tuesday musings: My sense is the probability of a recession hitting has gone up dramatically. The fiscal measures suggested by Donald Trump will help. This is exactly what the Australian government did in 2009 and Australia was the only G20 country to avoid recession. Thus far my hedging strategy has been to use ratio put spreads. The risk here lies in price dropping more than the level of protection and I am forced to buy stock well above the market. The strategy change is to convert the ratio put spreads into bear put spreads by matching up the sizes - for some I bought back the sold puts and for others I bought more puts to match the sold puts. Profits from prior hedge trades helped. If I see a price bottom forming I can easily sell more puts to convert back to ratio spreads. I will review again as March expiry comes up on March 20
With the bounce in markets on Friday, I made another change in strategy and bought back sold puts in some cases to leave the bought puts open ended. I think this selloff has more to go and I want to be open to more downside in the week to expiry on March 20. I have no ratio put spreads exposed.
Vanguard FTSE Europe Index Fund ETF (VGK): Europe Index. With price closing at $47.47, closed out June 2020 55/52 bear put spread for 457% profit since February 19 - i.e., 20 days.
Tuesday: Added 50 strike puts against a closing price of $49.15 to match 47 strike sold puts. Thursday: Closed out those strike 50 puts - the Tuesday adds made 277% profit. My sold puts pending order did not execute - that had me bothered with the risk of another big down day leaving that risk open. I waited until Friday futures market opened and chose to leave the trade open until Friday close when I would be awake. Price did come up 6% and I was able to buy back lower to yield a net profit of 251%
Invesco QQQ Trust (QQQ): Nasdaq Index. Monday: With price closing at $193.57, closed out March 2020 218/209 bear put spread for 467% profit since February 21 - i.e., 18 days. Deployed proceeds to buy 194 strike puts to match up 190 strike sold puts. Still have a mismatch which I fixed by buying back 190 and 192 sold puts on Tuesday for 31% and 249% losses respectively
Added more 200 strike puts against a closing price of $204.11 to match 185 strike sold puts.
SPDR S&P 500 ETF Trust (SPY): S&P 500 Index. Bought back 256 strike put options for a 52% profit since February 28. Closing price was $288.42.
Overall: Closed hedging trades produced an overall profit of 1% for the year to date. Open trades were a little under water.
Income Trades
Naked Puts
The Walt Disney Company (DIS): US Media. Disney price has been hammered because of the theme parks exposure. With price closing up 11.67% on Friday I chose to take the loss and closed out March 2020 130 strike naked put. The loss was an uncomfortable percentage in the thousands = ouch. I was certainly not anticipating such a dramatic turn in market conditions.
NVIDIA Corporation (NVDA): US Semiconductors. I was holding a March 240 strike naked put. I do not have margin to absorb a $24,000 stock purchase - so I closed out the naked put for another loss in the thousands of percent. This exit could well be a mistake as price did close 11.38% up to $240.93 - just above sold strike BUT there is a week to go.
Cryptocurency
Crypto markets got smashed on Thursday - 51% drop through all the support levels for BTC.
That wiped out my margin account taking down crypto and agriculture positions. Overall exposure was about 1% of total portfolio value. I will be staying away from this until markets settle down.
CryptoBots
Profit Trailer Bot No closed trades. Still not working.
New Trading Bot Trading out using Crypto Prophecy. No closed trades
Currency Trades
Outsourced MAM account Actions to Wealth is in the process of changing trading platforms. No closed trades - whew.
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
March 9-13, 2020
Posted via Steemleo