Trade war hots up. Chinese investors flock to Bitcoin. Complete the healthcare risk reversal trade. Topping up in gold/cobalt. And rocketing crypto prices brings profits and new entries.
Portfolio News
Tariff Tantrum
Friday markets responded to Trump calming words and ended in positive territory.
The weekend saw all that unravel with China coming out and saying the US had reneged and Trump going back to the hardline tweets. US futures are following Asian markets down. Biggest indicator of what is really going on in the trade talks is the Chinese currency testing levels not seen since December 2018.
My options contract is standing at 63% profit but is less than halfway between breakeven and 100% profit rays = a big spike in implied volatility. One of the Asian banker talking heads has put a target of 7.000 back on the pair again. The next bellwether (which I use all the time) is the Corn price reaching to lows not seen since Septmber 2018.
This has been a rollercoaster in my portfolio since rollover in early May.
ThyssenKypp (TKA.DE): Europe Steel. Thyssen has been working on plans to hive off its loss making steel units.
The German government and trade unions effectively shut that avenue down. Instead they announced they would spin off the profitable elevator (we call them lifts) business. Share price popped 28% = not enough to recover from the steel tariff hit they took in April/July 2018.
Bought
CVS Health Corporation (CVS): US Healthcare. As I indicated in TIB416, I did sell a January 2021 put to convert the 57.5/70 bull call spread into a call spread risk reversal. The $3.73 premium covered the whole of the net premium that I paid for the spread by $0.13 - better than was available in Thursday markets when I opened the spread.
Alloy Resources (AYR.AX): Australian Gold/Cobalt. Alloy Resources is running a share purchase plan at a discount with a minimum lot size which is larger than the holding I want to buy. The way markets are going I was not prepared to fund the full lot size and run the risk of price settling back to or even below issue price forcing an exit with a spread based loss. Instead, I bought a small parcel in the open market foregoing the discount. The business has some interesting gold tenements in Western Australia near Kalgoorlie and cobalt tenements in New South Wales near the strong Thackaringa deposits.
Naked Puts
The down move in the markets increases my exposure to naked puts. The updated table (in expiry order) shows the naked puts. The ones highlighted RED are within the danger zone. Of note is that in the last week coverage has reduced on 14 of the positions (marked LESS).
- Most concerning is Boeing (BA) with the delays to the 737 Max 8 flying again and pressures from China through the trade deal. China is the largest customer for Max 8 aircraft
- LYFT is of some concern with multiple contracts open (but trade size is smaller)
- New to the list are Walt Disney (DIS) and CVS Health Group (CVS)
- May expiries were looking safe as of Friday but another hell week could well push the hedge trades on Nasdaq (QQQ) and S&P500 (SPY) close to the wire. A 14% drop from here might be a good level to buy in on SPY.
Cryptocurency
Bitcoin (BTCUSD): Price range for the weekend was $1480 (24% of the low). Well, well there was no consolidation around the pink ray or the ochre ray. Price smashed though all those levels and found sellers 3 levels above (solid green line) around $7322.
A move like this is catalyst driven especially with price not reacting adversely to the Binance hack. Good guess is it has to do with China outflows when it became known to people in the know in China that the trade deal had bigger problems than anyone was letting on. With such a big move we might have to wait for short term action to see where support and resistance lies - the old stuff will not be that helpful
Opened one new Bitcoin trade on a 30 minute reversal (by pending order) at $7192 - maybe not a very patient entry when looking at a 4 hour chart.
Of note is of the orders still open the next one up in the staircase was opened exactly 12 months ago. I am a holder on this reversal strategy I follow.
Ethereum (ETHUSD): Price range for the weekend was $39 (23% of the low). Price did follow Bitcoin though at a more controlled pace on the first days of the run and a smaller percentage than Bitcoin. Sellers were to be found around resistance at $201.
In my portfolios two trades hit profit targets for $13.07 (7.8%) and $15.43 (9.15) per contract profit
CryptoBots
Profit Trailer Bot Fixed the Binance APIs and took the opportunity to upgrade the software version. Six closed trades (1.85% profit) bringing the position on the account to 7.32% profit (was 7.17%) (not accounting for open trades).
The API changes caused problems in PT Defender trading and I was forced to restart it - it then messed up all the average price calculations. This will take quite some work to report profits consistently.
New Trading Bot Trading out using Crypto Prophecy. No closed trades . Trades open on SC, VET and XLM. Altcoins are lagging the run in Bitcoin and Ethereum.
Currency Trades
Outsourced MAM account No closed out trades. Trades open on GBPUSD (long) (Just negative)
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 and Yahoo Finance. 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
Bitcoin: Now is the time to get started with mining Bitcoin for as little as $25 http://mymark.mx/Galaxy
Trading: Binance offers a wide range of coins to trade, tight spreads and low fees if you use BNB to pay https://mymark.mx/Binance
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May 10-12, 2019