Markets start to get edgy after last week's euphoria. Iran tensions do not help. Trade action is mostly short or hedging in nature other than in commodities. Busy night writing covered calls - about half way through the list.
Portfolio News
Market Rally
US markets start to fray at the edges
That recession word is coming back into the conversation especially when the talking heads look at Dow Transports index - airlines and railways and trucking all under-performing.
The bond market is giving signals that seem more clear = not good feeling persists. The question will be, are consumers paying attention as lower rates drive lower mortgage costs?
It feels a little nervy out there.
Bought
Soybean Futures (SOYB): Soybean. Pending order from the day before taken up. Am trailing stop losses on this and moved take profit target above previous highs.
Yamana Gold (EUR) (RNY.DE): Gold Mining. Gold is on the move. Averaged down entry price in two portfolios. Chose the Europe listings as I had spare Euros in these accounts.
VanEck Vectors Gaming ETF (BJK): Gaming/Casinos. Gaming news before market open was of Eldorado Resorts (ERI) taking over Caesars Entertainment (CZR).
Given I had written yesterday that my gaming trade needed a little more time, I figured this takeover could be an added catalyst. I added a new trade buying a September 2019 38/41 bull call spread. With net premium of $0.80 this offer maximum profit potential of 275% if price moves around 11% from close of $37.08. Let's look at the chart which shows the bought call (38) as a blue ray and the sold call (41) as a red ray with the expiry date the dotted green line on the right margin.
I have moved the start of the pink arrow price scenario to the current price area. Price is currently on a steeper price trajectory (the blue arrow). The pink arrow will make about 100% and the blue arrow will take the trade to the maximum. I sure hope I do not run out of time this time around.
iShares Silver Trust (SLV) With closing price of $14.46 - bought October 2019 strike 14.5 call option for a premium of $0.59. (4% of strike). This adds a silver hedging trade to the last remaining portfolio. This one is open ended for upside.
Shorts
Consumer Staples Select Sector SPDR Fund (XLP): US Consumer Staples. CNBC Options Action team reviewed relative performance of consumer staples and settled on a trade short on Procter & Gamble. The view is that price earnings multiples for the sector are way over-valued. As I am already on a trade short this ETF, I chose to revisit it. I did two trades. I added to the July 2019 56 strike put options to average down. This is a risky trade as strike is currently 5% out-the-money with only 4 weeks to go. My plan will be to close this out as soon as this particular trade reaches 100% (if it does) rather than waiting for the maximum.
The other trade was an August 2019 59/55 bear put spread with a net premium of $0.86 offering maximum profit potential of 365% if price drops 7%. The bought leg is already in-the-money. Let's look at the chart which shows the bought put (59) and 100% profit as red rays and the sold put (55) as a blue ray with the expiry date the dotted green line on the right margin. The other trade is all in pink (revised 100% profit is dashed pink ray).
Price did not quite follow the ABC correction wave fully (pink zigzag) that I drew in last time. However a price correction like the down leg of that wave (red arrow) would take both trades well past 100% profit and to the maximum for the new trade. The key for this trade is expiry is well into next earnings season.
FedEx Corporation (FDX): Courier Services. CNBC Options Action idea based on steady under-performance of Fedex compared to S&P 500 and weakness in whole transport sector. Options premiums are pricey to buy puts. Idea was to sell a 175/170 call spread - i.e., buy the 175 call and sell the 170 call - as this was more cost effective than buying a put spread and it does offer a bit of protection in the event that earnings are better than expected. Now this is a new trade format for me and somehow I landed up with the trade setting up the other way which I did not check at trade time. Now I am long the 170 call and short the 175 call which is not very smart on a day price dropped 2.69%. I will fix it overnight. I will report the trade when I fix it.
Hedging Trades
Vanguard FTSE Europe Index Fund ETF (VGK): Europe Index. I replaced the expired hedging trade on Europe with a September 2019 52/49 ratio put spread. Normally I like to go out two months but options availability was limited for August. Net premium for this first trade was $0.10 (i.e., I did have to pay). Because this is a ratio spread it is hard to predict the maximum profit potential as the trade opens up a naked put situation if price drops below $49 and stays below.
Income Trades
21 new covered calls written at an average premium of 1.07%. This is a comfortable percentage as quite a few trades are looking for price movement of up to 10%. A quick reminder on my process for writing covered calls.
- Select stocks I am happy to sell if I get exercised.
- Calculate 5% move up in price from previous day close (7.5% for technology stocks; 10% for stocks under water; 20% for leveraged stocks)
- Choose a one month out call option closest to percentage move up in price.
- Place a bid between bid and ask. Ideally one should aim for a premium of about 1% to make this worthwhile
The table shows purchase price and closing price, the premium received and the % relative to close and to purchase price. The strike is shown and the important columns after that are the amount price has to move to reach the strike price - you will see they are all around 5% to 10% with a few more than that. The net cost column is updated each month to show purchase price less accumulated premium received - the percentage column at the end shows what contribution income has made compared to purchase price.
Cryptocurency
Bitcoin (BTCUSD): Price range for the day was $548 (5% of the open). Price makes an inside bar with a buyer bar (close higher than open). Takes out the previous high in today's trade inching toward the next level up
Ethereum (ETHUSD): Price range for the day was $18 (6% of the high). Price pulls back from the prior high and tests down to the support around the $300 level. Trade today creeps past yesterday's high but not quite a higher high. There is a gap to the next level up at $348.
Ripple (XRPUSD): Price range for the day was $0.0287 (6% of the high). Price pulls back from the prior high and tests down to the middle between the two levels. Today's trade also inches a little higher than yesterday's high.
One new contract opened on reversals
CryptoBots
Profit Trailer Bot No closed trades
New Trading Bot Trading out using Crypto Prophecy. No closed trades
Currency Trades
Outsourced MAM account Actions to Wealth closed out 2 trades on NZDUSD and AUDNZD for 0.45% profits for the day. Trades open on EURUSD (0.45% positive)
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
Bitcoin: Get started with mining Bitcoin for as little as $25 http://mymark.mx/Galaxy
June 24, 2019