Busy options expiry with a slew of assignments in European stocks picked over the last few months from stock screens. Stayed away from markets mostly as the worries ahead of the Federal Reserve meeting got in the way. Did top up quite a few ASX stocks
Portfolio News
In a week where S&P 500 dropped 0.48% and Europe rose 1.01%, my pension portfolio rose a more hefty 1.63%. Heavy lifting was done by De Grey Mining (DEG.AX up 6%), Eramet (ERA.PA up 5%) and European banks, Japan portfolio up 4.77%, with US stocks up 1.38% led by Navios Maritime (NM).
Big movers of the week were AXP Energy (AXP.AX) (+100%), Aurora Cannabis (ACB.TO) (+84.7%), Canopy Growth (WEED.TO) (+44.1%), Elmore (ELE.AX) (+40%), Northern Dynasty Minerals (NAK) (+31%), AdAlta (1AD.AX) (+29.4%), Azincourt Energy (AAZ.V) (+25%), Lifeist Wellness (LFST.V) (+25%), American Rare Earths (ARR.AX) (+24%), Navios Maritime Holdings (NM) (+21.4%), Loop Industries (LOOP) (+18.6%), Sigma Lithium (SGML) (+17.7%), Anagenics (AN1.AX) (+17.6%), Vistry Group (VTY.L) (+17.6%), Uranium Energy Corp. (UEC) (+15.4%), Airtel Africa (AAF.L) (+15.2%), Dawson Geophysical Company (DWSN) (+15.1%), VHM Limited (VHM.AX) (+14.6%), Denison Mines (DML.TO) (+14.5%), North Pacific Bank (8524.T) (+14.3%), HelloFresh (HFG.DE) (+14.3%), GoGold Resources (GGD.TO) (+13.4%), Boss Energy (BOE.AX) (12.6%), Honey Badger Silver (TUF.V) (+12.5%), Coronado Global Resources (CRN.AX) (+12.3%), Stuhini Exploration (STU.V) (+12%), Arafura Rare Earths (ARU.AX) (+12%), ETFMG Alternative Harvest ETF (MJ) (+12%), Deep Yellow (DYL.AX) (+11.7%), Mitsui Engineering & Shipbuilding (7003.T) (+11.4%), GTI Energy (GTR.AX) (+11.1%), JSC National Atomic Company Kazatomprom (KAP.IL) (+11.1%), Fission Uranium (FCU.TO) (+10.4%)
Wow - 33 stocks make the list. There are some big themes - cannabis (4), uranium (7), lithium (3), rare earths (3), gold and silver mining (4). Good to see some longer term picks getting traction. A fw of the ASX stocks ae moves off very small bases - e.g., AXP Energy up one tenth of a cent = 100%
US markets were happy with the IPO of Arm Holdings (ARM) driving sentiment early on but then the infation fears came back to make for a down week.
Uranium Bounces
Uranium has been on the improve in recent weeks with entries in the big movers every week. The US is waking up to two realities - nuclear power is a good way to provide base load electricity and they have becorme too dependend on uranium enrichment supplies from Russia/China bloc.
The big bounce came this week when Cameco (CCJ) announced earnings below consensus but talked about looming supply shortage - they have a shortfall on their own. That shortage will have to be met in the spot market.
It did not take long from spot market prices to jump to a 12 year high. The challenge for investing is to find operators close to production and get a balance of wildcat ideas in place.
Timing is everything - Wall Street Journal published an article on this topic this week about the waning power of OPEC in oil being replaced by China in other areas of alternate energy. Check the link - it is a gift unlocked article.
Crypto Bounces
Bitcoin price dipped to start the week below the support level it has held for some weeks and then found buyers ending the week 3% higher with a trough to peak range of 7.7%
Ethereum chart is similar - same drop and then a recovery to end the week 1% higher with an 8% trough to peak range
Been a holder of AAVE (formerly LEND) for a long while. It popped 22% on the week and seems to be holding the gains.
Chainlink (LINK) broke above the resistance level from the last run on the 4 hour chart with a 15% pop, pullback and another surge into the new week.
Thorchain is making waves with its new ShapeShift protocol which allows one to create liquidity pools without going wrapped. RUNE price followed up last week's surge with a pullback and another 28% pop almost passing past week's high. Price is well ahead of my last entry.
Last chart is a pop out of a long sideways move by VeChain (VET) also up 22% at one stage.
Bought
Dutch Bros Inc (BROS): US Restaurants. Assigned on sold put at expiry which averages down entry price on existing holdings. Breakeven for the new tranche taking into account net profits is $29.34, a 5.9% premium to $27.71 close (Sep 8). Price has since moved quite a bit lower on the back of a large rights offering at $26 per share - got to work that through for a few months.
https://finance.yahoo.com/news/dutch-bros-inc-announces-pricing-025900950.html
PayPal Holdings (PYPL): Payment Services. With price opening at $64.66 (Sep 15) and trading above $65, covered calls run the risk of going to assignment. Scaled in with another holding at a small premium to possible assigned price - the premium was smaller than the covered call premium earned last month. As it happened price dropped below strike to close at $64.21. This is the challenge of tradng the half hour after market open compared with the half hour before close.
Glencore plc (GLEN.L): Base Metals. With price opening at £4.55 (Sep 15) and trading higher covered calls run the risk of going to assignment. Scaled in with another holding at an entry price a little lower than last entry. Glencore have changed multipliers on options contracts again (1054 vs 1034) and will need a top up to have covered calls properly covered. Wrote covered call for 0.71% premium with 8.8% price coverage.
Okapi Resources (OKR.AX): Uranium. Received a Next Investors newsletter about this uranium enrichment company with properties in US. Uranium market is facing a supply squeeze and US is starting to work on getting back to supply independence from China and Kazakhstan. Added a small holding in an options style trade
iShares MSCI India ETF (INDA): India Index. 45/50 bull call spread went to exercise. Quick update of the chart shows that price was somewhat delayed in making a run - a repeat of the blue arrow price scenario will make for a solid trade. Market sentiment is India could be the new China engine. Breakeven is $44.95 - a little lower than the entry.
Nokia US ADR (NOK): Network Equipment. With price closing at $3.93, assigned on naked put sold earlier in the week
Qualcomm (QCOM): US Semiconductors. Assigned on sold leg of 115/105 credit spread in managed portfolio. Breakeven is $112.85 at a 2.2% discount to $113.14 close (Sep 15). AAplus have been adding to their holdings.
Sold
IGO Limited (IGO.AX): Base Metals Mining. Assigned early on covered call for 14.2% profit since March 2022. Holder wanted the $0.50 dividend and special dividend. Too bad the covered call premium did not cover the dividend amount.
Assignments on covered calls - lots of those especially on an up week in Europe
ENGIE SA (ENGI.PA): French Utility. Assigned at purchase price making a loss of trading costs since August 2023. 3 of 4 contracts were assigned just before the close as closing price was below the sold strike (15.2)
Evonik Industries AG (EVK.DE): Specialty Chemicals. Assigned at purchase price at breakeven with stock received in an earlier assignment in August 2023. Stock screen idea
HelloFresh SE (HFG.DE): Restaurants. 37% profit since June 2023. Stock screen idea
OCI N.V. (OCI.AS): Specialty Chemicals. 0.34% loss since July 2023. Stock screen idea
PostNL N.V. (PNL.AS): Dutch Postal Service. 3.3% blended profit since July/August 2023. Stock screen idea
Repsol, S.A. (REP.MC): Europe Oil. 3.6% blended profit since July/August 2023. Stock screen idea
Barclays PLC (BARC.L): UK Bank. 6.6% blended loss since January/February/March 2023. 2 out of 3 tranches unprofitable. Income trades since the last assignment recovered 82% of the capital losses. In managed portfolio, 5.3% blended loss since January/February/July 20923 with 1 tranche profitable. Income trades covered 65% of the capital loss. Long run holdings have been profitable.
ETFMG Alternative Harvest ETF (MJ): Cannabis. 64% blended loss since November 2021/November 2022. Am a firm believer in the long run potential of cannabis as a medicinal treatment - industry suffered from a massive over-investment in growing capacity. Averaging down through 3 tranches did not work - needs a bottom fishing approach going forward.
AT&T Inc (T): US Telecom. 54% loss since May 2021. Jim Cramer idea at time of entry. The streaming story did not work out the way he envisaged though the spin-off of Warner Media was profitable
WestRock Company (WRK): Packaging. News of the SmurfittKappa negotiations to acquire Westrock pumped the share price. Locks in 6.9% profit since July 2023. Stock screen idea.
Uranium Energy Corp (UEC): Uranium. 11.9% profit since August 2023. Disappointing as price moved another 34% past the assigned price - this is the challenge of writing covered calls a bit tight.
Société BIC SA (BB.PA): Europe Consumer Products. 2.1% profit since August 2023.
Glencore plc (GLEN.L): Base Metals. 2.3% blended loss since July/September 2023. Have a mismatch in multipliers meaning some of the new tranche was assigned. At least there was coverage. Income trades have covered 57% of the capital loss. Will be scaling back in.
ASX Portfolio
The segment reports trading in ASX fractional share portfolio. Trade entries are made based on stock screens looking for undervalued stocks (price to book, price earnings, price to sales) that are showing technical signs of breaking a downtrend. Exits are made at 30% profit or 20% if 52 week high is lower than 30% advance. New buys are in $300 lots. Scale ins and top ups in $150 lots - increased lot sizes following the switch to monthly pricing plan to make sure to get the full benefit of the fee rebates.
Scale Ins
Woodside Energy Group (WDS.AX): Oil. Dividend yield 10.40%
Viva Energy Group Ltd (VEA.AX): Dividend yield 7.20%
Woolworths Group (WOW.AX). Retail. Dividend yield 2.90%
Orica Ltd (ORI.AX): Specialty Chemicals. Dividend yield 2.52%
Top Ups
Incitec Pivot Ltd (IPL.AX): Specialty Chemicals. Dividend yield 7.40%
Chart shows a 2nd one month high with a bit of a pull back after breaking the downtrend. This is often a strong indicator.
MA Financial Group Ltd (MAF.AX): Financial Services. Dividend yield 4.00%
Chart shows price has been trading in a channel above the $4 support level. Price did make a one month high - the next scaling in trade might be based on touching the lower end of the Bollinger Bands (not shown)
Expiring Options
iShares MSCI Emerging Markets ETF (EEM): Emerging Markets Index. With price closing at $39.13, 45/50/39 call spread risk reversal expired worthless. Trade was set up in May 2023 with the sold put at a shorter expiry and rolled over a few times. Overall profit in the trade was 25% - a far call from the maximum but a profit nonetheless.
Quick update of the chart shows the original legs and adds in the rolled out sold puts (39). Price basically stayed in the same channel from trade time - time to put another one on. Next time I will look at emerging markets excluding China.
POSCO Holdings (PKX): Korean Steel. With price closing at $108.64, 105 strike sold put expired worthless. Slowly dropping the cost base for the next entry as Posco gears up the switch from steel to batteries.
Vanguard FTSE Europe ETF (VGK): Europe Index. With price closing at $60.19, 61/62/59 call spread risk reversal expired worthless. This was a frustrating trade as it was set up to cover the fact the broker did not close out the short position from last options expiry automatically. What would have been a profitable exit turned into a loss making adjustment. And they created a loss when they closed out late.
Update of the chart shows my frustration - the adjustment was made to cap any potential losses for being short - the gap between 61 and 62with the risk of the red arrow p[rice scenario
Hedging Trades
iShares 20+ Year Treasury Bond ETF (TLT): US Treasuries. With price opening at $93.94 (Sep 14), sold leg of 96/94 ratio put spread could go to assignment. Kicked the ratio portion of the spread down the road in the pension portfolio. Locks in a 56% profit on the buy back and was hugely cash positive. This leaves the 96/94 bear put spread in place for one more trading day to expiry. With price closing at $93.53 after a 0.72% drop (Sep 14), chances are good that this will reach maximum profit. Spread did trade through the bottom for a 2.1% profit.
Quick update of the chart shows that price did almost exactly what it did in the last drop to drag beow the sold put level (94). The Federal Reserve meetring in Sep 19/20 will tell if that pencilled in support level will hold or there is another leg down.
In managed portfolio, was short a 96 strike put option. Kicked that down the road with a losing buy back but also cash positive. My sense is yield curves will flatten soon enough - that is when I will be happy to hold long term treasuries
Income Trades
Across three portfolios 65 covered calls expired with 14 going to assignement (UK 3 (3) Europe 24 (7) US 38 (4)). Ten new covered calls written (UK 2 Europe 1 US 7). Five naked puts expired with one assigned (Europe 1 US 4 (1))
Naked Puts
Wynn Resorts (WYNN): Gaming. With price opening at $96.42 (Sep 14), 100 strike naked put could go to assignment. Kicked the can down the road locking in 37% profit on the buy back with a cash positive trade.
Société BIC SA (BB.PA): Europe Consumer Products. With price opening at €62.25 (Sep 15), 60 strike covered call will go to assignment. Sold a October expiry naked put at the same strike to set up a lower entry if price drops.
Credit Spreads
Adyen N.V. (ADYEN.AS): With price opening at €700.20 and trading lower (Sep 14) assigned early on sold leg of 780/720 credit spread in pension portfolio. The plan had been to use the credit spread as a way to average down entry price if it was assigned. Decided to close out the spread and go to exercise and just run covered calls on remaining stock until the market finds an exit point- this business is not going anywhere the market tells me. The exercise loss on the spread was 7.7% - will allocate the sale against the longest standing holding from March 2022 and write in a 68% loss for the tax man.
Seems the analysts are leaning the same way about the business
In managed portfolio, do not have a stock holding - so chose a different path. Sold the bought put for 64% profit and will go to assignement on the sold put.
Credit spread month was toned back to reduce margin exposure with only two spreads going in-the-money - Qualcom and Adyen.
Resources
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. Crypto tickers come from TradingView
Charts: http://mymark.mx/TradingView - this is a free charting package. I have a Pro subscription to get access to real time forex prices
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September 11-15, 2023