TIB: Today I Bought (and Sold) - An Investors Journal #512 - French Utilities, 3D Printing, Lithium, Banks, Solar Power, Spain, Gold Mining, Pharmaceuticals, Frontier Markets, BTC and ETH, Wheat, Soybeans, US Indexes.
Market selloff continued all week. Too bad I took action early in the week to replace some stock assigned the prior week. Hedging trades did all their work in the space of a week. Nice to take the profits but it is time to rethink the levels.
Portfolio News
Market Selloff
The fear turns into a rout with the fastest drop into 10% correction for S&P500 ever (6 days)
Treasury yields drop also to record lows.
Bought
Electricite de France S.A. (EDF.PA): French Utility. Added a new holding following successful short term options trade with a view to writing covered calls and using for yield value. Dividend yield 3.70%.
ENGIE SA (ENGI.PA): French Utility. Bought back stock assigned to continue writing covered calls. Dividend yield 4.75%.
3D Systems Corporation (DDD): 3D Printing. Bought back stock assigned to continue writing covered calls.
Livent Corporation (LTHM): Lithium. Opportunity to average down in selloff.
Commerzbank AG (CBK.DE): German Bank. Bought back stock assigned to continue writing covered calls.
Deutsche Bank AG (DBK.DE): German Bank. Bought back stock assigned to continue writing covered calls.
JinkoSolar Holding Co (JKS): Solar Power. Bought back stock assigned to continue solar power momentum.
Global X Lithium ETF (LIT): Lithium. Added to on portfolio to continue electric vehicle momentum.
UBS Group AG (UBSG.SW): Swiss Bank. Replaced December 2021 strike 14 call option sold in error on the last trade I set up - did recover the error plus trading costs.
iShares MSCI Spain Capped ETF (EWP): Spain Index. Bought back stock assigned at 8% lower.
Citigroup (C): US Bank. Jim Cramer idea to add back. Added a small holding to round up to be able to write covered calls (1.52% premium)
Sold
Yamana Gold (EUR) (RNY.DE): Gold Mining. Closed out January 2021 2.5/4 bull call spread for 75% profit since February 2018.
Made some sales in one portfolio to raise cash to cover one naked put heading to assignment - some for profits and some to exit weak trade scenarios.
Biogen Inc. (BIIB): US Pharmaceuticals. Profit taking trade for 26% profit since June 2019. Initial trade was a Jim Cramer idea.
iShares MSCI Europe Financials ETF (EUFN): Europe Financials. 28% loss since April 2018. I had hoped that this ETF would give good coverage across banks and insurance companies. It does and that has led it to lag as banks have dragged down while insurance has performed quite well. I remain exposed to financials directly via specific stocks and one London based banks ETF.
iShares MSCI Frontier 100 ETF (FM). Frontier Markets Index. 6.5% loss since June 2019. Initial investment idea was that these markets are somewhat uncorrelated to US markets. They are - hence lagging the US. My sense is they have a higher exposure to cororna virus as their health systems are not well placed to cope with a major outbreak.
Agricultural Commodities (SOYB and WEAT). With margin pressure in IG Markets account, I chose to close contracts in Wheat ($14.40 per contract loss (-2.67%)) and Soybeans ($10.70 per contract loss (-1.19%)). It is clear that market thinks demand from China will be severely curtailed (though people still need to eat).
Shorts
Thursday Trades
Invesco QQQ Trust (QQQ): Nasdaq Index. I have been looking at converting the bear put spreads into ratio put spreads. With the market in free fall this did not feel quite right. There might be more to come. At the time of setting up trades before Thursday close, price was $210. I decided to add a ratio put spread at 5% and 10% down and leave the existing bear put spread in place. I bought a March 2020 200/190 bear put ratio spread for a net premium of negative -$0.19 - i.e., I got paid. Risk in the trade is if price drops another 8.2% from the $205.64 close, I will have to buy the stock here.
Vanguard FTSE Europe Index Fund ETF (VGK): Europe Index. I did the same in Europe adding a March 2020 50/47 bear put ratio spread for a net premium of $0.05 (i.e., I paid $15). Risk in the trade is if price drops another 12% from the $52.65 close, I will have to buy the stock here.
In another portfolio, I set up the same trade. Then I come to look at broker reports and find that I had a pending order to sell a strike 50 put option to convert the prior structure to a ratio put spread. Trades 6 hours apart look a bit messy to fix and now have a loss the price of a dinner for two.
Friday Trades
In Friday trade just before market close, I closed out bear put spreads on QQQ and SPY for profits in excess of 450% since February 4 (February 21 in one portfolio and 836% on SPY puts). I did get the market call right to be short. I was also right in not putting in place the ratio spreads straight away and in fact had only done in two portfolios during the week.
I watched a few Real Vision interviews this morning which suggested the market has reached some momentum support levels, which will open the floodgates lower if they are breached. An important fact was the publication of China PMI data at 37.5 - well below prior levels. This will drag global PMI's down below 46 (my guess is closer to 45). This is a very weak signal - there is a correlation between US 10 year yield and Global PMI = the lower the PMI the lower the yield. 3 trade avenues are open - keep the index puts open ended, go long gold and silver and be long US 10 year bonds.
Expiring Options
Two naked puts expiring on FireEye (FEYE) and Uber Technologies (UBER). FEYE was assigned at $15 and UBER expired in my favour
Income Trades
61 covered calls written in the week for average premium of 1.71% at 9.49% coverage bringing monthly average to 1.65% at 9.68%
Naked put strategy is looking risky with the big correction. There will be some losses coming - not in panic mode just yet.
Cryptocurency
Bitcoin (BTCUSD): Price range for the week was $1606 (16% of the high). Price tested above resistance at $9954 on first day of the week and then crumbled through $8891 level to find buyers just above support at $8400. This last cycle up and back down has Bitcoin now positively correlated with S&P500 - i.e, they both are moving in the same direction.
2 contracts closed for average per contract profit of $133.23 (1.43%)
Ethereum (ETHUSD): Price range for the week was $68 (24.5% of the high). Price started the week with a bearish engulfing bar and tested then down to support at $222 - there are buyers lurking there as price has been trading that level for 5 days now
2 contracts closed for average per contract profit of $8.88 (3.45%)
Ripple (XRPUSD): Price range for the week was $0.06286 (22% of the high). Similar shape to ETH with a bearish engulfing bar and a drop through support at $024754 to find buyers around $0.23 level - that is where I was last buying (today)
CryptoBots
Profit Trailer Bot No closed trades - VPS still shut down.
New Trading Bot Trading out using Crypto Prophecy. No closed trades
Currency Trades
Outsourced MAM account Actions to Wealth closed out 9 trades on AUDNZD for 0.09% profits for the week. No trades open. Broke the losing streak at the end of the week.
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
February 24-28, 2020
