TIB: Today I Bought (and Sold) - An Investors Journal #346 - Swiss Banks, US Banks, Cybersecurity, Oil Shipping, Europe Payments, Euro

in #investing5 years ago

Rally moves into 4th and 5th day as rate and China fears reduce. Improving rate profile suggests a review of Swiss banks. Looming options expiry and time to preserve capital and book some profits.

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Portfolio News

Market Rally

US market rally goes into its 4th day and now 5th day

Jan9US.JPG

Two concerns are going away with Federal Reserve meeting minutes showing a bit more caution than the meeting statement and positive vibes coming from China trade discussions.

Even European markets shrugged off the nervousness and stepped up.

Jan9Europe.JPG

European interest rates have risen 10 basis points in the last 5 days and are back to zero percent for December 2020 - hard to believe - zero and two years to go.

Jan9Euribor.JPG

Bought

Credit Suissee Group (CSGN.SW): Swiss Bank. With markets bouncing off the selloff lows I deployed some spare Swiss Francs into a small stock holding and a new options contract. My brain must have been fried as I bought 1 share and 1 contract - should have bought 100 shares. Trading cost was almost as high as the trade cost for the 1 share. I must say I hate high European trading costs - a trade cost of SFr10 ($10.26) hurts compared to one of $1 in US markets. Topped up the 1 share overnight to get to 100 shares and forked out another SFr10 in trading costs but I did get a lower entry

Bought December 2021 strike 21 call options for premium of SFr1.40 (11.7% of strike). I will look to convert that to a spread in trade tonight - example: sell 18 strike for SFr0.24 would bring premium below 10% of strike. I succeeded in selling the 18 strike premium at last trade giving a net premium for the trade of SFR1.16 offering maximum profit potential of 417% if price reaches 18 before expiry in just under 3 years. I have another bid outstanding for the 12/18 spread at that premium.

Let's look at the chart which shows the bought call (12), breakeven, and 100%, 200% and 300% profit as blue rays and the sold call (18) as a red ray with the expiry date the dotted green line on the right margin.

Jan9CSGN.JPG

First thing to note is that price has bounced off the lows but one cannot say it is a confirmed reversal until we see a higher low made (i.e., price pulls back and reverses at a low higher than the last one). What I like about the setup is the 2018 low is higher than the 2016 one. The target maximum profit line is below the 2018 high. If we get a repeat of the run from the 2016 low (left hand pink arrow) this trade will comfortably reach maximum profit. What we do need to see though is European interest rates move off negative rates.

Sold

Earthport plc (EPO.L): Europe Payments. Visa made a bid for Eartheport late in 2018. Rather than wait for the deal to complete I sold my small parcel for 33% blended profit on trades made in August 2017 (6%) and averaged down in July 2018 (180%). This time averaging down worked very well. Trade costs £6 ($7.67)

Expiring Options

Options expiry is coming up on January 18. Time to close out and recover some premium on out-the-money options or close out in-the-money options I do not want exercised.

Frontline Ltd (FRO): Oil Shipper. Closed strike 7 call option for 95% loss since March 2017. With closing price $6.24 this is frustrating call. Price was over $7 in October and November but only high enough to pass breakeven on one day ($8.12).

Zions Bancorporation (ZION): US Regional Bank. Closed strike 40 call option for 29% loss since April 2017. With closing price $43.55 this might have been an impatient exit. Price dropped below the 40 strike in the selloff (low of $39.06) and was showing signs of recovery. This trade was bought as part of 40/60 bull call spread. I will let the sold call run to expiry as I am confident price will not reach $60. 52 week high was $59.19 on May 18, 2018. I have mixed feelings about US regional banks with the potential of fewer rate hikes looming and did not want to take delivery of the stock.

FireEye, Inc (FEYE): US Cybersecurity. Closed strike 15 call option for 8% profit since May 2017. With closing price $16.79 this might also have been an impatient exit. Price dropped close to the 15 strike in the selloff (low of $15.43) and was showing signs of recovery. This trade was bought as part of 15/22 bull call spread. I will let the sold call run to expiry as I am confident price will not reach $22. 52 week high was $20.61 on November 5, 2018. I am confident about the future of FireEye but did not want to add to my holdings.

Cryptocurency

Bitcoin (BTCUSD): Price range for the two days was $557 (13.7% of the high). Last time I wrote

This type of (engulfing) bar often signals a reversal. This is possible as price is at the top of a range and could choose to retrace. To my eye this really looks like an indecision bar - hard to tell which way it could go.

Jan10BTC.JPG

Well I was right on that score - price spent one day undecided around the $4000 level and then collapsed all the way to the bottom of the range holding above $3500 also making a lower low. .

Ethereum (ETHUSD): Price range for the two days was $31 (20% of the high). Last time I wrote

Price needs to hold above the prior day low of $146 to position for a go at passing $160. If not, do not be surprised to see a drift all the way back to support at $132.

Jan10ETH.JPG

Well price did hold above $146 for day one but could not hold the level when Bitcoin fell and it headed all the way down to support bottoming at $122 which is below the prior support - next level of support is the reversal on $112 made in the last cycle up.

CryptoBots

Outsourced Bot No closed trades. (222 closed trades). Problem children remains at 19 coins. (>10% down) - DASH (-73%), ETH (-66%), ZEC (-72%), AE (-44%), LTC (-45%), BTS (-68%), ICX (-86%), ADA (-70%), PPT (-86%), DGD (-85%), GAS (-88%), SNT (-61%), STRAT (-71%), NEO (-84%), ETC (-67%), QTUM (-77%), BTG (-72%), XMR (-55%), OMG (-78%).

Coins moved in a wide band, mostly down with some notable risers. LTC rose by 6, SNT by 4 and STRAT, XMR dropped 4. GAS (-88%) remains the worst coin. LTC (-45%) went up a level and STRAT (-71%) dropped a level.

Profit Trailer Bot Three closed trades (1.46% profit) bringing the position on the account to 5.29% profit (was 5.24%) (not accounting for open trades).

Jan10PTWins.JPG

Dollar Cost Average (DCA) list remains at 5 coins with all coins improving or flat. It looks like a quality altcoins move is happening as Ethereum/Bitcoin falls.

Jan10DCA.JPG

Pending list remains at 10 coins with 8 coins improving, and 2 coins trading flat

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PT Defender continues defending 9 coins. No change

New Trading Bot Trading out using Crypto Prophecy. Part DCA close on FUEL for 1.89% profit. Trades remain open on FUEL, SC, VET, XLM

Currency Trades

Australian Dollar (EURAUD): Talking heads were talking about the impact the improving China trade scenario could have on the Australian Dollar - i.e, strengthen it. Trade idea was to buy short term protection for the rise using puts on the Euro against the AUD. The majority of my pension assets are held outside Australian Dollars but I need to pay pensions in AUD. I looked at calls on AUDUSD and puts on EURAUD and calculated that 100% profit would require a 3.9% fall in US Dollar and only a 2.9% fall in Euro. So I chose the EURAUD and bought April 12, 2019 1.61 strike puts to cover two thirds of a year's pension payments.

Let's look at the chart which shows the bought put (1.61), breakeven and 100% profit as red rays with the expiry date the dotted green line on the right margin.

Jan9EURAUD.JPG

In 2018 we have seen two major price falls for the Euro (modelled from the left hand red arrow) which are about the same size. Get a repeat of that and this trade will comfortably make 100%. I have modelled the price scenario below the spike as that is distorted by the forex flash crash from last week.

Outsourced MAM account Actions to Wealth closed out 1 trade for 0.03% profits for the day.

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

Crypto Prophecy provides a useful tool to identify oversold and overbought coins - https://mymark.mx/CryptoProphecy

January 9-10, 2019

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interesting program sir.
excellent work sir @carrinm

I haven’t heard of a gold update from you in a while. Any thoughts as it has seemingly put some bottoming action late last year?

Posted using Partiko iOS

Gold trades put in place as hedging trades. While there is hedging to be done, I do not look at the price. It can be depressing but that is what hedges are for.

Now when the tide turns, I will look at it as a trading avenue - now is not the time.

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