Markets I Trade: March 19, 2019

In my non-registered account, I am developing my trend following strategy continuously. I don’t pretend to have all the answers. I am sharing this ongoing learning journey with you in this series.

I am always exploring new ways of trading, new markets to access, and better control of risk and opportunities. My main goal is to avoid large losses while achieving reasonable returns over time. I try to focus on trades which I believe have good reward-to-risk ratios.

You will see me trade index products, currencies, and commodities primarily with futures contracts and LEAPS options for maximum capital efficiency. I try risk small amounts of capital with each trade targeting high return multiples on that risk.

One thing that is easy to notice is most weeks have no action and trading is quite boring. The equity based positions move in relative tandem. Volatility positions are the only place where exciting things seem to happen more frequently.

*Information on this post is dated at market close, Friday, March 15, 2019.

IWM: LEAPS Options

Source: StockCharts.com

I purchased IWM $160 call options on January 15, 2019 when IWM was trading at approximately $143 per unit. IWM is again moving higher over the past week, but has not hit new highs in my holding period. I am looking for the price to push past the recent high of $159 before I raise my stop.

EEM: LEAPS Options

Source: StockCharts.com

I purchased EEM $45 call options on January 15, 2019 when EEM was trading at approximately $40.50 per unit. EEM has moved up in price since my purchase and my stop is set at at $40.10. Since the lower low on March 8 I'm watching this position carefully. It is moving up again so I'm looking for a new higher high to relax my attention.

EWZ: LEAPS Options

Source: StockCharts.com

I purchased EWZ $50 call options on January 25, 2019 when EWZ was trading at approximately $44 per unit. My stop level is at about $40 and EWZ is in long-term overbought territory. Using long-term metrics, positions can be overbought for much of an uptrend. It can be a sign of optimism rather than extreme optimism.

KWEB: LEAPS Options

Source: StockCharts.com

I purchased KWEB $50 call options on February 20, 2019 when KWEB was trading at approximately $45.10 per unit. My current stop is set at $42.20. So far, KWEB has made higher highs and higher lows in a steady pattern since late December 2018.

DXJ: LEAPS Options

Source: StockCharts.com

I purchased DXJ $55 call options on February 22, 2019 when DXJ was trading a little under $51 per unit. I'm holding my stop at $47.60 per unit until we see a push over the $51.50 level.

VXXB: Options

Source: StockCharts.com

On March 11, I purchased in-the-money VXXB $50 put options when VXXB was trading at approximately $31.25 per unit. This trade is currently in profit.

Comments & Questions

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Markets I Trade: March 12, 2019

In my non-registered account, I am developing my trend following strategy continuously. I don’t pretend to have all the answers. I am sharing this ongoing learning journey with you in this series.

I am always exploring new ways of trading, new markets to access, and better control of risk and opportunities. My main goal is to avoid large losses while achieving reasonable returns over time. I try to focus on trades which I believe have good reward-to-risk ratios.

You will see me trade index products, currencies, and commodities primarily with futures contracts and LEAPS options for maximum capital efficiency. I try risk small amounts of capital with each trade targeting high return multiples on that risk.

IWM: LEAPS Options

Source: StockCharts.com

I purchased IWM $160 call options on January 15, 2019 when IWM was trading at approximately $143 per unit. With the recent advance of U.S. Small Cap stocks, my stop has moved past purchase price.

We have seen a pullback in IWM over the past two weeks. This is in line with an overbought reading we saw at the end of February. The reversal appears it may have hit a bottom, so now I am looking for the price to push past the recent high of $159.

EEM: LEAPS Options

Source: StockCharts.com

I purchased EEM $45 call options on January 15, 2019 when EEM was trading at approximately $40.50 per unit. EEM has moved up in price since my purchase and my stop is set at about $40.

EEM had a pullback at the beginning of the month. Looking at the chart, there was a first lower low made on March 8. Although it hasn't hit my stop, I am cautious on this position right now. I should point out that I am quite heavily exposed to emerging markets in general with my positions on EWZ and KWEB.

EWZ: LEAPS Options

Source: StockCharts.com

I purchased EWZ $50 call options on January 25, 2019 when EWZ was trading at approximately $44 per unit. My stop level at a little under $40.

EWZ just about hit my stop level last week. However, I am still quite optimistic about EWZ. This is one of the few positions that I would consider to be in a long-term uptrend. Pullbacks are always expected and healthy, even in uptrends.

GLD: LEAPS Options

I purchased GLD $125 call options on November 19, 2018 when GLD was trading at approximately $115.65 per unit. This has been a very profitable trade for me; my stop is set a little under $122 per unit right now.

The price of GLD fell below my stop level so I sold my call options for a small profit on March 4, 2019.

VXZB: Options

I purchased VXZB $20 put options on January 16, 2019 when EWZ was trading at approximately $20.40 per unit. This is a volatility short trade that I made following the volatility spike we saw in December. So far the trade has nicely moved into profit.

I sold the VXZB options for a small profit on March 7, 2019 when volatility jumped and took an opposing position (more on that below).

KWEB: LEAPS Options

Source: StockCharts.com

I purchased KWEB $50 call options on February 20, 2019 when KWEB was trading at approximately $45.10 per unit. Since my purchase, the price of KWEB moved over $48. My trade is in profit with a current stop set at $42.20.

So far, KWEB has made higher highs and higher lows in a steady pattern since late December 2018. That's always a promising sign and could be indicative of a developing long-term uptrend.

DXJ: LEAPS Options

Source: StockCharts.com

I purchased DXJ $55 call options on February 22, 2019 when DXJ was trading a little under $51 per unit. I'm holding my stop at $47.60 per unit until we see a push over the $51.50 level.

VXXB: Options

Source: StockCharts.com

I purchased in-the-money VXXB $25 call options on March 7, 2019 when VXXB was trading at approximately $32.95 per unit. This is a hedging position betting on volatility increasing in stock markets. After my signal changed on March 11, I exited the position for a small loss.

On March 11, I purchased in-the-money VXXB $50 put options when VXXB was trading at approximately $31.25 per unit.

VXXB provides exposure to increased near-term volatility on the VIX Index.

Silver: Futures Contracts

I purchased Silver futures contracts on December 20, 2018 at approximately $14.83 per ounce. Silver has moved up in price since my purchase and my stop is set at $15.10 per ounce.

Silver fell below the stop price on March 3, 2019 and my position was closed for a profit.

Brazilian Real: Futures Contracts

I purchased Brazilian real futures contracts on January 3, 2019 at approximately US$0.267 per real. As the futures contract came to expiry at the end of February, I exited my position for a very tiny gain.

Since the real has been range-bound since my purchase, I decided not to rollover my position to the next futures contract. Instead, I will re-evaluate my neutral position if the real makes new highs over the $0.275 level.

South African Rand: Futures Contracts

I purchased South African rand futures contracts on January 25, 2019 at approximately US$0.0731 per rand. The rand has weakened a bit against the dollar since my purchase. I have my stop set at US$0.0692 per rand.

The rand fell below my stop price on March 7, 2019 so I exited my position for a small loss.

Summary

As you can see, I have made a few trades since my last market post. For a clearer picture as of March 11, 2019 I hold the following positions in this portfolio:

  • IWM $160 Call Options
  • EEM $45 Call Options
  • EWZ $50 Call Options
  • KWEB $50 Call Options
  • DXJ $55 Call Options
  • VXXB $50 Put Options
  • BSV (for my USD cash holdings)

Comments & Questions

All comments are moderated before being posted for public viewing. Please don't send in multiple comments if yours doesn't appear right away. It can take up to 24 hours before comments are posted.

Comments containing links or "trolling" will not be posted. Comments with profane language or those which reveal personal information will be edited by moderator.