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
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
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
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.
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
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
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.
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.
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)
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