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.
Currently a number of my positions have a flattening trend forming. Depending on the moves in the market this next week, I may be exiting some positions and reducing market exposure.
*Information on this post is dated during market hours, Monday, March 25, 2019.
IWM: LEAPS Options
I purchased IWM $160 call options on January 15, 2019 when IWM was trading at approximately $143 per unit. IWM lurched lower towards the end of the past week. It still has not hit new highs in my holding period, so no change to my stop level.
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 at the beginning of this week and made new highs within my holding period. It fell sharply Friday and ended the week lower than last. My stop is now set at $40.75, a slight bump up which should lock my trade into profit barring a large gap down.
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 is at about $40 and EWZ is now hovering right above the stop.
The price fell sharply and volatility jumped this past week on news of arrests and corruption probes by the new government. While still in a long-term uptrend, things could change in a hurry with weekly moves of this magnitude. My trade is now in a loss position.
KWEB: LEAPS Options
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.
KWEB had made higher highs and higher lows in a steady pattern since late December 2018; however, this changed as KWEB failed to make a new high on the recent upside move. The price is still above my stop, so we'll see what happens over these next few weeks.
DXJ: LEAPS Options (Closed)
I purchased DXJ $55 call options on February 22, 2019 when DXJ was trading a little under $51 per unit. My stop level was set at $47.60 per unit. Before the stop was hit, this position entered signs of a downtrend so I exited my position before the maximum loss level. I lost a little less than 50 percent of my maximum loss on the trade.
On March 11, I purchased in-the-money VXXB $50 put options when VXXB was trading at approximately $31.25 per unit. With the volatility jump this past Friday my trade went into a small loss. We also got very close to a signal change and will see what this next week brings.
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