Markets I Trade: April 30, 2019

I'm testing a concept where I am including momentum factors in my weekly updates. The momentum factor number is based on a multi-model trend system I developed which can be applied effectively to a range of markets. Most equities will be on a scale of 0 to +10. Certain markets like volatility and currency pairs will be on a scale of -10 to +10.

I will also be shifting my position size in response to the momentum factor. If the factor increases, my position will increase; if the factor decreases, my position will shrink.

Feel free to ask questions or leave comments.

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 methods 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, April 26, 2019.

IWM: LEAPS Options

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Momentum Factor: +9

I purchased IWM $160 call options on January 15, 2019 when IWM was trading at approximately $143 per unit. IWM is still floating sideways in the $154 - $158 range. I'm patiently waiting for a breakout to see which direction this trade will take.

EEM: LEAPS Options

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Momentum Factor: +9

I purchased EEM $45 call options on January 15, 2019 when EEM was trading at approximately $40.50 per unit. EEM has slipped a little this past week, but I am calling it a healthy pullback at this point. Signs of an uptrend are still very much intact.

KWEB: LEAPS Options

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Momentum Factor: +9

I purchased KWEB $50 call options on February 20, 2019 when KWEB was trading at approximately $45.10 per unit. As with EEM, KWEB is in a slight pullback and has been pretty much sideways since the beginning of the month. However, the longer term uptrend is very much intact at this point and that is reflected in my strong momentum factor.

VXXB: Options

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Momentum Factor: -10

On March 11, I purchased in-the-money VXXB $50 put options when VXXB was trading at approximately $31.25 per unit. As the price of the option came to match the unit price, I cycled the trade with a new position of similar size purchasing in-the-money VXXB $30 put options on April 29. The price continues to move lower and my trade is showing a good profit.

EFA: LEAPS Options

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Momentum Factor: +9

I purchased EFA $60 call options on April 9, 2019 when EFA was trading at approximately $66 per unit. The price came down a small amount this past week, making the return nearly flat on my trade. However, EFA is still showing strong momentum on the upside at this point.

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