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 to 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 my exposure to stocks in the trading account is around 7.5 percent. Most of my cash is in BSV.
*Information on this post is dated at market close, Friday, May 24, 2019.
IWM: LEAPS Options
Momentum Factor: +3
I purchased IWM $160 call options on January 15, 2019 when IWM was trading at approximately $143 per unit. The momentum factor stays at +3, despite a further 1.35 percent decline over the past week. My position is a little under 1/2 size right now.
EFA: LEAPS Options
Momentum Factor: +5
I purchased EFA $60 call options on April 9, 2019 when EFA was trading at approximately $66 per unit. EFA remained effectively unchanged finishing the past week, but momentum is continuing to drop. I have adjusted my exposure to a half position.
Momentum Factor: -7
On May 7, I purchased a call ratio backspread for a small account credit when VXX was trading at approximately $29 per unit. This is a hedged position. VXX is still hovering on that line of upside/downside shorter-term momentum with swings happening daily.
QQQ: LEAPS Options
Momentum Factor: +8
I opened a less-than-full position in QQQ last week with a purchase of $160 call options when QQQ was at $184 per unit. Momentum is slipping, especially with the price drops towards the end of last week.
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