Market feels like eggshells as it decides whether to be happy or down. Cybersecurity looks like a hot topic again. More tidying up for short term option expiries as time seeps away after the selloff. Bitcoin has a quiet day.
Portfolio News
Short Squeeze US markets continued their recovery for a second day. A few panic merchants got squeezed with one hedge fund reporting some very big loss numbers - 5.4% in fact. The squeeze goes a bit wider than that. The key factor that stuck in my head as we progress through earnings season - 60% of stocks reporting have made revenue beats. This economy seems pretty solid at this stage of the recovery.
Japanese Yen The Yen made a surprise move stronger in one big transaction during the day. The pattern of strengthening has been running for a while while the US Dollar falls out of favour. The big move cannot be fully explained by safe haven flows as the US markets were up. There is a seasonal effect as Japanese corporations repatriate funds ahead of their year ends. The levels being tested are key as these are the 2017 lows. Break those and price is heading to 100. My short Yen position is looking sad and I am concerned for a portfolio of Japan stocks dependent on solid export numbers.
Japan GDP numbers have just been released - while the economy is growing the result was below estimates. This might reverse the flows into the yen.
Bought
Leucadia National Corporation (LUK): Investment Management. Rolled this short term options trade one more month to March with no change in strike price (26). With markets recovering from the selloff there is a chance that one more month will turn this into a winner. The strategy calls for closing out these short term trades at 50% loss. The sharp selloff took this below the 50% level in one session. Books a 94% loss in the process. I was prepared to make this change as I am already holding March expiry options for Leucadia with a 27 strike. The chart shows the two call options (pink ray is the newly extended one).
Price has pulled back sharply in the selloff. I will need price to recover like it did from 2017 lows to bring this home though I doubt the trade will recover the premium lost in the rollup. New breakeven is $27.57 which is above the blue ray.
Sold
Barclays plc (BARC.L): UK Bank. Short term options trade hits its 50% stop loss level for a 45% loss since December 2017. I have experimented with short term options trading in the past - one becomes a hostage to any sudden corrections before expiry as there is not enough time to recover.
Ditech Holding Corp (DHCP): Mortgage Servicing. Walter Investment Management entered bankruptcy in November 2017 to effect a restructuring of its balance sheet. Business was restructured through a merger with a new entity and a stock swap and issue of stock warrants. Sold partial shares received in the transaction. This restructuring effectively wipes out 90% of the capital of existing shareholders in favour of the new shareholders. Details of the warrants are hard to find other than the fact they are 10 year warrants.
Income Trades
FireEye (FEYE): Cybersecurity. Bought back strike 16 call options expiring this week for 44% profit. I have been watching the price rise strongly since the selloff without a rise in implied volatility. News flow has been about a spike in cybersecurity threats. Decided to hold onto the stock and was able to buy back without giving away all the sold premium.
Cryptocurency
Bitcoin (BTCUSD): Price range for the day was $591 (6.1% of the high) and is the lowest price fluctuation we have seen for a while. I wrote yesterday
What is really clear is that each cycle makes 4 or 5 higher highs before turning over. I will be watching this closely and if I get a lower low I will close one contract and wait for the pullback
I was not wrong. Not long after making the post price made a lower low on the one hour chart and I closed out one contract for $79 profit (0.9%). While the profit was small the protection was from a $525 drop. The chart tells the story - 4 higher highs in the channel and then a break below.
I did make one new trade at the lows of $8530 and closed that out for a $215 per contract profit (2.5%). It is hard to tell what price wants to do next. The 4 hour chart is encouraging as we are getting a succession of higher lows though the last high was not a higher high. I have only 2 contracts outstanding on Bitmex - I will hold that for a while until I see clear direction.
CryptoBots CryptoBots did not close any trades. Problem children (worse than 5% down) are fewer - DASH, EOS, GAS (ugly), NEO.
I have been wrestling with setting up my own trading bot. The tools are easy enough - the challenge is in having different bots running in and out of one account and also working out how to stop the bot meddling with buy and hold positions. Problem solved by opening a new Binance account (will be verified separately) and funding with Ethereum though trading will be in BTC pairs. The whole process of opening an account, funding and buying BNB and BTC was done inside 30 minutes (not verified yet as that only needs to happen for withdrawals).
Ethereum Sold Ethereum to buy Bitcoin and Binance Coin (BNB). BNB will be used to fund trades and to get the trading discount Binance offer. Open your account at Binance here http://mymark.mx/Binance
Currency Trades
Forex Robot did not close any trades and is trading at a negative equity level of 9.03% (higher than prior day's 8.3%).
Outsourced MAM account I run an outsourced forex trading account with Actions to Wealth. They closed out 4 trades for 1.8% losses for the day. It looks like they got caught both sides of a flip flop trade - 2 buys lose and 2 sells lose
Cautions: This is not financial advice. You need to consider your own financial position and take your own advice before you follow any of my ideas
Images: I own the rights to use and edit the Buy Sell image. News headlines come from Bloomberg.com and Google Search. All other images are created using my various trading and charting platforms. They are all my own work
Tickers: I monitor my portfolios using Yahoo Finance. The ticker symbols used are Yahoo Finance tickers
Charts: http://mymark.mx/TradingView - this is a free charting package. I have a Pro subscription to get access to real time forex prices
Crypto Trading: get 6 months free trades with Bitmex for leveraged crypto trading. http://mymark.mx/Bitmex
Bitcoin: Get started with Bitcoin for as little as €50 (in Bitcoin) and earn Bitcoin at a rate way better than your bank will offer - think weeks instead of months. http://mymark.mx/Mark
February 13, 2018
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