TIB: Today I Bought (and Sold) - An Investors Journal #141 - Oil Producers, German Banks, French Insurance, US Technology

Markets make a big rebound and interest rates are under pressure again. Trades are a mixed bag of old themes and new themes. Bitcoin makes a new high. Panic over.

Bought

Commerzbank AG (CBK.DE): German Bank. Addedd Dec 2021 strike 14 call options to a few portfolios - adding out-the-money options to replace the in-the-money options sold the day before. I must say that the call premium feels a bit high at 16.5% but there are still 4 years and one month to run to expiry. All will be fine. Let's look at the charts which shows the bought call (14), breakeven, and 100% profit as blue rays with the expiry date the dotted green line on the right margin.

Price has been marching up steadily from the late 2016 lows. It needs to get more than halfway to the post-European debt crisis highs to make 100% (the upper dotted green line). Of course, if it makes halfway to the level of the Eurostoxx 50 (orange line), this trade will be well over 500%. I am not sure Mr Mario Draghi of the European Central Bank has it in his mind to relax interest rates that much in the next 4 years.

Goldman Sachs Hedge Industry VIP ETF (GVIP): US Technology+. I wrote about this in TIB140. I added this to the portfolio in which I had sold the Technology ETF (XLK) - it will diversify the technology elements represented by XLK

SPDR S&P Oil & Gas Exploration & Production ETF (XOP): US Oil E&P. Added a Jan 2020 35/50 bull call spread in one portfolio to replicate what I have done in other portfolios. Read about that in TIB139.

Emeco Holdings (EHL.AX): Australian Mining Services. Bought additional shares as part of a rights issue. I did consider not taking up the rights but a 15% discount is a 15% discount. If price goes back half way to 2013 highs, this will be a 350% additional profit to add to the 195% achieved so far since Feb 2017.

Sold

Axa SA (CS.PA): French Insurance. Sold Dec 2017 strike 22 call option for 55% profit since Feb 2015. Trade is getting close to expiry - shows the value of long dated options. I will explore adding options further out in time. Closing price was €25.10

Technology Select Sector ETF (XLK): US Technology. Sold next two rungs in staircase of options as price has passed through three rungs above. Jan 19 strike 60 for 105% profit since Jun 2017 and strike 61 for 126% profit also since Jun 2017. Some of proceeds were applied to roll up to Jan 2020 65/75 bull call spread (as reported in TIB140 yesterday)

Technology stocks have been a strong driver of US stock markets in 2017. Analysts are calling for more in 2018 based on strong earnings.

I started buying this technology ETF in October 2016 when I sold a slice of my holdings in Apple (AAPL). I invested half of what I got from Apple in Jan 2018 strike 48 call options and have been rolling up every time price has cleared the strike price. Let the numbers do the talking - for $2600 invested I have generated $5200 in profits - feels like 200% to me in just over 12 months.

Nice work!! The journey is not yet over.

Shorts

Direxion 20 Year Treasuries Bear ETF (TMV): US Treasuries. Investing on interest rate moves has been a challenging process these last 5 years. One of the early ideas was to invest in an ETF that tries to deliver 3 times the movement up in Treasury yields. This is really a short term vehicle - I am having another go. This has been something of a widow maker trade for me - but I keep climbing back on the horse.

The challenges are captured in the latest Bloomberg headlines - some say up and some say down depending on the day of the week.

https://www.bloomberg.com/markets/rates-bonds

For charts, I am going to put up an (updated) chart I shared a while ago when I bought May 2018 strike 18 call options.

Since then price has traded in a range between the strike price and the breakeven (2nd blue line up). Still waiting for the breakout. If it starts now there will still be time before expiry to produce a winner - timing will hinge on the December Federal Reserve meeting. 3 Month Eurodollar Futures markets are telling us that short term rates are rising (price falling means rates are rising). Big question is when is this going to play into longer term rates?

Income Trades

Advanced Micro Devices (AMD): US Semiconductors. Sold December 2017 strike 12 calls for 2.84% premium (2.87% to purchase price). Closing price $11.25 (lower than last trade). Price needs to move another 6.7% to reach the sold strike (easier than last trade). Should price pass the sold strike I book a 7.5% capital gain. Cumulative income to date is 20.1%

Cryptocurency

Bitcoin (BTCUSD): Bitcoin makes a new high - PANIC over. My hedge trade on Bitcoin Cash looks pretty sad especially as my broker has just doubled the margin requirement as of November 18.

I will be running a PANIC OVER webinar soon - add a reply to show your interest.

Currency Trades

Forex Robot did not close trades and is trading at a negative equity level of 5.2% (higher than prior day (5.1%).

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 Google Search. Bonds headlines come from Bloomberg.com. 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

Bitcoin: If you want a low cost way to enter Bitcoin, you can buy a package for as low as €50 (in Bitcoin) and earn Bitcoin at a rate way better than your bank could offer - think weeks instead of months. http://mymark.mx/USIBitcoin

November 16, 2017