TIB: Today I Bought (and Sold) - An Investors Journal #189 - Europe Banks, German Insurance, German Chemicals, Covered Calls, Bitcoin
Japan surprised world markets on Friday. Maybe markets are waking up to the sleeping giant. Bitcoin traded off its lows and gave me solid winners. The global selloff last week did claim some victims in German chemicals and insurance. Income trades worked well this month - the selloff did help there.
Portfolio News
Japan Japanese market made a strong recovery from the selloff against the tide of a surging Yen - it was a nice surprise in my portfolios when I had a look after a few days away from the terminals. Trade results show strong export growth - the clue lies in the way other currencies have flowed against the Yen. US Dollar has weakened much more than other currencies making the export hit less critical with its main trading partners other than US (China, South Korea, Taiwan, Hong Kong, Thailand)
http://www.worldstopexports.com/japans-top-import-partners/ for data on trade partners.
Bought
UBS Group (UGSg.VX): Swiss Bank. Finger trouble had me buying a March 2018 strike 18.8 call option. I meant to sell this as a covered call. Trading costs are 21% of total trade size = ugly. Choices now are to sell a call higher up the options chain or wait and ride this out and try to close out if price rises enough.
Shorts
Japanese Government 10 Year Bonds (JGB): The Bank of Japan committed to keep the yield on the 10 year at zero. For a while they were failing - i.e., whenever this next chart was falling. February has seen a 60 point rise in the price of JGB's. Instinct was telling me that the BoJ cannot hold back the tide forever and price will crack again. I added to my short position - price action for the day shows a seller bar - maybe I have timed the reversal?
If I look at a chart for Eurodollar Futures it certainly looks like the trend for rising interest rates is quite clear with price testing the lows again. [Note: this is a bond price chart - price rises when yields fall]. I have tightened my trailing stop loss above the reversal bar at 9722 (the right hand green bar).
Euribor rates are consolidating in a range above the lows. I now have placed trailing stop losses at 9942 on all my trades which is better than breakeven. We could see a jump up in price if there are any more market surprises and I will be taken out of the trade.
Expiring Options
BASF AG (BAS.DE): German Chemicals. Selloff gets its next victim with 96 strike call option rolled up in December failing to make 96 strike. This is disappointing as price did break above the strike price (shown with the blue ray) and then collapsed more than half way to 2017 lows
BASF is a strong exporter - the stronger Euro would impact results though the Euro broke upwards well before BASF collapsed.
Münchener Rückversicherungs (MUV2.DE): German Insurer. Lesson learned - if the rollup trade is a trade you would not make, sell the position and take the loss on the nose. This call option was rolled out in time in December 2017. I chose to wait this one out in this account and sold it in another account. Gave away €45 in the process. Ouch!!
Income Trades
All income trades for the month closed out profitably. I reported last week that I did buy one back as price had passed the sold strike and I wanted to keep the stock (FireEye (FEYE)). I did some of the next month Europe trades overnight - US trades will be done when markets open after Presidents Day holiday. These trades are comfortably delivering $500 per month in income.
Commerzbank AG (CBK.DE): German Bank. Sold March 2018 strike 13.5 calls for 1.24% premium (2.25% to purchase price). Closing price €12.95 (lower than last month). Price needs to move another 4.2% to reach the sold strike (tighter than last month). Should price pass the sold strike I book a 90% capital gain. Income to date amounts to 19.5% of purchase cost.
Deutsche Bank AG (DBK.DE): German Bank. Sold March 2018 strike 13.8 calls for 1.37% premium (1.55% to purchase price). Closing price €13.11 (lower than last month). Price needs to move another 5.3% to reach the sold strike (easier than last month). Should price pass the sold strike I book a 19% capital gain. Income to date amounts to 15.1% of purchase cost.
Cryptocurency
Bitcoin (BTCUSD): Bitcoin price has moved from a low of $8504 on Valentines Day to a high of $11,262 on February 19 - a move of 32% from the lows in 5 days. Early trade on 19th shows an important transition. Price had pulled back to make a lower low and then went higher only to drop back to a lower low and a lower high (in the blue circle). Price chose not to make another lower low and broke higher - HALLELUJAH!!
In my Bitmex account both open trades hit profits targets for an average $179 per contract profit (2.01%). I did not place any new trades over the weekend.
Closed one trade in my IG Markets account for a $1345 per contract profit (14.45%). I have 3 positions open in this account - plan is to close each trade at the entry level of the trade above in the price staircase and then leave the last trade to run.
Bitcoin Futures (XBTG8): February futures cash settled at expiry for a 48% loss since December 2017. Investing in Bitcoin via futures was an experiment in a new market. Two things happened to turn this into a bad idea.
- The price collapsed.
- The spread between out in time contracts and spot price closed quite dramatically. The initial pricing had spreads that were wider than normal for a futures market.
CryptoBots CrypoBot closed 3 trades adding a little over 0.5% to closed trade profits. With the strong run up in the Bitcoin price, the problem child list is looking ugly with all coins still running worse than 10% down. - ZEC (-21%), DASH (-13.9%), ETH (-19.4%), ENG (-19.2%), EOS (-23.7%), GAS (-12.6%), NEO (-11.1%)
While the Bot tool offers a facility to run Hybrid bots where the user opens the trade and the bot runs the close, I chose to startup a new bot in one of the accounts to see if it could average down and trade back the big losers.
Currency Trades
Forex Robot closed 4 trades (0.17% profit) and is trading at a negative equity level of 9.7% (higher than prior day's 9.03%).
Outsourced MAM account I run an outsourced forex trading account with Actions to Wealth. They closed out 10 trades over 4 days with an average of 0.19% profits for each day.
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. 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 14-16, 2018
thanks for all your writing, I can understand it and hope that your health and safety will always be with you.
Thanks