Investments Trade Log

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white belt
Posts: 1450
Joined: Sat May 21, 2011 12:15 am

Re: Investments Trade Log

Post by white belt »

My RSX puts that expired on 2/4 were not profitable. My P/L for the entire trade thus far is +$300. The lesson learned is to not make concentrated bets on geopolitical events in which the timing is uncertain. I should have spread my puts more evenly across different expiration dates at the very least (which I've since done).

WFJ
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Re: Investments Trade Log

Post by WFJ »

I'm even selling some of my boring S&P index funds and rolling into Dividend and Value ETFs. Top 10 S&P companies all look like they are limping along. It is also looking a lot like the 70's, Vietnam war and "Great Society" which ended with the S&P 500 at a PE around 8. Today it's in the mid-20's and the E (Earnings) might trend down with higher inflation. Don't like losing roughly 5% a year in purchasing power, but at least I can control and adapt to this. market returns can crush ERE plans quickly.

What do people use as their fixed income investments? I usually roll 3–9-month CDs, but yields are terrible. I've only bought bonds once in my life and won't do it now at all. This is one aspect of the 60/40 that I don't think many understand is that if 40 is in a bond fund, the returns will get crushed when rates go up. If one has yearly maturing bonds, then rates won't matter as investor can hold until maturity, but this is not how bond funds are structured.

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Lemur
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Re: Investments Trade Log

Post by Lemur »

@WFJ

This is a recent area I've been looking into. For instance, in the balance of my index funds I use 10% of my allocation towards BND but looking at its performance...I almost don't see the point.

Any thoughts on a high-yielding covered-call ETF as a fixed-income asset? Perhaps even a replacement to bond allocation...Seems to beat the heck out of bonds anyway and money is made even when the market trends downward * I think* I don't know how to judge the risk here.

https://finance.yahoo.com/quote/QYLD/performance?p=QYLD

Most are yielding around 10% with expense ratios ~0.60%

Global X S&P 500 Covered Call ETF (XYLD)
Global X Russell 2000 Covered Call ETF (RYLD)
Global X NASDAQ 100 Covered Call ETF (QYLD)

thedollar
Posts: 254
Joined: Tue Feb 21, 2017 4:07 am

Re: Investments Trade Log

Post by thedollar »

Only around 45-50% down from here to pessimistic market sentiment valuation (= March 2020), then add in the effects of not having low interest rates causing people to sell off equity for bonds etc. to the downturn. This could become serious!

andy
Posts: 23
Joined: Sun Jan 23, 2022 9:56 am

Re: Investments Trade Log

Post by andy »

@Lemur

I personally wouldn't touch those unless you want to receive regular monthly income at this point. You are almost guaranteed to underperform SPY with worse drawdown, lower alpha, sharpe ratio, sortino ratio, etc. I went through a phase where I researched/reviewed probably over 500 alternative ETFs and mutual funds back when interest rates hit 0. Only a few alternative funds (options based, managed futures, volatility based, etc.) are worth it (in my opinion). Portfoliovisualizer.com - best free site ever. I use HMXIX as my main bond replacement now in that it's not very volatile and can stabilize a portfolio.

See: http://alphacentricfunds.com/funds/Prem ... tation.pdf

I check my brokerage account every day to make sure every part of my portfolio works as intended. Today for example, big red day for SPY. Did my hedges offset my SPY losses? Do they do it consistently? If not, I cut them from the team. Can they still make money or break even when SPY is up? I think it's important to understand why people own bonds. If they want regular income streams, that's one thing, but if they are using it to reduce volatility in their portfolio, there are better options in my opinion at this point in time.

Today, for example. My main brokerage account was down 0.37% while SPY down close to 2%. My main hedge VXZ did its job (trickier one bc need to rebalance regularly). My two other hedges also helped (MSVX & PQTAX). On days earlier in the week when SPY was up 1.5% I was up 0.7%. To me it's all comes down to limiting losses, but everyone has there own style and nothing works for everyone. This just works for me.

SPY is not even down 10% YTD yet and people are crapping their pants (and for good reason with interest rate increases, Russia, etc). This is why I think most people say they are long term investors, but most humans can only handle a certain amount of drawdowns before they puke. Buy low, sell high is hard for a reason. How do you eliminate emotions...hedge (specifically with volatility). I bought the crap out of SPY today, because I have portfolio insurance (hedges). If we drop on Monday...too bad, I'm out of cash. Haha, but I will buy this thing all the way down and sleep well.

A lot of people know about this style of portfolio construction popularized by Artemis Capital, and it's not for everyone of course, but a good read nonetheless. Good luck to you guys! I hope we bounce on Monday!

https://www.artemiscm.com/research-market-views

Humanofearth
Posts: 188
Joined: Sun Mar 28, 2021 3:32 am

Re: Investments Trade Log

Post by Humanofearth »

Fixed income is in anchor protocol but mostly from staking atom.

Still thinking to take more profits from my jewel farms into btc for some safety but I see this dip as temporary. Fake fud over the Yankees saying Russia will invade Ukraine when Russia and Ukraine say it isn’t happening.

Have 6 figs on sidelines to pay the ransom so I don’t get kidnapped. Don’t think I’ll deploy it unless the market nukes another 90%.

jacob
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Re: Investments Trade Log

Post by jacob »

Lemur wrote:
Fri Feb 11, 2022 3:46 pm
Any thoughts on a high-yielding covered-call ETF as a fixed-income asset?
Meh! Automated buy-write funds convert volatility+return into income. If they write ATM (which seems common) expect half the volatility in exchange for an income at the cost of half the upside (at ATM delta=0.5 and so the risk of a call is 50/50).

This is all fine when done selectively in order to get rid of positions that you'd like to sell anyway (trailing stops are another way) but done willy-nilly as a blanket strategy at a high fee? Thanks, but no thanks. This is an odd kind of financial engineering product that doesn't add/have any value as far as I can tell(?)

By the put-call parity and Black-Scholes, one could technically replicate the exact behavior using a combination of bonds and stocks. In particular, this is how the market's plumbing-operators really determine how they quote bid/ask on options.

white belt
Posts: 1450
Joined: Sat May 21, 2011 12:15 am

Re: Investments Trade Log

Post by white belt »

My RSX puts that expired on 2/11 were not profitable. My P/L for the entire trade thus far is -$2.1k. That's not the direction I want to be moving but I'll eat it with the lesson learned of spreading a cross a variety of expiration dates for such event-driven trades. It's not a good feeling losing money, but I know that it's part of the game and should be expected when trying to act on asymmetric opportunities.

I have $3.6k in cost basis for puts expiring each week until 3/11. If I have guessed correctly and Russia invades, I will profit handsomely. If I'm wrong, then the world will remain a slightly more stable place for now and I'll have lost ~$5.6k. Win-win in my book.

If anyone wants to play the short term trade, I still think RSX is hilariously mispriced. The Ukrainian president has been briefed Russia will invade Wednesday (https://www.msn.com/en-us/news/world/uk ... ar-AATQtEg), and RSX is up ~3% today. It's ~10% higher than it's recent low from 1/26. I get the "market...irrational...solvent" argument, but I can't imagine a Russian invasion followed by sanctions is going to be bullish for Russian companies or the RUB/USD rate. What am I missing?

plantingtheseed
Posts: 202
Joined: Sat Mar 28, 2020 7:23 pm

Re: Investments Trade Log

Post by plantingtheseed »

Sold CLF options +650%, Hold CVX @8.5%, Hold QMES puts, NW: ~1.1M cash+pension(~1.6M)+HC+SS

white belt
Posts: 1450
Joined: Sat May 21, 2011 12:15 am

Re: Investments Trade Log

Post by white belt »

I am posting the following not to start a political discussion, but rather to outline my trading thoughts at this moment in time. I am posting this for posterity regardless of the profitability of this trade. I am aiming to refine my trading mindset and methods just like many others on here.

What is likely to happen?
Sun Tzu wrote:All warfare is based on deception. Hence, when we are able to attack, we must seem unable; when using our forces, we must appear inactive; when we are near, we must make the enemy believe we are far away; when far away, we must make him believe we are near.
Sun Tzu wrote:Engage people with what they expect; it is what they are able to discern and confirms their projections. It settles them into predictable patterns of response, occupying their minds while you wait for the extraordinary moment — that which they cannot anticipate.
Events of the past 48 hours
-Russia stages public TV event where Putin agrees that diplomacy is still important
-Russia announces they are returning troops to home base
-NATO and Western Allies say they see no evidence that Russian troops are withdrawing
-Russia targets Ukrainian financial and government institutions with cyber attack

At this time, I am handicapping the likelihood of a Russian invasion of Ukraine at about 90%. That is up from 80-85% I was feeling yesterday. Putin is following textbook Russian tactics up to this point. The cyber attack today is what put me over the edge, as it is typically a first operation immediately prior to a larger Russian military action. Early reporting is that the cyber attack was only a DOS, however that could easily be a screen for a far more sophisticated attack. Perhaps we will see the first large scale ransomware attack integrated with military operations ("You will be able to access your money again as long as you support your newly elected president"). Russia's military is the best in the world at complex hybrid warfare across all domains. Ubiquitous smartphones and social media coverage will show the world sides of war it has never seen.

In response to Russian action, the West will issue sanctions. I'm unsure of how harsh they will be because Europe doesn't want to worsen their energy crisis. Nevertheless, they will have to do something to not appear they are rolling over against Russia.


How will I profit?
After today's large upward movement in RSX, the Ruble, and broader equities, I believe the markets are pegging the likelihood that Russia will invade at perhaps 10-20%. In my mind, they have fallen for Putin's deception hook, line, and sinker. It's like the markets feel so fatigued by "crisis" headlines that they can't even realize one that's right in plain sight.

RSX ripped another ~6% higher and I took the opportunity to buy more puts at a bargain. Yes, volatility is high, but I don't see it dissipating before these puts expire. I can profit in 2 ways from RSX. The first is from the value of Russian companies going down, which may happen if holders want to take off risk in anticipation of sanctions. The second method is by the RUB depreciating against the USD, which will happen if capital flees Russia. If my base case is correct, then both will happen.

I also have long positions in commodity producers which aren't directly related to this trade, however they will likely benefit if commodity prices rise in response to this action. If I was more sophisticated, maybe I could've played this by shorting the RUB, but I'm not there yet. An ETF with options is about the most sophistication I can handle at the moment.

I haven't taken any risk off the table yet, but if I'm right one could expect SPX to decline. However, I anticipate that SPX could easily bounce back in a short few weeks from such an event. I didn't have as much conviction of playing the SPX on this one due to all the other factors that influence it.


Devil's Advocate
If markets have shaken off the risk of war up to this point, maybe they will shake off war itself. Maybe Putin is bluffing and he'll wind things back down, or Ukraine will capitulate in the face of pressure. Maybe this will be a nothing burger for financial markets like the start of the conflict in 2014 was. Maybe RSX won't decline since it's mostly commodity producers and we know that EU countries are resistant to restricting their own energy supplies. Maybe my timing will be off on the options and I'll still lose money even if my thesis is correct.

chenda
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Re: Investments Trade Log

Post by chenda »

white belt wrote:
Tue Feb 15, 2022 5:38 pm
Maybe Putin is bluffing and he'll wind things back down.
Fwiw I think this is highly likely. Its just defensive posturing to show that he could, not that he will.

Dream of Freedom
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Re: Investments Trade Log

Post by Dream of Freedom »

@white belt

It is also possible that if there is a war they will simply close the fund. America already has a list of companies (Executive Orders 13959 and 14032) connected with the Chinese government that Americans are no longer allowed to buy and one of the first things Biden did when taking office was to add companies to that list. If the fund manager suspects a ban like that will happen they might try to sell while there is liquidity.
Last edited by Dream of Freedom on Wed Feb 16, 2022 3:50 pm, edited 1 time in total.

WFJ
Posts: 416
Joined: Sat Apr 24, 2021 11:32 am

Re: Investments Trade Log

Post by WFJ »

white belt wrote:
Tue Feb 15, 2022 5:38 pm
I am posting the following not to start a political discussion, but rather to outline my trading thoughts at this moment in time. I am posting this for posterity regardless of the profitability of this trade. I am aiming to refine my trading mindset and methods just like many others on here.

What is likely to happen?





Events of the past 48 hours
-Russia stages public TV event where Putin agrees that diplomacy is still important
-Russia announces they are returning troops to home base
-NATO and Western Allies say they see no evidence that Russian troops are withdrawing
-Russia targets Ukrainian financial and government institutions with cyber attack

At this time, I am handicapping the likelihood of a Russian invasion of Ukraine at about 90%. That is up from 80-85% I was feeling yesterday. Putin is following textbook Russian tactics up to this point. The cyber attack today is what put me over the edge, as it is typically a first operation immediately prior to a larger Russian military action. Early reporting is that the cyber attack was only a DOS, however that could easily be a screen for a far more sophisticated attack. Perhaps we will see the first large scale ransomware attack integrated with military operations ("You will be able to access your money again as long as you support your newly elected president"). Russia's military is the best in the world at complex hybrid warfare across all domains. Ubiquitous smartphones and social media coverage will show the world sides of war it has never seen.

In response to Russian action, the West will issue sanctions. I'm unsure of how harsh they will be because Europe doesn't want to worsen their energy crisis. Nevertheless, they will have to do something to not appear they are rolling over against Russia.


How will I profit?
After today's large upward movement in RSX, the Ruble, and broader equities, I believe the markets are pegging the likelihood that Russia will invade at perhaps 10-20%. In my mind, they have fallen for Putin's deception hook, line, and sinker. It's like the markets feel so fatigued by "crisis" headlines that they can't even realize one that's right in plain sight.

RSX ripped another ~6% higher and I took the opportunity to buy more puts at a bargain. Yes, volatility is high, but I don't see it dissipating before these puts expire. I can profit in 2 ways from RSX. The first is from the value of Russian companies going down, which may happen if holders want to take off risk in anticipation of sanctions. The second method is by the RUB depreciating against the USD, which will happen if capital flees Russia. If my base case is correct, then both will happen.

I also have long positions in commodity producers which aren't directly related to this trade, however they will likely benefit if commodity prices rise in response to this action. If I was more sophisticated, maybe I could've played this by shorting the RUB, but I'm not there yet. An ETF with options is about the most sophistication I can handle at the moment.

I haven't taken any risk off the table yet, but if I'm right one could expect SPX to decline. However, I anticipate that SPX could easily bounce back in a short few weeks from such an event. I didn't have as much conviction of playing the SPX on this one due to all the other factors that influence it.


Devil's Advocate
If markets have shaken off the risk of war up to this point, maybe they will shake off war itself. Maybe Putin is bluffing and he'll wind things back down, or Ukraine will capitulate in the face of pressure. Maybe this will be a nothing burger for financial markets like the start of the conflict in 2014 was. Maybe RSX won't decline since it's mostly commodity producers and we know that EU countries are resistant to restricting their own energy supplies. Maybe my timing will be off on the options and I'll still lose money even if my thesis is correct.
Putin is talking his Oil/LNG book. The "West" has given the oil exporters an easy way to increase energy revenues. Are you as talented at reading minds as Joe? This whole episode is a distraction and best to ignore the CNN/MSNBC "Teach your child Russian before Putin invades Ohio" panic special.

white belt
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Re: Investments Trade Log

Post by white belt »

WFJ wrote:
Wed Feb 16, 2022 3:43 pm
Putin is talking his Oil/LNG book.
That certainly seems to be the consensus in markets. Today's RSX close was at it's highest price since 1/12, which I find odd given that the invasion risk is arguably highest right now according to every headline. Maybe you don't believe the headlines; it seems markets certainly don't. The future is uncertain and I am fully prepared to lose the money I've put on the line with this trade. I make no claims to be an experienced trader.

RSX's holdings are 37% energy and 26% basic materials, so it's quite possible that a crisis driving energy prices up might not tank the price of RSX like I'm anticipating. Again, if I had more sophistication maybe I would have shorted the Ruble, but that currency is so intertwined with commodities that it's difficult to tell if that would perform any differently. However, I do think capital will flow out of the companies that RSX tracks because of sanction risk and currency risk immediately after Russian military action.

I think long commodities are a great way to play the larger geopolitical trends, but I didn't do that for this specific trade because ~25% of my total portfolio is already long on commodity producers and has been for the last year. That's ~12x more than the money I allocated for my RSX trade (not quite apples to apples because my commodity positions are long shares while my RSX exposure is options). So I guess in a way you could argue I'm hedging by trying to isolate for Russian geopolitical risk without getting blown up on a wider commodity bull market.

Humanofearth
Posts: 188
Joined: Sun Mar 28, 2021 3:32 am

Re: Investments Trade Log

Post by Humanofearth »

Going barbell, sold some LUNA for higher risk ZIP and lower risk ETH.

WFJ
Posts: 416
Joined: Sat Apr 24, 2021 11:32 am

Re: Investments Trade Log

Post by WFJ »

white belt wrote:
Wed Feb 16, 2022 6:44 pm
That certainly seems to be the consensus in markets. Today's RSX close was at it's highest price since 1/12, which I find odd given that the invasion risk is arguably highest right now according to every headline. Maybe you don't believe the headlines; it seems markets certainly don't. The future is uncertain and I am fully prepared to lose the money I've put on the line with this trade. I make no claims to be an experienced trader.

RSX's holdings are 37% energy and 26% basic materials, so it's quite possible that a crisis driving energy prices up might not tank the price of RSX like I'm anticipating. Again, if I had more sophistication maybe I would have shorted the Ruble, but that currency is so intertwined with commodities that it's difficult to tell if that would perform any differently. However, I do think capital will flow out of the companies that RSX tracks because of sanction risk and currency risk immediately after Russian military action.

I think long commodities are a great way to play the larger geopolitical trends, but I didn't do that for this specific trade because ~25% of my total portfolio is already long on commodity producers and has been for the last year. That's ~12x more than the money I allocated for my RSX trade (not quite apples to apples because my commodity positions are long shares while my RSX exposure is options). So I guess in a way you could argue I'm hedging by trying to isolate for Russian geopolitical risk without getting blown up on a wider commodity bull market.
I did some commodity trading years ago and found the level of hedging was more important than the price action in many investment vehicles. For example, how much of the energy companies in the RSX have sold their producible inventory over the next 5 years? If the inventory is not hedged, then prices of the assets will react when commodity prices move. If fully hedged, they won't move at all and might even move down as if prices of inputs increase but only prices of outputs are hedged, returns can be negative. This takes time and easier with a Bloomberg. I eventually traded futures only with commodities but was at a desk all trading day and futures have crazy leverage.

plantingtheseed
Posts: 202
Joined: Sat Mar 28, 2020 7:23 pm

Re: Investments Trade Log

Post by plantingtheseed »

Took some profits off the table on the short position, but will continue to add to the position appropriately.

As a potential retiree, one of the worst economic conditions have materialized, in which, there is a significant erosion in the purchasing power, while all the asset classes are poised to crumble and there could be an unfolding of a significant social unrest.

The objective is simple: preserve the purchasing power. This will be accomplished in multiple ways:

1. saving and investing

2. dissociate real wealth from fiat

3. start reasonable preparations for the worst

For 1, the intermediate goal is to continue working/saving/investing until 8k-10k/month in pension is reached and reassess, equivalent to around 3M. The target for savings buffer is 2M. This can be achieved in less than 5 years. As a margin of safety, the pension will track inflation with some degree of cost of living adjustment that is compounded and a reasonably optimized social security benefits will follow that is completely inflation protected. In addition, investing/trading activities will continue along with other hobbies, using the monthly pension as the financial foundation, if I retire after reassessment.

For 2, there are plans in place.

For 3, I have not had any firearm for a long while, but I will be training again and getting re-certified for the concealed carry permit. The reality is that it is relatively easy to own a gun in California if you're a law abiding citizen. There hasn't been a reason to own any firearms, as the responsibility, the liability, and the laws have serious consequences. But the history maybe indicating that it is time. Apparently, if no one wants peace, then the outcome is relatively simple.

For now, I plan to hit the range to nudge the muscle memory.

Hold CVX @8.5%, Hold QMES puts, NW: 1.1M+ cash+pension(~1.6M)+HC+SS

white belt
Posts: 1450
Joined: Sat May 21, 2011 12:15 am

Re: Investments Trade Log

Post by white belt »

I closed virtually all of my RSX positions earlier today. Shortly after exiting, the price started nosediving in the late morning and early afternoon, so was quite concerned I had made a mistake and exited too early. But upon further consideration, I am satisfied with my decision.

My reason for ending the trade this morning was concern that the Western sanctions announced would be soft and that the market had already priced in much worse sanctions, which so far seems to be true. Another concern was that the ~10% down day on RSX was the low point we might see for this phase of the conflict. I will be carefully watching price action and unfolding events to potentially open up new positions if I see things mispriced again.

My total profits on the RSX trades are $10k, which comes out to almost 6 months of expenses for me. It averaged out to between 2 and 3 bagger returns on initial cost basis, even with the multiple mistakes with the trade. If I could do it over, I would scatter my put expirations more evenly across multiple dates. Instead of riding out puts until expiration or close to expiration for larger return, I would close them 1-2 weeks out and just walk with the 3-4 bagger profits. I didn't have clear targets for when to take profits or when to cut losses.

plantingtheseed
Posts: 202
Joined: Sat Mar 28, 2020 7:23 pm

Re: Investments Trade Log

Post by plantingtheseed »

Futures has popped nicely and market appears to be preparing for a quick nosedive for the short term. In conjunction, oil futures has also spiked higher. I've significant positions that have been accumulated, and at this rate, I may get to the 2M buffer objective sooner than expected.

thedollar
Posts: 254
Joined: Tue Feb 21, 2017 4:07 am

Re: Investments Trade Log

Post by thedollar »

thedollar wrote:
Thu Feb 03, 2022 4:48 am
Volatility is pretty extreme atm. I'm forced to hold majority of my stocks due to taxes on unrealized gains, but I don't see any point in being in stocks for the next 3 months time until we see the effects from Fed winding down economic support. Huge risk IMO.
Today feels like the bottom. Our worst fear has come true and nothing really affected the western world truly. This won't be a WW, this will be forgotten shortly. Or maybe the market will bottom out within the next month if something rate (non-war) related happens in March. I predict the market will be back up in 5-6 months. Let's see how this prediction ages :lol:

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