Friday, May 30, 2014

Weekly: Patience

It is a quiet week for me. I wait for better opportunities, and the calendar to get to June. Gold moves lower, stocks higher, bonds continue their amazing run. I make modest profits. I was a bit too cautious, but I see that as better than being too aggressive and getting clipped. I take a new position in the German stock etf EWG. 

There is some chatter about some big players buying VIX calls for September and October, expecting a big uptick in volatility (a sharp decline in the stock market). That tends to be a turbulent time, and is also the time when the taper is scheduled to end. So far, a good many have misplayed, or misread the market reactions to the Fed moves, especially in the bond market. Here are my three trades for the week:

Thu Sell IWM Jun 105 puts @113.3. Another mechanical rebalancing trade to get me closer to net neutral on the Russell 2000 etf.

Tue Sell GLD Jun 128 calls @121.9. Gold breaks to the downside after election news from Ukraine. I rebalance my short strangles by selling some calls. Again, the premiums collected are tiny vs. the margin requirements.

Sell EWG Oct 30 puts @32.1. New position in German stock etf. Stocks all across Europe are breaking out from a base formation. EWG options have tighter spreads and lower margin requirements. These puts are further out in time and closer in the money than I often do.

Position Summary:
net long APC GLD
net neutral AAPL SPY
net short IWM

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