TIB - An Investors Journal #608 - Nasdaq Index, Oil, Europe HR Services + Utilities, Financials, Silver Mining, Uranium, US Healthcare, Electric Vehicles, US Treasuries + more
It was a bloodbath week. I could not stay out as my broker did some crazy things to cover a margin problem - not what I would have done.
In a week where S&P 500 dropped 6.14% for the worst week since March 2020, my pension portfolio dropped a little less at 4.87%. That includes the big losses driven by broker closing out positions on a margin violoation.
Big movers of the week were Direxion Daily Real Estate Bear 3X Shares (DRV) (+15.1%), ProShares UltraPro Short QQQ (SQQQ) (+13.2%), Honey Badger Silver (TUF.V) (+9.1%). This was a week of losers wih Providence Resources (PVR.L) the worst at minus 28%
The market caught a big cold with the fear of inflation driving recession fears - nothing was spared
The market was ugly and crypto was a multiple worse.
Bitcoin kept tumbling with peak to trough drop of 33% before grabbing a foothold above $20k
It wal not all doom and gloom with quite a few alts in my portfolios rising - Polkadot up 46%
My largest alt holding in Hive up 33% at the peak and up for the week
Chainlink made a 23% rise against USD - even more against BTC
Litecoin too up 25% - the market may have taken a dislike to Bitcoin and Ethereum but crypto is not dead
Invesco QQQ Trust (QQQ): Nasdaq Index. With price opening at $275.59 (Jun 16) was assigned early on a strike 294 sold put. I had been planning to close out the put at start of expiry day trade but got assigned early. The result of the assignment was a margin violation which prompted the broker to close positions. As US market was closed, they chose to close out a bunch of European positions - and in the process created violations of a lot of the covered calls I was holding. The sale of the position triggered a 7.7% loss. The broker also bought back the remaining 294 strike sold put for a 17% premium.
The way they treated this assignment triggered some major losses. All they had to do is do what I did - sell the assigned stock and take a $4,540 loss there and then close out or exercise the protective puts which generated a net profit of $2,927 after the stonking big loss. Not only did they create unnecessary loses, they also screwed up the currency mix in the portfolio selling Pounds and Euros and Australian Dollars to cover the USD deficit.
The chart shows why I was hopping made - yes the sold 294 put option was assigned. I was well protected by the bought puts at 284 and 275 and the sold put at 270 could be closed at a profit as it was not reached.
Randstad NV (RAND.AS): Europe HR Services. Replaced stock force sold at 3.1% discount to forced sale price - time to claw back the losses with covered calls (Jun 17). That also brings the covered call cover back
Centrica plc (CNA.L): UK Utility. Replaced stock force sold at 2.8% discount to forced sale price - time to claw back the losses with covered calls (Jun 17). That also brings the covered call cover back
Barclays Group PLC (BARC.L): UK Bank. Assigned on call spread risk reversal at 15% premium to £1.56 closing price. Breakeven £1.76 - Russia gas moves will bank that safely
Credit Agricole (ACA.PA): French Bank. Assigned on sold put at 11% premium to €8.99 closing price. Breakeven €9.69
ENGIE SA (ENGI.PA): French Utility. Assigned on sold put at 6.7% premium to €11.25 closing price. Breakeven €11.87
Commerzbank AG (CBK.DE): German Bank. Exercised on call spread risk reversal at 0.7% discount to €7.86 closing price. Breakeven €7.43 with a naked put slotted in alongside the sold put for the reversal
Alerian MLP ETF (AMLP): US Oil. Assigned on sold put at 8.7% premium to $34.02 closing price. As I was sold out of BP plc (BP.L) I was quite happy to invest in US oil.
Hecla Mining Company (HL): Silver Mining. Assigned on sold put at 40% premium to $4.35 closing price. This one is going to hurt but I am convinced in the role of gold and silver as hedges against the long run high inflation. With breakeven at $4.63 - maybe nothing to worry about.
SPDR S&P Regional Banking ETF (KRE): US Banks. Assigned on sold put at 4.6% premium to $57.37 closing price. I chose not to kick this down the road as I am sure rising interest rates will float all the banks
Woodside Energy Services (WDS.AX): Australian/US Oil. Assigned on a covered call for 49.5% blended profit - part of this holding was the spin-off of BHP Group (BHP.AX) oil interests making for a solid windfall profit.
ABN AMRO Bank N.V. (ABN.AS): Dutch Bank. Sold following margin violation for 9.6% blended loss since February/May/June 2022 - resulted in uncovered call.
Allianz AG (ALV.DE): German Insurance. Sold following margin violation for 6.6% loss since August 2021 - not the week I would have sold this either.
Randstad NV (RAND.AS): Europe HR Services. Sold following margin violation for 4.6% loss since April 2022 - resulted in uncovered call.
BP PLC (BP.L): Europe Oil. Sold following margin violation for 10.7% blended loss since October 2018/March/August 2019/February 2021 - not a stock I was aiming to sell as dividend yield is solid.
Centrica plc (CNA.L): UK Utility. Sold following margin violation for 24.7% blended loss since April 2018/November 2020/May 2022 - not a stock I was aiming to sell as dividend yield is solid and gas prices are sky high. Also resulted in uncovered call. The loss is large here as I chose to set off against an old holding at a high price.
JSC National Atomic Company Kazatomprom (KAP.L): Uranium. Sold following margin violation for 28.3% blended loss since November 2021/February 2022 - not a stock I was aiming to sell with war raging in Ukraine.
AMN Healthcare Services (AMN): US Healthcare. Assigned on covered call for 5.5% profit since May 2022.
ChargePoint Holdings (CHPT): Electric Vehicles. Assigned on covered call for 14% blended loss since April/May 2022.
iShares 20+ Year Treasury Bond ETF (TLT): US Treasuries. With price opening at $114.36 (Jun 10), set up a July expiry 113/110 ratio put spread. I chose to be further out in time ahead of the Federal Reserve meeting. I must say I was not expecting a 75 basis point hike - hence the ratio put spread. Trade was cash neutral. I will use up days to put in protection
Pfizer (PFE): US Pharmaceuticals. Exercised on short term bear put spread at 12.8% premium to $46.53 closing price. As this portfolio may not hold short positions the broker will cover the short. I was a bit slow to sell the put at full premium. My thesis on Pfizer is playing out a bit sooner than I thought. I remain short through a January 2024 40/30 bear put spread.
Quick look at the charts shows how price tested around the level of the sold put (52.5) and then fell over in the last week not quite enough to test the bought put (45). There is a lot of time to go for the long term trade to play out - bring it on.
Deutsche Lufthansa AG (LHA.DE): Europe Airline. With price opening at 5.94, rolled out June expiry 6.4 sold put to July strike 6.2. The net premium deficit was smaller than the original sold premium. I am figuring the market may get over its nerves and price will get above 6.20 in 5 weeks. This trade converts the September/June 6.4 calendar put spread into a diagonal put spread.
United States Natural Gas Fund (UNG): Natural Gas. With price opening at $26.81 (Jun 14), closed out a 15 strike hedging put option bought in March 2022. Missed my attention as I sold the stock being hedged in April.
Vanguard European Stock Index Fund (VGK): Europe Index. With price opening at $53.44 bought a July expiry 52 strike put option to protect an upcoming assignment. The 58/54 bear put spread trade through the bottom for a 7% profit.
Quick look at the chart shows how price tried to bounce off the bought put level (58) and then fell over - the challenge is knowing what to do next - there is a naked put to cover (48)
Invesco DB Agriculture Fund (DBA): Agriculture. With price closing at $21.80, 22/21 strangle expired worthless - close but no cigar. Liquidity is not solid enough to create good credit spreads.
Big expiry cycle with 82 covered calls expired in my favour - keep writing the income (UK 2 Europe 17 US 53).
Deutsche Bank AG (DBK.DE): German Bank. With price opening at €9.40, kicked the can down the road from June to July on a 10.8 strike sold put. Buy back was at a 19.5% premium (i.e., a profit) and the sold premium was larger than the buy back premium. I am waiting from European banking stocks to move as rates are promised to rise.
Kicked a few more down the road
Coeur Mining (CDE) - Small loss
ETFMG Prime Cyber Security ETF (HACK) - small profit
iShares Silver Trust (SLV) - was part of a call spread risk reversal - mistake kicking it down the road.
ABB Ltd (ABBN.SW): Europe Industrials. With price opening at SFr27.83 and trending higher in morning trade, I was concerned the 30/28 credit spread would land in the middle and I would be assigned the stock at SFr30 - I kicked the can down the road setting up a replacement July expiry 30/28 credit spread. I am still getting to grips with the strategy for credit spreads. I see the value in the bought put and want to grab it somehow and I can get more premium for the sold put as time is on my side. Hindsight suggests a smarter trade was to take the loss and exit.
Crédit Agricole S.A. (ACA.PA): French Bank. With price opening at €9.12, I have a bought put which is part of a credit spread that is strongly in-the-money. I chose to sell the put for a 190% profit and let the sold put stand to go to assignment. That will average down entry price on my holding. With the proceeds I bought a protective put for the stock that will be assigned. I am bullish on European banks as rates will be rising soon.
A few through the bottom losses as the market sell off hard
ETFMG Prime Cyber Security ETF (HACK): Cybersecurity. With price closing at $44.21, 53/48 credit spread loses 10.4%. I have been kicking this one down the road a bit. This is a frustrating area as the world is rife with hacking and any business not investing in protection is not smart.
Nucor Corporation (NUE): US Steel. With price closing at $113.99, 130/124 credit spread loses 4.8%. This is an AAPlus idea that is not working out.
Sold Pounds, Euros and Australian Dollars to cover the USD deficit. Not my choice especially as I pay pensions in Australian DollarsResources
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
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June 13-17, 2022
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