Topics for Indianapolis DNOWS Trading Group:
Bob Shenberger - Markets Trends
Ken Yamasaki - BPI and RSI
Kim Sharpe - Geeks on Parade Review
George Crawford - Market Musing and Risk Twist Spread Case Study
1. Low Volatility: 13.00
RUT and QQQ have stagnated after reaching new highs. Dow and SPX are both range bound. SPX and /ES Futures broke above 2800 last week. Can the rise continue this week? The SPX Options are pricing in range for the week is +- 30 or 2780 to 2830. GDPNOW is forecasting 3.9% for 2Q US GDP. IMF warns that Global Economy has stalled as we head into Global Tariffs Wars. For now low volatility trading: Diagonals, Calendars and Debit spreads.
2. E-currencies vs US Dollar:
Bitcoin is still range bound between 5800 to 7800. There is a significant ramp up in blockchain transactions. Does that mean Cryptos will finally catch a bid for the 2nd half of 2018. Check Blocktivity.info to see daily blockchain activity. This is still a trader’s environment, where you can buy or sell a small positions and take profits quickly. Are you mining cryptos in private wallets yet? US Dollar is range bound between 93.5 and 95.5
https://www.coinbase.com/charts?locale=en-US
3. Cherry Picks Newsletters:
Tasty Trade Researchers publish an awesome weekly newsletter every Tuesday. This last Saturday, they also did a “Geeks on Parade” broadcast. Check out the videos below with some of their latest research, ideas and tools for us Tasty Traders. If this blog sounds like gibberish, watch "Where do I start 101" free education series on Tastytrade.com
https://s3.amazonaws.com/cherry-picks-s3-bucket-newsletter/live/18_07_17_tastytrade_Research.pdf?mc_cid=2cdf2b3665&mc_eid=e9e24bad07
https://www.tastytrade.com/tt/shows/geeks-on-parade/episodes/exploratory-portfolio-intelligence-07-16-2018
4. Trump Trades:
Invest in Twitter. All executives are using twitter for direct access to clients, customers and citizens.
Tariff / Trade Wars - Short China, Short Solar, Short American Farmers, Short Global Automakers
5. TRADE Log: VIX < 14
- Broken Wing Butterfly, Dynamic Iron Condors
- Calendars, Diagonals, and Debit Spread
- Risk Twisted Spread - QQQ Hedge
6. Videos:
Theotrade NFLX Misses, Let The Earnings Games Begin...
Chapter 13 - Portfolio Hedging: RISK TWIST SPREADS
This trade comes from the TheoTraders. The best entry for this trade is when VIX is below 15 at or near market tops. The idea is to use this trade as a quarterly hedge against your overall portfolio.
Management
Take trade off 30 days off before expiration to avoid the $1000 valley of death.
On the analyze tab, use step function and set days 15 to 20 days to see impact of time
Margin and Risk on Twist Spreads
Yes, IRA but must figure BPR for each unit
$10 from the $10 wide contract buried in this RTS
BRP: the cost of bought back ratio, and the net BPR for credit spread.
Could lose $1000 plus the cost of RTS
Trade Allocation
Why RTS? Hedge the Portfolio Risk or Outright Profitability in the event the markets tank!
Hedge: RTS does not pay until the market tanks. 10% down move is the estimate. RTS Unit with 10% down move expands to $1000 conservatively
$100,000 portfolio, 10% down then 4 units RTS give $4000 of hedge. Never hedge at 100%.
If markets drops 20% then RTS expands to $3000/ unit.
Profit: account size vs RTS units
2k-10K 1 unit
Lesson Learned from 1st Half 2018
Think about monthly when you have parabolic up move.
January 2018, best time was VIX 11 or 12 as hedge fund managers were buy hedges.
After closing Risk Twist Spreads, put them back on always!!!!
Closing Risk Twist Spreads with 60 days seems to provide best coverage for the costs...