Markets continued to sell off until the infrastructure deal came through. I used the selloff days to average down and the bounce days to lock in a few profits.
Portfolio News
In a week where S&P 500 rose 2.8% to close at all time high, my pension portfolio rose a more modest 1.8%. Value drags were Pilbara gold explorers De Grey Mining (DEG.AX) and Kairos (KAI.AX)
Big movers of the week were 3D Systems (DDD) (+40%), Harvest One Cannabis (HVT.V) (+23%), Nike (NKE) (+20%), 88 Energy (88E.AX) (+15%), First Solar (FSLR) (+14%), Navios Maritime (NM) (+12%), Huntington Bancshares (HBAN) (+10%)
News of the week was President Biden getting agreement on an Infrastructure Bill which overshadowed the fallout from the Federal Reserve words the week before
Crypto booms
Bitcoin price pushed lower as far as 17% to test $30,000 twice but finished the week pretty well where it started. Note the trading zone on the chart which has been respected quite a few times in recent weeks
Price was hit 2nd time around for the week when UK's Financial Conduct Authority (FCA) issued a warning to Binance to cease trading regulated products.
Now the headlines talk about banned - the words from FCA were quite specific. Binance can continue offering buying and selling of crypto coins in UK but must not offer trading in regulated products like tokens related to shares and also derivatives on crypto.
https://www.ft.com/content/8bc0e5e0-2705-496d-a265-acccaffaee87
All the altcoins fared a bit worse with drops over 25% to the lows and recovered some of that. Worst in my portfolios was Steem (STEEM) with a drop to the low over 35%. Hive was marginally better.
3D Systems Corporation (DDD): 3D Printing. Shares in 3D Systmes soared 28% on announcing a partnership with Israeli company CollPlant aimed at 3D printing material used for breast reconstruction surgery.
This makes my 35 strike covered call look a bit uncomfortabe with trading over $36 on day one and $38 on day 2. Rather than buy back the covered call, I sold another put option at a $34.50 strike for a 4.9% premium. That gets my sold call exercised at an effective $36.77 which is a whole lot better than $35. Of course, there is a risk the deal falls over and price sags below $34.50
Bought
Electricité de France S.A. (EDF.PA): French Utility. Rounded up holding in one portfolio after receiving a small dividend reinvestment parcel.
Eni S.p.A (ENI.MI): Europe Oil. With rising oil prices rounded up a holding in one portfolio to average down entry price and write covered calls.
Cisco Systems, Inc (CSCO): Network Equipment. Added another small parcel in one portfolio as Jim Crameer added again.
Union Pacific Corporation (UNP): US Railways. Added another small parcel on Jim Cramer idea. Price has drifted and felt right to average down a little from the last entry two weeks ago.
United States Steel Corporation (X): US Steel. Jim Cramer has been adding to Nucor (NUE) as his preferred steel recovery investment. I have been selling naked puts in Nucor. I did a price comparison from the March 2021 lows which is about the time that Nucor was added to the bullpen. US Steel (blue line) is 60 points behind - hence my choice to buy the stock and to set up an options trade
Now I look at things in the cold light of day, a small change to March 2020 lows shows Nucor lagging by nearly 100 points and that looks like a better play. Of note though is the gap from current levels to last month highs for US Steel is around 100 points.
Now I did some digging and added in a range of steel stocks I have previously invested in. Nucor (the bars) is tradng in line with the VanEck Vectors Steel ETF (SLX - light blue line) and Arelor Mittal (MT - green line) and Gerdau (GGB - pink line). The laggard is Russian steel maker, Mechel Steel (MTL - lower purple line). I did catch some of the leaders wins some time back
I also bought a January 2022 24/32 bull call spread. With a net premium of $2.00 this offers maximum profit potential of 300% for a 35% move from the $23.57 opening price. I funded the full premium by selling an October 2021 strike 22 put option.
Let's look at the chart which shows the bought call (24) as a blue ray and the sold call (32) as a red ray and the sold put (22) as a dotted red ray with the expiry date the dotted green lines on the right margin. US Steel has recovered about half of of the losses casued by the China trade tariffs. The bought call is looking for price to move a little above the last highs. The sold put (22) is around the lows of the current consolidation. I have modelled a price scenario from late 2016 - it matches in size the move in late 2018. A repeat of that from the 2020 low level will be enough.
Nucor Corporation (NUE): US Steel. I mentioned above that this was Jim Cramer's preferred steel pick. He bought in again to average down his cost base. I added this to one portfolio as my first entry. See the charts above to see which one might be wrong or right. I am figuring both will work if the recovery continues to flow.
I took the chance of the selloffs early in the week to average down a few holdings
CVS Health Corporation (CVS): US Healthcare. Re-entered stock exited in January 2021. Dividend yield 2.38%.
iShares MSCI Emerging Markets ETF (EEM): Emerging Markets. New entry in one portfolio.
Hecla Mining Company (HL): Silver Mining. Return to holding in one portflio last held in July 2020. This is a hedging trade.
Global X Lithium ETF (LIT): Lithium. Replaced stock assigned on covered call at 3.4% premium to assigned price.
ING Groep (INGA.AS): Dutch Bank. Replaced stock assgined in May at 1.4% premium to assigned price
Barclays PLC (BARC.L): UK Bank. Averaged down entry price.
HSBC Holdings (HSBA.L): Global Bank. Averaged down entry price.
American Eagle Outfitters, Inc (AEO): US Consumer. Jim Cramer added this to the bull pen. On the day he does that I often write a naked put at some price lower than the ruling price in anticipation of him making a buy if prices falls. I did that at a 1.3% premium but in one portfolio I did buy a parcel of shock to write covered calls at 1.5% premium. Nice to see stock price pop same day when a photo of Brooke Shields and her daughters was posted wearing AEO outfits.
Teekay Corporation (TK): Oil Shipping. Added a small position in one of my small protfolios to write covered calls.
Starr Peak Mining Ltd (STE.V): Gold Exploration. Read an article about growing exploration work in Quebec, Canada covering a range of base metals in addition to gold. Added a small parcel of stock to test out another gold exploration idea to add to De Grey Mining (DEG.AX), which is now the laresgt holding in my Australian stock portfolio.
Loop Industries, Inc (LOOP): Specialty Chemicals. Share price of Loop Industries popped when South Korean comglomerate SK Global took a 10% stake to accelerate the commercialization of Loop's sustainable polyethylene terephthalate ("PET") plastic and polyester fiber manufacturing technology throughout Asia.
Loop's patented technology allows for waste PET plastic and polyester fiber to be upcycled into virgin-quality PET using low heat and no added pressure. This low energy process allows Loop to eliminate contaminants, such as dyes, additives, and other impurities, preventing otherwise unrecyclable materials like colored and contaminated plastics or textiles from ending up in landfills and natural areas.
https://finance.yahoo.com/news/sk-global-chemical-acquire-10-090000614.html
I bought a parcel of stock and a January 2022 15/22.5 bull call spread. With a net premium of $1.65 this offers a maximum profit potential of 354% for a 52% move from trade price of $14.75. Closing price was some 12% lower at $13.07 - I will be averaging down the holding. The commercialisation process is expected to run through to production in 2023 - I am sure I will be rolling those options forward to get into 2023 expiries when they become available.
Sold
Microsoft (MSFT): US Software. Profit taking sale of half my holding in one portfolio for 113% profit since June 2019 - about the time I started my Action Alerts Plus subscription with Jim Cramer. This trade has paid for a few yeas of subs.
Costco Wholesale Corp (COST). US Retail. Profit taking sale of one third holding in one portfolio for 26% profit since January 2020. I took profit on FIFO basis - averaged profit would have been only 20% as the last addition was at a price not far from current price. Also a Jim Cramer idea to open and keep adding.
Shorts
iShares 20+ Year Treasury Bond ETF (TLT): US Treasuries. With price opening at $144.39, I set up a July expiry 142.5/139 ratio put spread. This offers price protection for a price drop between 1.3 and 3.9%. Ratio was 3 to 1 to make the trade cash neutral.
Cryptocurrency
Did the regular review of altcoin charts to see which might be turning up relative to Bitcoin or Ethereum. I rounded up holdings in two to get closer to A$500 per holding
Solana (SOLBTC): Sold Bitcoin to buy Solana
Litecoin* (LTCETH): Sold Ethereum to buy Litecoin.
Income Trades
Covered Calls
A busy time writing covered calls in my pension portfolio (US 40 Europe 12 UK 5 Canada 1 ). Quieter in two other portfolios (US 19 Europe 6 UK 5 Canada 1)
Naked Puts
With market sentiment reasonably positive I pushed naked put writing a little higher in my pension portfolio espcially as I did generate a lot of cash in the last round of expiries (US 18 Europe 3 Canada 1)
In my other portfolio I was a little quieter but I did keep open the big ideas from Jim Cramer's buy list (AAPL, GOOGL, NVDA) (US 11 Europe 1 Canada 1)
Nike Inc (NKE): US Consumer. Nike announced results in the week that surprised markets.
I had chosen to ignore trade exit by Jim Cramer late the week before and continued the process of writing the monthly covered call at a strike price of $135. Price spiked to close at $154.35 in Friday trade. This is the disadvantage of writing covered calls - big jumps like that cannot be claimed. I chose to grab some of that bounce by selling a July expiry 145 strike put option for 0.9% premium. I somehow do not see price dropping this hard in 3 weeks.
Currency Trades
No trades
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 21-25, 2021