Well that Dollar / Yen trade was an almighty screw up and I am suitably poorer for my efforts.
I still think in the long-term (3 to 4 months) the trade is the right one but having been stopped out twice in the last few weeks I've had my fill of this particular currency play.
That doesn't mean I've moved my attention away from the currency market and I've used some of these new Standard Bank Currency Reference Warrants to go long the US Dollar against the South African Rand.
One of the fallouts I would expect to see courtesy of Dubai is some money being pulled out of emerging markets and parked off in in things like the US Dollar - particularly as Christmas rolls around.
If one looks at the US dollar call (USDSCA) there seem to be quite a lot of people taking bets that the rand is going to weaken from these levels. Of the last 7 trading days 4 have had trade in excess of 2.3m which is not bad for an instrument which is only 2 weeks old.
I also bailed on my Sasol call after my stop-loss was breached - the warrant was decaying too fast and my sense is that investors are not going to rush to bid up emerging market shares over the next 30 days.
Showing posts with label Warrants. Show all posts
Showing posts with label Warrants. Show all posts
Saturday, November 28, 2009
Friday, November 13, 2009
A whole lot of nothing
A week which opened up a little nervous but ultimately ended green.
The JSE Top40 (J200) opened at 23730 and finished at 24075 helped by a bit of a bounce in banks and industrials (SAB and RCH). For the rest it was a case of going nowhere fast.
Portfolio changes:
Sasol seems to have built a nice base around the R290 mark (Friday close as well as warrant strike). IMP on the other hand has broken below R170 (the warrant strike) and coupled with the safety issues and the drop off in production - it maybe needs to do a few things right to tempt me back.
Having said that trade in both warrants was brisk over the week and for investors with a bit of risk appetite, they both seem to be an option.
The JSE Top40 (J200) opened at 23730 and finished at 24075 helped by a bit of a bounce in banks and industrials (SAB and RCH). For the rest it was a case of going nowhere fast.
Portfolio changes:
- Sold out of my long IMP call on Wednesday (IMPSBC) for a marginal profit - time decay was starting to bite into the warrant despite being in the money
- Switched into a long on SOL (again SOLSBG)
Sasol seems to have built a nice base around the R290 mark (Friday close as well as warrant strike). IMP on the other hand has broken below R170 (the warrant strike) and coupled with the safety issues and the drop off in production - it maybe needs to do a few things right to tempt me back.
Having said that trade in both warrants was brisk over the week and for investors with a bit of risk appetite, they both seem to be an option.
Thursday, September 17, 2009
Shorts, warrants and something in between
Do you ever get the sense that you're at the end of a grand ponzi scheme and suddenly you are the last guy holding out waiting for your money to come in?
I'm starting to get that creepy feeling and I started looking around for a bit of downside protection today. Started shifting away from a lot of my small-cap stocks into either cash or puts today.
Without question my "feelings" are very non-technical and would be thrown out the door by most traders - but having watched the market in the last few days (specifically the US), one can't help but get the sense that the market is running out of steam.
Thought this made for interesting reading - this is the volume traded on Put warrant TOPSBV which is a warrant issued by Standard Bank on the Top40.
Monday - 14 September - 13.5m warrants traded
Tuesday - 15 September - 1.3m warrants traded
Wednesday - 16 September - 6.4m warrants traded
Thursday - 17 September - 7.7m warrants traded
There is a lot of action around this warrant and I get the sense that people are starting to buy some protection against downside risk.
Looking at the US markets this evening I see that they seem to be bumping their heads around 9800 level on the Dow and people have stopped to ask themselves - what next?
I still have a long position on Anglo Gold which seems to be doing ok although I am watching it quite closely. If it doesn't kick on again tomorrow I might be tempted to exit it although I wouldn't be surprised to see gold move up going into the weekend. Looking at the ADR (AU:US) its off just under 2% but the JSE listed counter has not been helped by the dollar being so weak - a little slip in the rand and the gold shares could fly.
Warrants / spreads / products etc
An observation that I thought could be the opening for an interesting debate around linear and de-linear trading products in a market such as these.
I haven't traded warrants in ages, preferring to instead use things like the spread trading platforms offered by our favourite bucketshop. However I was finding myself getting stopped out at losses on that particular platform with some regularity even if the overall trend I was looking at was right.
While there has been this big move toward straight line products like spreads, knock-outs and binary options there is still an important place for a product such as warrants which can absorb some sideways volatilty (without hopefully being strangled by time decay).
The importance of picking the right product to work alongside your trade is often as important as picking the right trade - it means sweet bugger all if you can't execute on the right strategy.
I'm starting to get that creepy feeling and I started looking around for a bit of downside protection today. Started shifting away from a lot of my small-cap stocks into either cash or puts today.
Without question my "feelings" are very non-technical and would be thrown out the door by most traders - but having watched the market in the last few days (specifically the US), one can't help but get the sense that the market is running out of steam.
Thought this made for interesting reading - this is the volume traded on Put warrant TOPSBV which is a warrant issued by Standard Bank on the Top40.
Monday - 14 September - 13.5m warrants traded
Tuesday - 15 September - 1.3m warrants traded
Wednesday - 16 September - 6.4m warrants traded
Thursday - 17 September - 7.7m warrants traded
There is a lot of action around this warrant and I get the sense that people are starting to buy some protection against downside risk.
Looking at the US markets this evening I see that they seem to be bumping their heads around 9800 level on the Dow and people have stopped to ask themselves - what next?
I still have a long position on Anglo Gold which seems to be doing ok although I am watching it quite closely. If it doesn't kick on again tomorrow I might be tempted to exit it although I wouldn't be surprised to see gold move up going into the weekend. Looking at the ADR (AU:US) its off just under 2% but the JSE listed counter has not been helped by the dollar being so weak - a little slip in the rand and the gold shares could fly.
Warrants / spreads / products etc
An observation that I thought could be the opening for an interesting debate around linear and de-linear trading products in a market such as these.
I haven't traded warrants in ages, preferring to instead use things like the spread trading platforms offered by our favourite bucketshop. However I was finding myself getting stopped out at losses on that particular platform with some regularity even if the overall trend I was looking at was right.
While there has been this big move toward straight line products like spreads, knock-outs and binary options there is still an important place for a product such as warrants which can absorb some sideways volatilty (without hopefully being strangled by time decay).
The importance of picking the right product to work alongside your trade is often as important as picking the right trade - it means sweet bugger all if you can't execute on the right strategy.
Tuesday, January 20, 2009
Shorting Sasol
Well I got stopped out of my Sasol long and promptly reversed my position by going short... The Sasol share price dropped nicely and SSL is down a whopping 12.35% in the US.
(Obviously this is a bit of a function of the catch-up from Monday) but that puts Sasol at around R259 in Rand terms. Well below where we are at at the moment.
With Asia down again (particularly BHP) we should have some more pressure on our resources again today.
A little frustrated with myself as I converted some of my dividend earning shares into trading positions - which went against my "bigger picture" strategy but hopefully it will pay off.
My thinking is to convert some of the profits from the trades back into blue chip just to build the dividend stream as I go along.
Investec
I see InvestVrek (previously known as Investec) also took a whack yesterday.... UK banking operations have been on the receiving end of a hiding since the RBS announcement and with the Pound being flushed down the toilet it hasn't helped the share price here...
Might prove to be an interesting one from a dividend yield perspective in the next few months if it keeps tracking down like this - but that depends on what form Investec will take by the end of the year...
(Obviously this is a bit of a function of the catch-up from Monday) but that puts Sasol at around R259 in Rand terms. Well below where we are at at the moment.
With Asia down again (particularly BHP) we should have some more pressure on our resources again today.
A little frustrated with myself as I converted some of my dividend earning shares into trading positions - which went against my "bigger picture" strategy but hopefully it will pay off.
My thinking is to convert some of the profits from the trades back into blue chip just to build the dividend stream as I go along.
Investec
I see InvestVrek (previously known as Investec) also took a whack yesterday.... UK banking operations have been on the receiving end of a hiding since the RBS announcement and with the Pound being flushed down the toilet it hasn't helped the share price here...
Might prove to be an interesting one from a dividend yield perspective in the next few months if it keeps tracking down like this - but that depends on what form Investec will take by the end of the year...
Monday, January 19, 2009
Bloody Sasol!
I've been out of trading mode for a while as December wound down and we drifted into January...
Anyway decided to get back on the trading horse today and got a nasty start.
Spent a lot of time yesterday scanning through the big caps and isolated the trading options down to Gold Fields, Sasol, Sappi and Anglo American based on their volatility in the last few weeks.
Saw the Rand weakening a bit, thought Sasol had established a base around R290 and seemed to have confirmed something of a short term up-tick. With the ObamaMania swamping the US, I expected some opportunities
Went long Sasol using Sasol warrant SOLSBD. About 10 minutes after I entered the trade, Sasol came out with their Competition Commission disclosures and we "enjoyed" a bitch slap all the way down to R274.
Rough day on the market in general and I'm still anticipating a US "Patriot" rally as Obama sweeps into office. We're seeing the Rand slightly weaker vs. the US dollar but the oil price isn't coming to the party just yet...
Will see what tomorrow brings and then decide what I'm going to do with the position....
Anyway decided to get back on the trading horse today and got a nasty start.
Spent a lot of time yesterday scanning through the big caps and isolated the trading options down to Gold Fields, Sasol, Sappi and Anglo American based on their volatility in the last few weeks.
Saw the Rand weakening a bit, thought Sasol had established a base around R290 and seemed to have confirmed something of a short term up-tick. With the ObamaMania swamping the US, I expected some opportunities
Went long Sasol using Sasol warrant SOLSBD. About 10 minutes after I entered the trade, Sasol came out with their Competition Commission disclosures and we "enjoyed" a bitch slap all the way down to R274.
Rough day on the market in general and I'm still anticipating a US "Patriot" rally as Obama sweeps into office. We're seeing the Rand slightly weaker vs. the US dollar but the oil price isn't coming to the party just yet...
Will see what tomorrow brings and then decide what I'm going to do with the position....
Monday, September 29, 2008
Options and Wealth?
The recent trouncing of the stock market has led me to a great internal debate / struggle...
Up until the start of September I had a nice little strategy going. Buy little blocks of shares, each time adding another dividend stream and try and grow my wealth that way.
Then I got all excited by the market volatility and fancied a bit of day trading and I sold out of 3 dividend producing shares to buy some call options on Impala Platinum and WHAM! I got the direction wrong.
Apart from losing money on the trade (I kept a portion of the position open though because I still think its the right call given the anticipated emerging market currency issues), I have also lost 3 dividend streams.
The irony of all of this though is that the shares that I have sold out of, have actually weathered the storm quite well.
The whole situation got me thinking - why do I bother to try and time the market to make "quick bucks" off of futures or options trading when a strategy of accumulation seems to work better?!
I had previously enjoyed some good successes trading in the options market, but at the end of the day, chasing a quick buck has actually moved me backwards.
Maybe its a fools game?
Stock brokers consistently tell stories about clients who churn their accounts over each year. Sometimes they end up, sometimes they end down - but at the end of the day, they don't consistently make any money by trading options.
Their is nothing scientific about my statement and I don't for a moment think that you can't make real money trading in the options and futures market. I do however wonder whether traders sometimes delude themselves that they are building WEALTH when they're actually gambling on trading profits...?
Up until the start of September I had a nice little strategy going. Buy little blocks of shares, each time adding another dividend stream and try and grow my wealth that way.
Then I got all excited by the market volatility and fancied a bit of day trading and I sold out of 3 dividend producing shares to buy some call options on Impala Platinum and WHAM! I got the direction wrong.
Apart from losing money on the trade (I kept a portion of the position open though because I still think its the right call given the anticipated emerging market currency issues), I have also lost 3 dividend streams.
The irony of all of this though is that the shares that I have sold out of, have actually weathered the storm quite well.
The whole situation got me thinking - why do I bother to try and time the market to make "quick bucks" off of futures or options trading when a strategy of accumulation seems to work better?!
I had previously enjoyed some good successes trading in the options market, but at the end of the day, chasing a quick buck has actually moved me backwards.
Maybe its a fools game?
Stock brokers consistently tell stories about clients who churn their accounts over each year. Sometimes they end up, sometimes they end down - but at the end of the day, they don't consistently make any money by trading options.
Their is nothing scientific about my statement and I don't for a moment think that you can't make real money trading in the options and futures market. I do however wonder whether traders sometimes delude themselves that they are building WEALTH when they're actually gambling on trading profits...?
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