Forex Is Crazy

As mentioned in a previous post on this trade, I was looking to initiate another short position when the opportunity arose. I got short at 126'20 and again at 127'20. I also sold a 129 call for more than a point so essentially it's getting short at a little over 130. This is the last of this position I am comfortable adding to at the moment. I'm still doing my homework on this trade. For instance, why would a $100,000 face value no coupon bond be selling for about $127,000 right now? Because ZBs are deliverable on a 6% yield basis, so there is a deflater/conversion factor calculation that has to be applied to the current price at time of delivery that brings it back in line. Right now I'm comfortable with the amount of risk I have on just based on technicals, a hunch that 30-year yields have hit a low and have nowhere to go but up, and QE2 bond purchases being fully priced in at this time. I believe there to be an upside price risk in this trade if the Euro region t...

I've finally finished documenting my historical trading results going back to my first trade in the summer of 2008. It was an interesting experience because my personality is such that I focus on losses much to strongly and tend to downplay my successes. So being able to quantify and visually see my total history has been a good exercise. I need to look at the overall results once in a while, specifically when I've had a recent loss as I tend to get conservative and even at times stop trading all together for a while. My style of investing has changed over this brief 28 month period so its hard to draw any solid conclusions on my performance other than to say I believe I will continue to trade profitably. I've learned a lot about risk mgmt and position sizing so hopefully future losses will be mitigated to an extent that some of these past trades were not. I would like to get more quantitative in the future as far as total portfolio return rather than just monthly dollar re...

I was already short 30-year Treasuries but yesterday's Korea news opened up an opportunity to add to the position. My feeling was this, six months ago if you had told me that North Korea would engage in an attack on South Korea and people died, I would have guessed the markets would be down huge and fall from there. When we only opened down 150 Dow points and didn't sell off any further I didn't sense any real panic. Bonds however did show some panic and shot higher. With the combination of this news and some technicals I decided to add to my shorts in both the DEC and MAR contracts. This morning apparently a good jobs number trumps international conflict and the markets rebound and thus bonds sold off. I exited my shorts for a nice three day gain of roughly $3400. I am still short (1) MAR11 ZB 130 Call but will look to short MAR11 ZB futures again should the opportunity arise.

This is another deceiving month as the large gain on MET has been a paper gain for many months and finally switched to a realized gain this month. My actual trading activity during the month was a loss.

I shorted the NQ yesterday afternoon at 2142 when it looked like it was going to stop at overhead resistance, was planning on shorting it down to support levels but using a stop in case I'm wrong. I just closed it out for a small gain. This was a trade where I was kind of late to the game. I had wanted to short last week but just didn't make the time to follow through on it and I missed the move. So when I saw a large white candle that seemed to stall at resistance I decided to be a late entry to the trade. I later decided that was stupid, I had already missed a good 50 point move down. So I'm out at 2124.75.

I've been very passive with trading/investing lately but I'm back at it full time as of yesterday and looking forward to it. I started things off good with what turned out to be a quick trade. I shorted (1) ZB yesterday morning at 127'20 and covered in after hours at 126'22 for a gain of $933. Minimum tick is 1/32 at $31.25 so each full point is $1,000. I decided to short after seeing the largest while candle in the last three months that looked to be nothing more than a little panic flight to safety buying as equities shed 1.5% that day. I will look to enter again with a short if there is any short-term strength in bonds. Meanwhile I have been short a ZB 133 call for November which is set to expire worthless, and I'm short a Dec ZB 130 call. I am going to spend the next few days finally rebuilding my spreadsheet I accidentally lost with all my trades going back to summer of 2008. That is the time frame I made the jump from primarily investing long-term with covered...

Is HyperInflation a possibility? You bet it is... NIA(National Inflation Administration)released a report that believes because this decade's Real Estate bubble was so large, Real Estate prices will likely overcorrect to the downside and the median U.S. home will be worth only 500 ounces of silver at some point this decade. Therefore, if you buy just $13,000 worth of physical silver today based on 26 dollar silver, NIA believes you will be able to pay cash (without any mortgage) for an average American home within the next 5 to 10 years." http://inflation.us/foodpriceprojections.pdf I do believe that we'll see inflation like this, but I think what we'll see first is corporations trying to keep a lid on prices and they'll do that by reducing the size of the item you buy. We're beginning to see this already, with cereal boxes shrinking as well as the amount of food being served in restaurants with each plate as commodity prices climb higher and higher. Gold ...

Thats the Oil drum I am talking about. What a run that the oil complex has had. Today we took out the May highs in crude of 87.15. I had to go to the weekly to get the next resistance level, as crude has cleared all resistance levels for the last 12 months. We are hitting 2 year highs today.     3 year weekly chart for Crude Now in the longer term time frame crude can continue higher and has not reached overbought conditions yet according to the RSI. But the daily is getting close. I do think we get a correction on the shorter timeframes before/if crude is to continue higher. Probably down to at least $84-$85 range. But then again I am biased as my portfolio is posiitoned to profit from the downside. Yesterday and today I have been lifting most of my long hedges preparing for a sell off, in exchange I bought some cheap call condors just in case. Below is what my current portfolio looks like, Delta wise. I will continue to try to trade around the positions and will be look...

First let me start by saying that I added some more short exposure on today's up day. I just don't buy it. Although yesterday I was out trying to hedge some of my exposure, I just think I need to be positioned short. So I added the following positions: 1) Short 5 Jan CL 86 calls @ $3.09 2) Short 5 Dec HO 2.39 Calls @ 288 pts or $0.0288/gallon And then I added to my delta neutral CL Dec/Jan spread. I added 20 more lots for a total of 25 lots at an average price of around +66. So lets take a look at the total portfolio and what I have in terms of Delta exposure: I created the above spreadsheet in order to keep track of my positions as well as my P&L. Today I added a section to keep track of my Delta exposure in terms of contracts of the underlying. As you can see from the table above the total portfolio is short the equivilent of 3.66 CL contracts, 3.7 HO contracts, and long 2.5 RBOB contracts. In the 3rd colunm you can see what a 1ct move in any product means to my in terms ...

Today I am adding some hedges to my short positions: 1) Short 5 Dec HO 2.33 puts @ 920 pts 2) Short 5 Dec RB 2.20 Calls @ 300 pts * 1 and 2 were done as a package. In a perfect world I would get assigned on both legs locking in a 730 diff, with the current diff at 1850. But I do not think this is the most likely case. It is most likely that one or the other will get assigned or they both expire worthless (which would be awesome as well, but diff would have to come in about 500 pts). It really has to do with the current diff and where they usually finish historically. For example with the current 1850 diff this is right in line with historicals, so if I were to get assigned on the 2.20 RB calls that would give HO a minimum price of 2.3850, thus no assignment on the HO short puts. So on something like this if I get assigned on the 2.20 RB calls then my breakeven is at around 2.32 or if I get assigned on the 2.33 HO puts then my breakeven is around 2.20. In addition to the above posit...