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Friday, June 22, 2018

#WTI #RBOB Simple #Crack Spread Pair #Trade

 How to calculate and trade Simple Crack Spread using RBOB and WTI Futures. 

Friday, June 22, 2018
Scaled in @17.4; tis a berry painful trade. I Feel Like I'm Taking Crazy Pills

Exec Time Spread Side Qty Pos Effect Symbol Exp Strike Type Price Net Price Order Type Crack
17.431
6/22/2018 11:31 FUTURE SELL -1 TO OPEN /CLQ8 18-Aug FUTURE 68.06 68.06 MKT
6/22/2018 11:31 FUTURE BUY 1 TO OPEN /RBQ8 18-Aug FUTURE 2.0355 2.0355 MKT


Wednesday, June 20, 2018

The U.S.  gasoline price decreased.  Let us wait for a summer spike in gasoline price and try to do some scalping at the same time.

Scaled in @18.71


Exec Time Spread Side Qty Pos Effect Symbol Exp Strike Type Price Net Price Order Type Crack_Spread
18.7126
6/20/2018 12:18 FUTURE SELL -1 TO OPEN /CLQ8 18-Aug FUTURE 65.51 65.51 MKT
6/20/2018 12:18 FUTURE BUY 1 TO OPEN /RBQ8 18-Aug FUTURE 2.0053 2.0053 LMT

Monday, June 18, 2018

Scaled out @20.27 for $100 ;  the basis is @20.87 now.

Exec TimeSpreadSideQtyPos EffectSymbolExpStrikeTypePriceNet PriceOrder TypeCrack_spread
20.2728
6/18/2018 10:23
FUTUREBUY
1
TO CLOSE/CLQ8
18-Aug
FUTURE
64.92
64.92
MKT
6/18/2018 10:23
FUTURESELL
-1
TO CLOSE/RBQ8
18-Aug
FUTURE
2.0284
2.0284
LMT

Friday, June 15, 2018

Scaled in @20.17.

Exec Time Spread Side Qty Pos Effect Symbol Exp Strike Type Price Net Price Order Type Crack_Spread
20.1696
6/15/2018 10:46 FUTURE BUY 1 TO OPEN /RBQ8 18-Aug FUTURE 2.0338 2.0338 MKT
6/15/2018 10:46 FUTURE SELL -1 TO OPEN /CLQ8 18-Aug FUTURE 65.25 65.25 MKT


Thursday, June 14, 2018

In line with my expectation, Q8 Crack spread is cheaper today. Having a long position here is a good idea as at summer seasons this pair is prone to sudden spikes.


Exec Time Spread Side Qty Pos Effect Symbol Exp Strike Type Price Net Price Order Type Crack_Spread
20.968
6/14/2018 11:05 FUTURE BUY 1 TO OPEN /RBQ8 18-Aug FUTURE 2.079 2.079 MKT
6/14/2018 11:05 FUTURE SELL -1 TO OPEN /CLQ8 18-Aug FUTURE 66.35 66.35 MKT

Thursday, June 21, 2018

#SP500 $ES_F #daytrading #algotrading : 5 points #Solstice #Trade

Today. June 21st, medved's SP500 daytrading algorithm went short and scored 5 points  The algo has generated another two trades during this week to the total profit of 15 points. The algo fully recovered the big loss Year to date in 2018 the algorithm has generated 90 points per one emini contract.

Solstice Trade:



Tuesday, June 19, 2018

#TESLA #Big #Short is coming

It looks like Elon Musk is a serial liar and a serial killer. How many more lives before The National Transportation Safety Board will pronounce: "Tesla is not safe". Short $TSLA when it is at new ATH.

" Saboteur hacked Tesla code, stole data and may have started fire." Elon Musk




Sunday, June 17, 2018

Why do I buy cheap OTM puts?

SLV credit puts spreads is the core of my Income Portfolio. A typical spread is -1 16 Put hedged with +1 13 Put.  Almost always  I have a feeling that cheap OTM puts are a useless waste of money. I have to suppress this emotion because back in 2008 SLV printed $8.5. If a financial crisis like in 2008 will happen again and the SLV price will drop say to $10 the baseline for me will shift $3 down but the income strategy will keep yielding interest. It turns out that Mark Spitznagel has a similar approach to risk hedging.

Friday, June 15, 2018

#soybean #ZS_F : protective puts

Soybean is under tremendous pressure. Let us buy some protection. The pain phase is in.

Exec Time Spread Side Qty Pos Effect Symbol Exp Strike Type Price Net Price Order Type
6/15/2018 10:41 SINGLE BUY 1 TO OPEN /ZSU8 1/50 SEP 18 /OZSU8 800 PUT 1.25 1.25 LMT
6/15/2018 10:41 SINGLE BUY 1 TO OPEN /ZSU8 1/50 SEP 18 /OZSU8 800 PUT 1.25 1.25 LMT

#SP500 2905 Call goes to heaven : 1 point

Macro works. 


Wednesday, June 13, 2018

#SP500 option pins for OPEX r @2750

2018-06-16 opt_pin@2750.0 /ES@2792.5 
2018-06-15 opt_pin@275.0 SPY@279.1 
2018-06-15 opt_pin@2750.0 SPX@2787.14

10 % #income #trade for elderly : trade update




I invested $3600  to get ~10%  of interest per year in my mother in law account. 

Today FOMC is going to raise rates again. This is a negative factor for silver prices. For this reason, I 've decided to increase protection an have bought Oct, 18 13.5 Put.




Since March,18  the account is up ~ 4%. 



#Crack #Spread : take $550 profit

It is possible that we will see cheaper Q8 simple crack spread;  I am taking $550 profit here and looking forward to a better entry. The trade entry was posted here.

Exec Time Spread Side Qty Pos Effect Symbol Exp Strike Type Price Order Type Crack_Spread
22.1086
6/13/2018 11:16 FUTURE SELL -1 TO CLOSE /RBQ8 18-Aug FUTURE 2.1083 MKT
6/13/2018 11:16 FUTURE BUY 1 TO CLOSE /CLQ8 18-Aug FUTURE 66.44 MKT


 How to calculate and trade Simple Crack Spread using RBOB and WTI Futures.

Tuesday, June 12, 2018

Q8 Simple #Crack #Spread : long #Gas short #Oil pair #trade

 "Crack Spread" is the difference between the cost of the oil products such as heating oil, gasoline and the cost of oil from which these products were cracked. Here there is an explanation of how to calculate and trade this pair using RBOB and WTI futures.

Exec Time Spread Side Qty Pos Effect Symbol Exp Strike Type Price Order Type Crack_Spread
21.5238
6/12/2018 10:38 FUTURE SELL -1 TO OPEN /CLQ8 18-Aug FUTURE 66.42 MKT
6/12/2018 10:38 FUTURE BUY 1 TO OPEN /RBQ8 18-Aug FUTURE 2.0939 MKT

Monday, June 11, 2018

#soybean $ZS_F : scaled in #naked #puts

Negative news for US farmers :
1.  China wants to produce more soybean.
2. Argentina's soybean crop is set to increase by 44% in 2018/2019. 

  Price keeps dropping. Contrarians have to endure more pain. Today I've added to the position. This is -No Pain No Gain- trade now.


Exec Time Spread Side Qty Pos Effect Symbol Exp Strike Type Price Net Price Order Type
6/11/2018 12:13 SINGLE SELL -1 TO OPEN /ZSU8 1/50 SEP 18 /OZSU8 910 PUT 7 7 LMT

Sunday, June 10, 2018

Small-scale Income Trade That Works Similar to Income from Real Estate Property

Part I: Upstream against Currency Devaluation

For all practical purposes, 1964 marks the last year when regular quarters minted in the USA were suitable for storing value by a regular person. 54 years later, in 2018, 1964 Washington silver quarter costs about $3. Isn't it an interesting and dangerous question - to whom  11/12 of the original value was transferred? 

Another important observation is that those- before 1964- folks were paid interest without losing the principal value. A modern investor has to operate in the monetary environment constructed to deplete the principal value of a cash account by virtue of the hidden currency devaluation. Let us estimate the rate of USD devaluation using the value of 1964 Washington silver quarter -  (1-x) ^54=1/12.  The answer x = 0.045. It means that 


No matter what they say in their official reports, the above calculation showed that the value of $1 decreases with the rate ~4.5% per year.


Now, the formula to calculate a real return on a cash account reads :


Real ROI = (1 - Tax Rate/100) x ROI - Currency Devaluation Rate,


where ROI stands for return on investment. Say if your tax rate is 25% than Real ROI for the cash account becomes positive if you make > 6% per year.



Part II:  Residential Real Estate Investing. 


Middle-class individuals often choose to invest in real estate as a way to receive interest without losing the principal value. For example, currently a 1400 square feet, 2 bedrooms, 2 1/2 bath condo in Miami-Dade, Florida costs ~$200,000. If rented out, such property generates cash flow, $1300 per month, minus management fee, $200-300 per month, and minus property tax, ~$2,000 per year. Altogether it is about 5% ROI.

Real ROI = (1 - Tax Rate/100) x (ROI - Depreciation Rate), 

Let us use IRS allowed number, 3.636%, for the depreciation rate. In this case, if your tax rate is 25% than Real ROI in the above described residential property is ~1% per year.  For investors in Miami-Dade residential properties, it means that in 2018 all future rental incomes are nearly priced in. Well, at least the wealth is protected from the silent erosion by $ devaluation. Investing in Miami-Dade residential properties was attractive back in 2010-4 when the same condo yielded between 6 and 4%.


Part III:  Small-scale investment in equities.


Real estate investing is a capital-intensive business while according to recent publications in media,  many people in the USA have no $500 of free cash. Now let us think of a person who wants to accumulate wealth by small-scale savings while collecting interest. Since this individual has to beat $ devaluation (see Part I), small-scale investing in a dividend-paying company looks like a natural choice here. This choice, however, creates an additional risk cause companies tend to lose business and at some point, nearly all of them will go bankrupt.
Thus it is better for our small investor to buy a dividend-paying index fund.  For example, in 2018 before tax SPY pays ~1.8% of interest.  Similar to real estate, the problem here is the overstretched valuation which goes hand in hand with debt expansion cycles. A debt expansion cycle is usually followed by a prolonged stagflation period. From 1970 to 1980 SP500 dropped from ~$700 to $300 while, for example, WTI oil skyrocketed from $20 to ~$120. It is difficult to predict when and at what price the next top in SP500 will happen, but the phenomenon of lost decades is amply demonstrated by the historical chart of SP500.

Part IV:  Small-scale investment in commodities.


Commodity investing is another way to fight currency devaluation. Beware that the entry point has to be close enough to the lows of a commodity cycle. Typically a long period of oversupply and of depressed prices is followed by a period when the demand becomes larger than mining supply. The price will stay depressed until the overground stocks are depleted. Usually, there is enough time to gather information and make an investment decision. 

Silver
At the beginning of 21st century, the rise of digital photography had eliminated about half of industrial demand for silver. After it, the investment demand was oversaturated in the bubble of 2011. The price of silver was depressed since then. With the widespread adoption of electronic gadgets the situation has changed and for the first time in many years, the total demand for silver is larger than mining supply. Silver ETF, SLV, is an ideal choice for a small-scale investment. Interest can be collected by selling out of the money calls against SLV stocks (SLV has liquid options) and at the same time to allow price appreciation against currency devaluation. Here is an example of the above-described investment in SLV using $3600.

Uranium
"In 2018 U supply is getting short, demand is growing while the number of active mines is dropping worldwide. When the overground stocks will go, the price will explode. Here one can get a solid return on investment while participating in the liquid market.  Indeed, for the next several years, aggressive trading strategies like stock replacement by debit call spread may yield abnormal returns ...."

URA ETF is suitable for small-scale investments in this market. Again, the options market here can be used to collect interest. Unlike SLV, URA is not a pure commodity ETF. As a collection of mining stocks, this ETF pays quite significant dividends.  
  

Saturday, June 9, 2018

#Ponzi #Crypto vs #Uranium

The recent post, "#Uranium is going to beat #crypto returns", may sound a little bit provocative, but let us check the realities of these two very different mining worlds.

The blockchain technology is not that young anymore, but no economically significant applications were reported yet.
At present, it is not obvious how to get rid of the inherent slowness and expensiveness of a blockchain transaction. Meanwhile, people are experiencing crypto-mania and it is an acute form of mania. The reason is that the opportunity of an abnormal gain has a strong emotional response in the reptilian part of the human brain. This reptilian brain has all chemical means to stop commonsense. When a critical mass of free lunch believers is achieved, it becomes a self-propelling mania, because human beings have the basic instinct to act in a herd. No one is going to ask who is the patsy, that ultimate bagholder on the other side of the trade. While the answer is pretty obvious, people don't mind to buy some hilarious  #ICO.  For example, PonziCoin does exist in the crypto universe.  I dare to predict that the eventual return on this ICO will be minus 100%. Ponzi is a common trait of ICOs. Hence minus 100% return is going to be the universal constant in the ICO world.




















As for #Uranium, there is no reason to think that the uranium cycle is different from any other commodity cycle for that matter.  In 2018 U supply is getting short, demand is growing while the number of active mines is dropping worldwide. When the overground stocks will go, the price will explode. Here one can get a solid return on investment while participating in the liquid market.  Indeed, for the next several years, aggressive trading strategies like stock replacement by debit call spread may yield abnormal returns and beat the darlings of the crypto world.



Friday, June 8, 2018

#SP500 $ES_F #daytrading #algotrading : 12 points

I continue SP500 daytrading using the statistics-based algorithm. The algo has generated only one trade during the last 5 trading days. It was a successful trade, 12 points. The algo needs another 7 points win to fully recover from the big loss. Year to date in 2018 the algorithm generated 70 points per one emini contract.


Thursday, June 7, 2018

#Uranium is going to beat #crypto

Today I had a chat with two young people. They literally are mesmerized by various #ICO and just don't want to see anything else. Well,  # Uranium is going to explode, so to say. In the followup post, an interested reader can find a reflection on the cycles in #PonzyCoin and #Uranium. 


Wednesday, June 6, 2018

#Uranium $URA spike : Judgment of Solomon


As a $URA trader, I want to take advantage of
1) high volatility, ~28%;
2) two 3+%  days in a row.

As a Uranium watcher, I want to keep the long position.

The Solomon's approach is to split the baby and put a strangle around half of the URA position.

Exec Time Spread Side Qty Pos Effect Symbol Exp Strike Type Price Net Price Order Type
6/6/2018 15:24 SINGLE SELL -1 TO OPEN URA 20-Jul-18 15 CALL 0.4 0.4 LMT
6/6/2018 11:33 SINGLE SELL -1 TO OPEN URA 20-Jul-18 14 PUT 0.3 0.3 LMT

Tuesday, June 5, 2018

#soybean $ZS_F : naked put reentry



Whenever Donald Trump tweets the price of soybean goes down. After it, the price bounces back.  Let us use this opportunity to reload our winning naked puts trade. 

The cone shows one standard deviation move. 
910 Put 80 DTE (days to expiration); Buying power effect: ~ $600; Max profit: $140.

Exec Time Spread Side Qty Pos Effect Symbol Exp Strike Type Price Net Price Order Type
6/5/2018 12:12 SINGLE SELL -1 TO OPEN /ZSU8 1/50 SEP 18 /OZSU8 910 PUT 2.875 2.875 LMT


Monday, June 4, 2018

#silver $SLV : take $250 profit & new entries

I continue rolling credit put spreads in silver ETF SLV. This is an income trade where interest on the invested capital is collected instead of buying a dream of the unlimited upside. The closed positions yielded 10% in 240days.
In the wake of the coming liquidity crisis, the new entries were moved far-out in time to collect more cash aka premium.


Exec Time Spread Side Qty Pos Effect Symbol Exp Strike Type Price Net Price Order Type
New entries
6/4/2018 10:10 SINGLE BUY 6 TO OPEN SLV 17-Jan-20 10 PUT 0.04 0.04 LMT
6/4/2018 10:10 SINGLE BUY 1 TO OPEN SLV 17-Jan-20 10 PUT 0.04 0.04 LMT
6/4/2018 10:04 SINGLE SELL -7 TO OPEN SLV 17-Jan-20 16 PUT 1.49 1.49 LMT
Take profit
6/4/2018 10:00 SINGLE BUY 7 TO CLOSE SLV 20-Jul-18 16 PUT 0.62 0.62 LMT
Original entries were posted back in Oct,17
10/31/2017 10:45 SINGLE SELL -1 TO OPEN SLV 20-Jul-18 16 PUT 1.09 1.09 LMT
10/31/2017 10:45 SINGLE BUY 1 TO OPEN SLV 20-Jul-18 11 PUT 0.04 0.04 LMT
10/30/2017 9:46 SINGLE BUY 1 TO OPEN SLV 20-Jul-18 11 PUT 0.03 0.03 LMT
10/30/2017 9:45 SINGLE SELL -1 TO OPEN SLV 20-Jul-18 16 PUT 1.05 1.05 LMT
10/9/2017 14:38 SINGLE BUY 2 TO OPEN SLV 20-Jul-18 10 PUT 0.03 0.03 LMT
10/9/2017 14:32 SINGLE SELL -2 TO OPEN SLV 20-Jul-18 16 PUT 1.06 1.06 LMT
10/9/2017 10:00 SINGLE BUY 1 TO OPEN SLV 20-Jul-18 11 PUT 0.04 0.04 LMT
10/9/2017 9:34 SINGLE SELL -1 TO OPEN SLV 20-Jul-18 16 PUT 1.05 1.05 LMT
10/5/2017 15:15 SINGLE SELL -1 TO OPEN SLV 20-Jul-18 16 PUT 1.21 1.21 LMT
10/5/2017 14:05 SINGLE BUY 1 TO OPEN SLV 20-Jul-18 10 PUT 0.02 0.02 LMT
10/4/2017 9:35 SINGLE BUY 1 TO OPEN SLV 20-Jul-18 10 PUT 0.03 0.03 LMT
10/4/2017 9:34 SINGLE SELL -1 TO OPEN SLV 20-Jul-18 16 PUT 1.2 1.2 LMT