Portfolio screen shot added to provide credibility. I’ve noticed some ET members prefer to call BS than write constructive comments and others tend to comment more when they believe the OP is sincere.
SUMMARY (TL; DR)
ASSUMING you know COVID-19 will continue to impact world economies for at least several more months and maybe years, what positions would you hold in the markets?
Please debate the validity of this assumption in other threads, not here.
+239% YTD ON COVID-19: NEXT STEPS
This wasn’t highly leveraged dumb luck. My individual trades gained MUCH more than 239%. In fact, I’ve been mostly in cash this year and I put a small portion of my portfolio long VIX options and VIX futures six weeks ago based on two models I built involving a hundred years of data. I sold many of my positions through mid- to late- March. My value at risk has always been very clearly defined and monitored. Several of my best trades ranged from 1000% to 1500% (OTM VIX calls).
MY QUESTION TO YOU
ASSUMING COVID-19 will continue to impact the world economy and world markets, what are the best strategies and positions to hold for profit? This is not about day trading.
This is not the place to discuss whether COVID-19 will continue to impact world economies or for how long they will impact world economies. Please do that in other threads.
CONTEXT
I have robust models for anticipating major changes in volatility and for anticipating recessions. Using them, I exited my long-term equity positions earlier this year and in late February and early March put a portion of my portfolio long OTM VIX calls and VIX futures. I’ve now closed many (but not all) of these positions.
When I entered these positions, premiums on volatility options were much lower than they are now. Even if we continue to see new stock market lows, I’m not sure that being long volatility is still going to be the most effective way to profit from the declines. How would you express an assumption of further COVID-19 impact on economies and markets over the next several months (whether you believe this thesis or not.)
What would you suggest as an attractive alternative to establishing positions in volatility? Long OTM Russell 2000 (RUT) puts? Currency options? Credit? Specific commodity options? Long/short positions across specific stocks or sectors? Long/short specific regions of the world? (I often like buying options to clearly define my maximum loss, particularly when my thesis is uncertain, as is the case here.) I have a laundry list of ideas, but I’m inviting the ET community to brainstorm and for you to share yours here.
DETAILS
The strategy depends, in part, on your beliefs as to the timeline and depth of economic disruption due to COVID-19. I’m asking you to assume there will be further disruption, but the exact nature of that disruption is wide open to speculation. In February, volatility futures and options were an effective way to express my opinion in the market. Now, the optimal trading strategy might be X for the next A months, Y for the next B months, and so on. Will credit defaults lead to weaknesses in banking? Will falling prices lead to deflation? What path will this all take? There are a lot of assumptions here, so feel free to add specifics if you have opinions.
I don’t presently have (much of) a prediction on the timeline, depth of disruption, and which economies and sectors of economies will be hit hardest at different stages of the evolving pandemic. Having a bias toward a specific trajectory would influence my belief in the most effective way to profit. Feel free to provide as many details and opinions as you wish on the potential trajectory and how this would inform your market strategies.
Personally, I’m seeking the most robust way to profit if COVID-19 continues to impact economies: I prefer ways that are likely to profit irrespective of the specific path or types of negative impacts.
IT’S NOT ABOUT DAY TRADING
This all has little to do with day trading. I do a little day trading, but I mostly focus on periods from a few days up to about a year, and this seems to be where I am personally most profitable. Increased volatility is undoubtedly good for profitable day traders, but that’s not what this post is about.
SUMMARY (TL; DR)
ASSUMING you know COVID-19 will continue to impact world economies for at least several more months and maybe years, what positions would you hold in the markets?
Please debate the validity of this assumption in other threads, not here.
+239% YTD ON COVID-19: NEXT STEPS
This wasn’t highly leveraged dumb luck. My individual trades gained MUCH more than 239%. In fact, I’ve been mostly in cash this year and I put a small portion of my portfolio long VIX options and VIX futures six weeks ago based on two models I built involving a hundred years of data. I sold many of my positions through mid- to late- March. My value at risk has always been very clearly defined and monitored. Several of my best trades ranged from 1000% to 1500% (OTM VIX calls).
MY QUESTION TO YOU
ASSUMING COVID-19 will continue to impact the world economy and world markets, what are the best strategies and positions to hold for profit? This is not about day trading.
This is not the place to discuss whether COVID-19 will continue to impact world economies or for how long they will impact world economies. Please do that in other threads.
CONTEXT
I have robust models for anticipating major changes in volatility and for anticipating recessions. Using them, I exited my long-term equity positions earlier this year and in late February and early March put a portion of my portfolio long OTM VIX calls and VIX futures. I’ve now closed many (but not all) of these positions.
When I entered these positions, premiums on volatility options were much lower than they are now. Even if we continue to see new stock market lows, I’m not sure that being long volatility is still going to be the most effective way to profit from the declines. How would you express an assumption of further COVID-19 impact on economies and markets over the next several months (whether you believe this thesis or not.)
What would you suggest as an attractive alternative to establishing positions in volatility? Long OTM Russell 2000 (RUT) puts? Currency options? Credit? Specific commodity options? Long/short positions across specific stocks or sectors? Long/short specific regions of the world? (I often like buying options to clearly define my maximum loss, particularly when my thesis is uncertain, as is the case here.) I have a laundry list of ideas, but I’m inviting the ET community to brainstorm and for you to share yours here.
DETAILS
The strategy depends, in part, on your beliefs as to the timeline and depth of economic disruption due to COVID-19. I’m asking you to assume there will be further disruption, but the exact nature of that disruption is wide open to speculation. In February, volatility futures and options were an effective way to express my opinion in the market. Now, the optimal trading strategy might be X for the next A months, Y for the next B months, and so on. Will credit defaults lead to weaknesses in banking? Will falling prices lead to deflation? What path will this all take? There are a lot of assumptions here, so feel free to add specifics if you have opinions.
I don’t presently have (much of) a prediction on the timeline, depth of disruption, and which economies and sectors of economies will be hit hardest at different stages of the evolving pandemic. Having a bias toward a specific trajectory would influence my belief in the most effective way to profit. Feel free to provide as many details and opinions as you wish on the potential trajectory and how this would inform your market strategies.
Personally, I’m seeking the most robust way to profit if COVID-19 continues to impact economies: I prefer ways that are likely to profit irrespective of the specific path or types of negative impacts.
IT’S NOT ABOUT DAY TRADING
This all has little to do with day trading. I do a little day trading, but I mostly focus on periods from a few days up to about a year, and this seems to be where I am personally most profitable. Increased volatility is undoubtedly good for profitable day traders, but that’s not what this post is about.
