hsi to hhi.hk spread - china index play

S

scriabinop23

long 1 hsi to short 1 hhi.hk - short term play for next 2-3 weeks.

here's the story:

china life (lfc) ipo is driving up all the china indexes to no end. ping an, large component of hhi.hk as well, also up 15%.

I've been long hsi for a while, and unfortunately sold my hhi.hk position a few days ago (nervous that the runup was too quick. ha !!) hhi.hk is up 700+ pts today because its so heavily weighted on this and some other associated financials.

anyway, i made some nice scalps of hhi.hk tonight, but ended with a dog. from 10230 level I attempted a final short. lo and behold, market moves up 100 pts. Just when I thought 600 was enough for the day and not much more was possible, we go another 100 !!

now I know the mantra, don't fight the trend. but at the same time I'm already long hsi, and can easily picture a few percent correction and US markets sell off some of the frothy gains on LFC/etc. So I left the short on, and I'm in a spread, long HSI, short HHI.HK.

Now essentially this is a sector play - if we run up another 10% on LFC tommorow, I lose. But if we correct, while the rest of chinese equities hold on, it could do quite well.

Any thoughts or ideas here? I'm giving it a go. realistically, this will result in at worst a day of lost gains. (worst case repeat of today's move, and it'll wipe out another 300 pts of profit as well) I consider 2 days in a row of 7% moves on this index unlikely, though.

HSI went up 380+ today, HHI.HK 700+ (and HHI.HK is half the size!!!) - so take the inverse assuming a lower probability of something like today repeating, and this could be a nice spread. 500 down on HHI.HK (short) versus 250 down on HSI (long) on a corrective short.

Perhaps Weds night (thursday) is the day to perfectly time this, since LFC's new ipo is on Friday, I believe.

So I may enter one more spread on this depending on how tommorow plays out. otherwise, an idea in the wind.
 
I didn't have the conviction to follow thru with this all the way. I covered my short at 10243 (10228 was entry previous day). these markets have too much momentum.

i'll let my HSI long work for me unhindered.

:)

[now to resume my normal daily plan of making money in China, then giving it back in the US markets each following day]
 
Quote from scriabinop23:

long 1 hsi to short 1 hhi.hk - short term play for next 2-3 weeks.

here's the story:

china life (lfc) ipo is driving up all the china indexes to no end. ping an, large component of hhi.hk as well, also up 15%.

I've been long hsi for a while, and unfortunately sold my hhi.hk position a few days ago (nervous that the runup was too quick. ha !!) hhi.hk is up 700+ pts today because its so heavily weighted on this and some other associated financials.

anyway, i made some nice scalps of hhi.hk tonight, but ended with a dog. from 10230 level I attempted a final short. lo and behold, market moves up 100 pts. Just when I thought 600 was enough for the day and not much more was possible, we go another 100 !!

now I know the mantra, don't fight the trend. but at the same time I'm already long hsi, and can easily picture a few percent correction and US markets sell off some of the frothy gains on LFC/etc. So I left the short on, and I'm in a spread, long HSI, short HHI.HK.

Now essentially this is a sector play - if we run up another 10% on LFC tommorow, I lose. But if we correct, while the rest of chinese equities hold on, it could do quite well.

Any thoughts or ideas here? I'm giving it a go. realistically, this will result in at worst a day of lost gains. (worst case repeat of today's move, and it'll wipe out another 300 pts of profit as well) I consider 2 days in a row of 7% moves on this index unlikely, though.

HSI went up 380+ today, HHI.HK 700+ (and HHI.HK is half the size!!!) - so take the inverse assuming a lower probability of something like today repeating, and this could be a nice spread. 500 down on HHI.HK (short) versus 250 down on HSI (long) on a corrective short.

Perhaps Weds night (thursday) is the day to perfectly time this, since LFC's new ipo is on Friday, I believe.

So I may enter one more spread on this depending on how tommorow plays out. otherwise, an idea in the wind.
More...

If I trade them like pair trading, I would put the directional preference in HHI as you say the momentum is there.
 
Quote from Willleung:

If I trade them like pair trading, I would put the directional preference in HHI as you say the momentum is there.
More...

turned out my spread was very nice; only i exited it way too early... the selloff is all played so its a non-issue now.

but this spread was worth a few hundred points if executed around the time frames i suggested.
 
You must log in or register to reply here.
Back
Top