Trading the Market Volatility – August 2019

As we mentioned a few weeks ago, volatility has increased substantially and that would provide a few chances for trading in and out of a few stocks. We’ve done just that.

First, our GOOGL PUT worked out nicely as we managed to nail the trade from top to bottom:

That big win was tempered by a loss on APHA.to two days later. Why? Because we sold a WEEKLY CALL on the stock for $8.50 and then it got exercised when the stock happened to pop up to $9.51 a day later. Good move by whoever did it, and we got stuck with a $1000 loss on the stock, minus the bit of money we made on selling options on it. We’re not sad to see the stock go but we would’ve liked a few more chances to make back our money. We should’ve started sooner and/or we should’ve just got rid of the thing sooner. Oh well, maybe there will be a next time.

Next bullish CALL is on NFLX as that stock has tanked quite a bit. We bought a $347 CALL for Sept 6 which we figure should work out. You’ll see the stock has traded down recently and that has meant our CALL has gone down in value but, and this aligns with our view that the overall markets have been greatly oversold and that a rebound is in the works, if only slightly.

And about that market rebound. We closed out our UPRO trade for a few percentage point-gain and followed that with a partial close of our INDL trade, making our week overall profitable. We still hold some more INDL at $58 and EDC at about $59.

As for GOLD, we’ve been trading around quite a bit in this space and if asked us whether or not we regret selling AEM.to too soon, we’d say no. We’ve been trading in and out a little bit and have been able to lock in some gains along the way so we’re not unhappy. We are still short AEM.to for Sept 20 and Dec 20 as well as NUGT at the end of August. These may not work out, that’s fine, and we have been trading the NUGT ETF on its volatility lately.

Next, we looked at the technicals and the oversoldness of the overall markets and decided to put some money into SOXL. This ETF can move pretty quickly so ideally we’d like to be out of it today, Friday August 16.

Hey, what about those CANADIAN ENERGY STOCKS you were so happy about a few months ago?

Well, they’ve fallen further and weighing down on our portfolios. We will not sell. We can afford to hold these for a while so it doesn’t make sense to be losing that sort of money. PD.to especially has been absolutely crrrrrushed lately, dropping to $1.48 as of yesterday’s close. Can it fall any farther? Is this company going out of business (it still has operations in the US)? We continue to collect dividends on some of the holdings but not many. We’d like to think that this is a capitulation sell-off but what some people are saying about recession possibilities and the future demand of oil and we’re starting to wonder if maybe it will be a long while before any of these stocks turn profitable. In the meanwhile, we can trade other things.

Overall, we’re keeping our stash of cash ample just in case any of this moves against us. We’re making sure that we can withstand any sort of whipsaw that happens and will hold few leveraged positions over the weekend.

Hey are you trading the VIX at all?

No. We’ve tried before but we never seem to get the timing and the direction right. Instead, we’ll focus on using the technical indicators on the charts above to pick out majorly oversold ETFs and trade those for the short-term.