Yo Pit Crazies,
Not long ago the hottest countries on the trading landscape were known as the BRIC’s:
Brazil
Russia
India
China
India has been off the races in 2021, check out the Wisdomtree India Earnings ETF (Ticker: EPI). Brazil has gone gangbusters lately, too, if you follow MSCI Brazil Index ETF (Ticker: EWZ).
China and Russia, Russia, Russia … not doing well.
The totalitarian twosome is proving to be a poor equity investment. Is this an opportunity?
Let’s find out!
Griff and I like the China Trade
The reason is simple: rates.
China went through a tightening/ clampdown in 2021, the likes of which listed companies have never seen before.
The Chinese Communist Party (CCP) raised rates and clipped the activity of many companies it deemed too powerful.
This seems done for now but Chinese equities have not bounced back at all. Xtrackers Harvest CSI 300 China Index ETF (Ticker: ASHR) is a name Griff and I have had a nice pair trade in, and we are looking to do it again. Stay tuned.
The big BRIC recently is Russia with the main ETF, VanEck Vectors Russia ETF (Ticker: RSX), plunging 30% since December.
Just when you might think higher oil and gas prices would goose up the market, the Ukraine incursion has created a mess for equity investors.
As long as this Ukraine thing drags on, I don’t see RSX making a big jump (but it could). I am thinking of selling some out-of-the-money puts in the long term once there is a little more clarity.
Even with the massive market of China and mineral wealth in Russia, ultimately the investment is still in the government and the Magic Eight Ball is not liking either lately,
That means you have to buy them when everyone hates them.
The time seems to be at hand.
Capitol Gains w/ Frank Gregory
Option Pit DC and Wall Street insider Frank Gregory and I run a portfolio approach to trading options with stocks that have good long-term prospects based on Frank’s K Street knowledge and my options expertise.
The live Power Moves Portfolio trade log is here.
-
-
- I closed the Petrobras SA (Ticker: PBR) calls for a 47% gain today with oil reaching $100. Seems like a short term peak with all the Russia news.
-
Power Income Trader:
Power Income Trader is a systematic approach to trading inflation. By pulling real-time data from the Fed, US Treasury and Gov’t, Power Income Trader alerts users on changes in money flow driven by Fed policy. Bill’s system puts you out in front of the most powerful money flow in the world.
Look for Griff and I on Thursday for our first FED FOCUS event and “trade the Fed” pair. I have the SPDR Financial/Utilities ETF (Ticker: XLF/ Ticker: XLU) pair up 5% right now.
Pro Trading Room:
The Pro Room is Option Pit’s live access to Mark and myself during trading hours. Our Pro students post trade ideas with Mark and me during the entire trading session.
The Pro Room using the rally today to take profits:
-
-
- Looking at a punt in RSX today to play the dip in the Russia/Ukraine dustup.
-
Trading Legion:
The Trading Legion is an intermediate-level education and a long strangle/calendar trading vehicle. The goal is to teach students the best times to buy options.
-
-
- I closed out the SPDR S&P 500 Trust ETF (SPY) call calendars for a 10% gain.
-
Volatility Edge & Volatility Trading Club:
Volatility Edge is run by Mark and uses the proprietary Option Pit VIX Light indicator to guide volatility trading. The Vol Trade Club is run by me (AG), and employs a long strangle strategy that seeks to use VIX future decay to pay for upside Cboe Volatility Index VIX, iPath Series B S&P 500 VIX Short Term Futures ETN (VXX) and ProShares Ultra S&P Short Term VIX Futures ETN (UVXY) options.
The Option Pit VIX Light Is Still Yellow as VIX hangs out at 30. This feels like the least volatile 30% VIX I have seen in a while.
I have some VXX strangles on in Trade No. 282 but need a real move in VXX for them to pay. I only have been getting 20% on the call spreads and will need more than that to finance the puts.
Remember, a lot of vol strategies I use are market neutral. That means whether SPX or VIX go up or down, the positions still make money. This is a technique you can learn in the Volatility Trading Club and Volatility Edge!
To Your Trading Success,
AG