Directional Risk

I finally was able to get rid of some of my directional risk with a JCP 1 strike OTM covered call. I would of done a short put, but I would prefer not to have another short put in my portfolio. Anyway, I do not think directional risk is a good thing when the market is acting like it is ready to fall. There is some very conflicting signals in the market about direction. The elimination of the short-term risk has hurt me a little, but It is more of a long term position. Despite this, my opinion is the SPX is way over priced compared to implied vol, but I am not going to try to predict when the market falls apart.

March 25, 2013 Opinions

I simple cannot believe this market. I have exhausted all possible longs (through options) in my portfolio, and I am still short 9.89 delta beta weighted against the SPY as for my options portfolio. I went ahead and shorted puts in VXX because of the high return on capital and my bearish  view of the market. I do prefer to be flat delta. I am bullish on VXX, SLV, P, BBRY, FXI, EEM, GRPN, SLV and ZNGA. I am bearish on the financials, bonds, SPY, Gold, GOOG, YHOO, Natural Gas, Oil, XLU, EWJ, TLT and etc. Most markets in general is just so expensive. The only really cheap major markets are agriculture products and some major currencies (especially the Euro). Bonds may become cheap if the market keeps rising, but I am not sure.

Strange Conditions

These market conditions are very strange. The ES is expensive compared to oil, gold/silver, EUR/USD, VIX, and it was expensive to bonds (bonds rose with the ES for a while but snapped into shape quickly). First of all, I am preparing for longs in the Euro, bonds, silver, oil, COP (Conoco Philips), and the yen. I have given up any hope of stock trades for the time being. The only exception to this is my long in FXY (Yen). I will probably execute my bias through vertical spreads. My personal trading flaw right now is my interest in shorting the ES. This is a dangerous move with a ton of money flow into stocks. The VIX does look really appealing since it is so cheap. (the vix was up today .37% on a  large up day in stocks). Lastly, the dollar is rising with the es which is very odd. Overall, most correlation are pointing to market fear. Thus making the ES very expensive, but I am not very trusting of non-options directional plays (there is opportunity in some pairs though).

March Decoupling

March 1, 2013

New Core Positions

Long: Yen, Euro (maybe), Natural Gas (maybe)
Short: Stock Indexes, Bonds

Lately, there has been no almost no market movement. I have temporarily given up on any intra week trades due to no opportunity. I have identified a few core positions that I believe are cheap and expensive. I especially like the Yen long because of how cheap the yen looks. There is all this worthless news about the yen, and the media is completely overplaying the situation in the Yen (It is also very likely that the Yen will continue its long term deflation). My gut feel is to trade against the news at the time. For example, the WSJ came out saying "George Soros makes billions shorting Yen." Those profits have already been taken. Other than that, the Euro looks temporarily cheap, and Nat Gas looks fairly cheap. Bonds and stocks look more expensive, and I really like the Bond short trade as there has been some bullishness in Bonds in the last two weeks.

Market Review 2/1/2012

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Live Review on Friday The 15th of Febuary

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