No new positions this week.

music selection:  “Can’t Find My Way Home” — Blind Faith

weigh-in:  212.0 +0.8

COVID-19 has really rollicked the markets.  Even my low Beta large caps saw significant moves last week.  Three are threatened: FISV, LLY, and BMY.  I searched high and low over the weekend for low Beta large caps that had attractive charts after the recent market turmoil.  I found none.  Thus, I will not be initiating new trades this week.

This is a feature not a bug.  A key part of my strategy is to be income centric.  About two thirds of the main trading portfolio that I live off of is in distribution paying names.  These are mostly closed end funds invested in bonds.  There is also a significant allocation to income REITs.  This approach covers my annual spending and allows me to “coast” when the markets are not cooperating.  Most of the time, I will initiate two new positions each Monday.  But I never want to be in a position where I compelled to make a trade.  That is a scenario where you must accept risk/reward ratios that are unattractive and likely ends in trading losses.

I did have some action over the weekend as 4 contracts of EIX (out of 14) were assigned early.  I opted to exercise my hedge on those 400 shares and take my profit.  I earned 105 dollars on 895 in capital at risk.  That was good for 12% over 5 days or a gonzo annualized return that I won’t even post for fear of angering the trading gods.

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Devour your prey raptors!

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One thought on “Sometimes the best trade is no trade

  • March 3, 2020 at 4:49 am
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    I’m looking at SBRA as a beaten down REIT play – but Bernie Sanders’ recent successes are giving me pause. A Trump win might be followed by more cuts to reimbursement rates.

    Also, on Friday I picked up some 22/24 bear call spreads on the VIX for a four figure credit. I think barring a zombie apocalypse the VIX will be below 18 at some point in the next 4 mos, and in the meantime I’ll earn a little time decay.

    With volatility as high as it is, a put writing strategy starts to make sense at some point. Maybe at another 15% down. Let’s hope!

    Reply

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