Tag Archives: chinese

Our Top Trades Review – October

Summary A review of our recent Top Trade Ideas. A snapshot of our Current Option Opportunities Portfolio. Several trade ideas that are still great opportunities for new trades. How interesting the markets have been! In our August Top Trade Review , I mentioned we were starting a new product – which began as the 5% Portfolio and was renamed the Options Opportunity Portfolio – which has been a huge success, now up 16.7% at the close of the second month: (click to enlarge) These are, for the most part, short-term trades, but we’ve been layering in some longer-term trade ideas – using our profits to invest in trades that will generate steady monthly gains over time, rather than only focusing on “quickies”. Our Top Trade Ideas generally tend to be longer-term trades, and we don’t have a portfolio that tracks them specifically. They are generally selected trades from the ones that we are adding to PSW’s Short-Term Portfolio or Long-Term Portfolio, and tend to be of the “set and forget” variety, while our OOP trades require a bit more active management. (click to enlarge) While 30 of our first 45 (66%) Top Trade ideas were winners, 4 of our 15 losers were Lumber Liquidators (NYSE: LL ) trade ideas – all of which are now coming back as LL pops back to $20! Hopefully it can break over $20 and we can put all that silliness behind us. Getting two out of three trades right is plenty to move the investing ball towards the goal line. Combine that with sensible portfolio management techniques (diversification, managing losses, hedging), and you’ll beat the S&P by a mile with no sweat. Generally, with our Top Trades, we’re simply picking stocks we feel are underpriced, and we’re using our various options techniques to give ourselves even better discounts and hedged entries – but these are patience plays that do take time to get going, though we did call for a cash-out of our winners in July, so August was kind of a fresh start. Without further ado, here’s the next month of trades for review – some are still good for new entries : (click to enlarge) On August 4th, we saw a news article that Windstream (NASDAQ: WIN ) won a contract for $450M to build out wireless services for the VA. As WIN was a company we had played in the past, this was a trigger for us to jump in with a new play, which was: In the STP, let’s go for 40 WIN Sept $5 calls for 0.50 ($2,000) and let’s do 10 in the $25KP ($500). As you can see, WIN popped nicely right off the bat and finished September 18th (expiration day) at $6.92, with the calls at $1.92 – up 284% . Well, they can’t all be long-term trades… 😉 (click to enlarge) August 11th was a double alert: In addition to a play on Terex (NYSE: TEX ), we also included a long oil Futures trade idea: You can still sell the TEX 2017 $23 puts for $3 and that’s net $19, which is very fair, even if the merger fails – I like that and you can add the $20 ($7.60) /25 ($4.30) bull call spread at $3.30 for net 0.30 on the $5 spread but that’s betting the merger does go through just to make another $1.70 – not really worth the risk. Our timing on that one was good, but then bad, as people first loved, then hated, the merger deal, and now they are warming up to it again. Nonetheless, since we were fairly conservative in our play, the short puts are still just $3.30 (down 10%) , and the additional spread I said was not worth the risk is now net $1.50, down 50%, and NOW it’s worth the risk! A much better trade that day was my Futures pick on oil (/CL) to go long at $43. We pretty much caught the dead bottom there and, as you can see, we popped all the way to $55 before the rally failed – up $12,000 per contract . Of course, we don’t just get in and ride them out – but if you are still in this trade back at $52.50 (up $9,500), it’s time to stop out, as we’re short again! August 24th was our next trade (we didn’t like anything enough in the prior week), and our trade idea that Monday was for our Stock of the Decade, Taser (NASDAQ: TASR ), as it fell back to the $20 line. We liked this one so much that not only was it a top trade, but it was the first long-term trade idea added to our Options Opportunity Portfolio as well: (click to enlarge) Buy 20 TASR 2017 $20 calls at $6.20 ($12,400) Sell 20 TASR 2017 $25 calls at $4.15 ($8,300) Sell 20 TASR 2017 $15 puts at $2.40 ($4,800) Our net on the spread was a $700 credit and, as you can see, this is another one we caught a nice bottom on. They are now back to testing the $25 level, which is all our very conservative target is looking for to make the full $10,700. At the moment, the net on the spread is $2,500, so already net $3,200 off our original $700 credit is up 457% in just over a month, and only just getting started! On August 26th, we got very busy indeed as we reviewed Goldman Sachs’ 25 most oversold stock list to see which ones we thought were playable. Our trade ideas were: (click to enlarge) Cheap food costs tip the scales for me on this one and sure, I don’t like paying 18.8 for a grocery store but I do like paying 12x earnings and that would be $22 and you can sell the 2017 $23 puts for $1.55 to net in at $21.45 (30% off) and we can play that with the $30 ($5.50)/$35 ($3.45) bull call spread at $2.05 to net into the $5 spread for 0.50. Margin on 10 short puts is a negligible $2,300 and I REALLY would like to own $46,000 worth of WFM at $23 so let’s do 20 of those in the LTP . Whole Foods (NASDAQ: WFM ) just took off and headed back to the $35 line, and the net on the spread has gone from $500 to $1,470, which is up $970 (194%) , but merely on trace to the full $5,000 we expect if it can get above $35 and hold it through January 2017. Good time to make a note that you don’t HAVE to make short-term trades to get great short-term returns on your cash. This trade was a very sensible entry on 8/24 and it’s only 10/10 and already we’re up 194% – that’s enough to satisfy all but the greediest of short-term trades yet we took no particular short-term risk because we are BEING THE HOUSE and selling more premium than we bought . (click to enlarge) 10 2017 $35 puts can be sold for $3.20 ($3,200) and $35 is already another 20% off and we can use that money to buy 10 of the $40 ($9.40)/50 ($5.50) bull call spreads for $3.90 for net 0.70 on the $10 spreads that are $4.77 in the money to start. I fully expect these to get cheaper and we’ll spend $4.50 more to roll down to the $30 calls (now $17) when and if we have the opportunity. For the LTP. Marathon Petroleum (NYSE: MPC ) was one we put our foot down on as it tested the $45 line. As we are supposed to do – we took advantage of the OPPORTUNITY to buy low, and we took up an option spread that would give us an entry even lower ($35.70 in this case) in our worst case. As it happens, we nailed the bottom, and already, this $700 spread is netting $3,300 for a $2,600 (371%) gain in just over 30 days. Again, you do not need to take big risks to make big rewards – even in the short run. (click to enlarge) Buy 10 April $40 puts for $2 ($2,000) Buy 10 April $50 calls for $4 ($4,000) Sell 10 Oct $50 calls for $1.55 ($1,550) Sell 10 Oct $45 puts for $2 ($2,000) This Lincoln National (NYSE: LNC ) spread was for our Butterfly Portfolio, and that’s one that needs managing. The long puts and calls are still net $4,900 (down $1,100), but the short puts and calls are down to $560 already (expire next Friday) for a $2,990 gain, and that’s an overall net gain of $1,890 (+77%) off our $2,450 investment in just over a month – not bad for a well-hedged Butterfly! The way our Butterfly plays work is we simply make our next target sale once the first one runs down so, for example, we expect LNC to be around $52.50 into the end of the year and the November options don’t pay well so we can sell the Jan $47 puts for $1.90 ($1,900) and the Jan $53.50 calls for $1.50 ($1,500) and drop another $3,400 in our pocket for the next 3 months. (click to enlarge) On September 2nd, we reiterated our long call on TASR (above) and added this one on Skyworks Solutions (NASDAQ: SWKS ): As we’re always looking for our monthly $4,000(ish) in the LTP, let’s sell 5 of the SWKS 2017 $60 puts for $7 ($3,500) as that’s certainly a stock we don’t mind owning way down from here. While that one got off to a good start, we’re right back where we started (a bit below), at $8.20 for a $1,200 (34%) loss . For the purpose of our LTP, we really do want to own the stock for net $53, so we don’t care what the PRICE (not value) of the option is at $79.60. But this is a patience play for sure. On September 4th, we reiterated our warning to cash out winning positions, and we reviewed all of our Portfolio Positions. As I’ve noted, we don’t have a Top Trade Portfolio, as these trades are mainly picks from other portfolio plays, but the same rules apple – mainly cash and well-hedged is our current position in all 4 of our Member Portfolios! (click to enlarge) Since we had plenty of cash, we were free to add more trades, and on September 9th, we added Yahoo (NASDAQ: YHOO ) with the following spread: Sell 10 2017 $30 puts for $3.80 ($3,800) Buy 10 2017 $25 calls for $8.50 ($8,500) Sell 10 2017 $38 calls for $2.20 ($2,200) YHOO is really only back to where it was on that day after a nasty dip, but once again our “Be the House” strategy pays off, and the net $2,500 entry is already at $3,240 for a $740 gain, which is only +29% – but that’s on a stock that’s gone nowhere in 30 days. Isn’t that a trading style that’s worth learning? (click to enlarge) Our second Top Trade on the 9th was for the only Chinese company we like, China Mobile (NYSE: CHL ), with the following trade idea: While we’re on the top of positions – CHL is up 0.86 today but still cheap at $60.22 and we can sell 5 2017 $50 puts for $3.90 and that drops $1,950 into the LTP and keeps our eye on it . That one has improved since we called it, though off the highs, as China is having a very rough ride (and we knew that, but we still like CHL down here). The $50 puts are now $3.83, or $1,915, on 5 contracts versus the $1,950 we collected, up a not very exciting $35 (2%) , but on track and still great for a new entry. Our other Top Trade ideas are too new to review, but clearly it was a good month, with 8 winners and just two losers (so far), both of which make even better entries now than they were when we called them. Our Option Opportunities Portfolio is a partnership with Seeking Alpha and you can sign up for that portfolio HERE , which aims to make $5,000 a month in a $100,000 portfolio using a variety of option trading strategies (the portfolio at the top of this page is through Friday after just 2 months). It’s similar to Top Trade Alerts but focuses on quicker opportunities that tend to require a bit more active involvement.

5 Top-Rated Global ETF Picks For Q4

The global markets went berserk in the third quarter with selling pressure hitting the ceiling. Back-to-back issues like the Chinese market crash, slowdown in the Japanese economy, return of deflationary fears in the Euro zone in spite of stimulus measure and slouching commodities bulldozed the market. Though the situation recovered a little to start Q4, odds remain as evident from the latest growth forecast cut by IMF. The organization slashed the global growth forecast (on October 6) for 2015 to 3.1% from 3.3% projected earlier. Slowing emerging market growth and the commodity market slump were held responsible for this sluggishness. The forecast for 2016 was reduced to 3.6% from 3.8% expected in July (read: 2 Winning Commodity ETFs for the Worst Q3 ). As per Reuters , the key industrial economies cut the rates to almost zero and shelled out around $7 trillion in quantitative easing programs in the seven years since the global financial crisis. But this huge influx of funding could not perk up growth, investment and consumer demand as anticipated and instead raised a cautionary flag over global growth (read: Expect Volatility in Q4? Try These ETF Ideas ). Still, the bulls can ride beyond the U.S. border. After all, most of the developed economies are thriving on easy money and thus act as lucrative investment propositions. Even at home, the hyper-active discussion over the Fed lift-off has taken a back seat after somber job data. Now the prospective timeline has shifted to the end of 2015 or early 2016, provided the economy gains momentum. Though cheap money inflows set the stage for bulls globally, investors need to be selective while playing this field, given the heightened uncertainty. How to Pick Right ETFs? First, fundamentals need to be favorable, and then investors can look at our Zacks ETF Rank. This ranking system looks to find the best funds in a given market segment based on a number fundamental and technical factors about them and the Zacks forecast for the underlying industry or asset class. Following this technique, we at Zacks revised our ETF ranks recently and found out that five global ETFs have been upgraded from #3 (Hold) #2 (Buy). We have also taken diversified exposure into our consideration, given the ongoing volatility in the country-specific exposure, and zeroed in on five global ETFs that are worth considering (see: Our Zacks ETF Rank Guide ): SPDR MSCI ACWI IMI ETF (NYSEARCA: ACIM ) This fund tracks the MSCI ACWI IMI Index. Though the ETF provides exposure to stocks across the developed and emerging markets, U.S. accounts for more than half of the asset base. Apart from this, Japan and UK take the next spots with about 8.1% and 7.3% exposure, respectively. In total, the fund holds about 800 stocks with each accounting for no more than 1.32% of assets. Financials, IT, Consumer Discretionary, Industrials and Health Care are the top five sectors with double-digit allocation each. The product has managed an asset base of $36.5 million and trades in good volume of more than 6,500 shares a day. It charges 25 bps in annual fees and was up 1.2% in the last one month. JPMorgan Diversified Return Global Equity ETF (NYSEARCA: JPGE ) The fund seeks to track the FTSE Developed Diversified Factor Index, following the “Smart Beta” strategy, to provide developed market equity exposure. The fund combines the two approaches under a single umbrella – a top down risk allocation framework and a bottom up multi-factor stock ranking process. The bottom up approach results in selecting stocks based on four factors: value, size, momentum and low volatility, while the top down approach results in an equal-weighted portfolio of stocks selected across 40 different regional sectors. This approach results in the fund holding a portfolio of 488 stocks from the developed markets with the U.S. taking one-fourth share. The fund charges 38 bps in fees and advanced over 2% in the last one month. This fund also has low risk quotient. SPDR MSCI World Quality Mix ETF (NYSEARCA: QWLD ) The fund looks to track the MSCI World Quality Mix Index to provide exposure to 24 developed economies focusing on matrices like value, low volatility and quality. This $6 million-ETF comprises 1,021 stocks. Sector-wise, Financials, IT, Health Care and Consumers get maximum exposure. Despite being a global equity ETF, the U.S. dominates the portfolio followed by Japan (8.24%), UK (8.1%) and Switzerland (4.1%). It charges 30 bps in fees for this exposure. The fund nudged up 0.6% in the last one month and has a Medium risk outlook. FlexShares STOXX Global Broad Infrastructure Index ETF (NYSEARCA: NFRA ) This ETF could be appropriate for investors seeking a play on the booming infrastructural activities worldwide. With slow global economic revival, spending on infrastructural activities has been picking up. This was truer in the developing regions rather than developed zones. Investors should also note that infrastructure is an interest rate sensitive sector, usually with strong yields. With a low rate environment prevalent across the globe, infrastructure looks attractive in the near term. NFRA looks to track the STOXX Global Broad Infrastructure Index. No stock accounts for more than 4.43% of the fund. The ETF presently holds 150 securities with total assets of $414.2 million. However, investors looking for heavy international exposure might be a little disappointed with this product, as close to half the portfolio is in the U.S. followed by 25% focus in Europe and the rest spread across the Asia-Pacific (15%), Asia (3%), Latin America (2%) and Asia (1%). The fund charges investors 47 basis points and has a yield of 2.40% per year. NFRA was up 1.3% in the last one month. The fund has a low risk profile. ALPS Workplace Equality ETF (NYSEARCA: EQLT ) The socially responsible fund looks to track the companies that have ‘progressive workplace policies that treat lesbian, gay, bisexual and transgender ( LGBT ) individuals equally and respectfully among all employees’. This produces a portfolio that has about 160 companies in its basket, while it has a slight tilt toward smaller companies, at least when compared to the S&P 500 index. It follows an equal-weight approach, so no single security makes up an outsized portion of the basket. The fund has double-digit exposure in sectors like consumer discretionary, financials, technology and industrials. EQLT charges 75 bps in fees and was almost flat in the last one month. The product has a low risk outlook. Link to the original post on Zacks.com

5 ETFs Up At Least 10% This Year

Volatility has been calling shots in the investing world this year as hard landing fears in China, return of deflationary worries in the Euro zone despite easy policy measures, vulnerable emerging markets, slumping commodities and the nagging hearsay about the timeline of Fed lift-off dampened the risk-on trade sentiments on several occasions. Though the most part of the year saw decent trading, the global market went ballistic in Q3 on the Chinese market crash. Sudden currency devaluation, multi-year low manufacturing data and some failed but desperate policy measures to rein in the slide led the Chinese stocks to hit the dirt in Q3 and see the worst quarter since 2008. Needless to say, such a massacre in the world’s second-largest economy did not spare other risky asset classes. The most key global indices also endured the worst quarter in four years and the leading U.S. indices tasted correction in August. Also, emerging market fund flows are now likely to turn negative this year for the first time since 1988 (read: ETFs to Watch as Emerging Market Asset Outflow Doubles ). Agreed, a dovish September Fed meeting and a soft job report for that month finally pushed back the speculative timeline for the U.S. policy tightening to early next year. This also brought the risk-on sentiment back on the table. Yet it definitely does not ensure seamless trading till the end of the year. These may give enough reasons for investors to panic and look for equity survivors this year. For them, we highlight five ETFs that have gained over 15% so far this year. China – Market Vectors ChinaAMC SME-ChiNext ETF (NYSEARCA: CNXT ) After a lot of tantrums, the China stocks and ETFs finally seem back on track. Compelling valuation after a bloodbath, some decent factory data in September, continued momentum in China’s service sector, persistent rollout of accommodative government measures (though at a petite dose) and an accommodative Fed led this China A-Shares ETF to build up gains in the year-to-date frame. The Zacks Rank #3 (Hold) fund is up over 25% so far this year (as of October 5, 2015) and also added close to 20% in the last one month. However, the point to be noted here is that China investing stands at a critical juncture this year and the economy is far from being steady. So, A-Shares investing needs a strong stomach for risks (read: Correction Seems Over: Time for China ETFs? ). Long/Short – QuantShares U.S. Market Neutral Momentum Fund (NYSEARCA: MOM ) Since volatility has been at its height so far this year, this long/short ETF had to emerge as the winner. The underlying index of the fund is equal weighted, dollar neutral and sector neutral. The index takes the highest momentum stocks into account as long positions and the lowest momentum stocks as short positions. MOM is up 20.8% this year and gained 3.3% in the last one-month period. With volatility refusing to backtrack even in Q4 on global growth issues, MOM is likely to prevail ahead (read: 3 Hit and Flop Zones of Q3 and Their ETFs ). Japan – WisdomTree Japan Hedged Health Care ETF (NYSEARCA: DXJH ) Since the Japanese economy shrank 0.3% in the second quarter of 2015, marking the first contraction since the third quarter of 2014, and the third quarter output is also seemingly flat; hopes for further policy easing are doing rounds. The Japanese economy is already undergoing a gigantic stimulus measure. Thus, hopes for further easing amid a slowing economy gave the justified boost to this currency-hedged ETF. DXJH is up about 21% so far this year (as of October 5, 2015). However, the product was flat in the last one-month period. The fund has a Zacks ETF Rank #1 (Strong Buy). Denmark – i Shares MSCI Denmark Capped Investable Market Index ETF (BATS: EDEN ) The Danish economy expanded 0.2% in Q2 and carried on the longest stretch of incessant growth in 25 years. Moreover, the economy wiped out fears of a lull in Q2. All these stirred optimism around the nation. This Zacks ETF Rank #3 fund has added over 17% in the year-to-date frame and gained about 2% in the last one month. Internet – First Trust Dow Jones Internet ETF (NYSEARCA: FDN ) This branch of the U.S. technology sector has been a smart survivor in the recent global market sell-off. The usage of Internet has been gaining popularity. While its surge has saturated in the developed economies, scope for growth is huge in the emerging markets. Investors should also note that tech stocks normally perform better in the final quarter of the year. Thanks to this burgeoning trend, this Internet ETF has advanced 13.7% this year and added 4.7% in the last one month. The fund has a Zacks ETF Rank #2 (Buy). Link to the original post on Zacks.com