Monday, May 22, 2006

Portfolio update - a few trades done over the last few days - and taking profits on 30y Treasury long:

As I mentioned on the 17th, I closed out the ~zero-cost put/call DOW
option trade, where I had sold a 11,500 call in £5/tick and bought a
11,200 put in £20/tick, when the underlying was close to 16,000. I
bought this back on the 17th, buying the call for 70 and selling the put
for 137, netting £2460. And I bought back my £4/tick in the DOW at
11,267, making £436. As I'd cut some equity risk in individual stocks
the previous day, I didn't mind closing this out. Looks like I may have
taken this off a little early though, as the market is lower from when I
closed it out, although holding up remarkably well given the carnage in
European equities and even more so in EMG stock markets.

And also I sold £3/cent of US Light Crude Jun '06 @ 68.94 on the 19th,
as I think commodities could come under pressure on a slowing US
economy, and also because I think the US economy is slowing down, I
increased my £100/tick position in Mar '07 EuroDollar by ANOTHER
£50/tick on the 19th May, buying it at 94.72.

My 30y Treasury contract has been performing, so I'm going to sell it
just now, as I think there is some chance of the US rate curve
steepening on 1) the FED pause and 2) markets building in more risk
premium as stocks continue to drop and volatility picks up. I'll keep
the risk in the EuroDollar Mar '07 contract. So as we speak, I've just
sold the 30y Treasury Future back at 107.46 in £10/tick, so making £920.
Think the yield was a bit inside 5.10%, although can't be bothered
logging into Bloomberg Anywhere to check it. I may trade this again from
the long side. Especially since Bill Gross of Pimco has said he has
massively reduced all his longer duration Treasury positions...that guy
is such a bad trader, when the 10y was at 4.38% just a few months ago,
and the Fed CLEARLY going to 5%, he was recommending a long position,
now they are 60-70bps wider he wants to sell! Well I'm not falling for
it and common sense will rule for my portfolio.

Aside from that, the 3 equity positions I still have are looking good,
as BT was up even as the FTSE was getting a kick-in, Cisco is only a
touch down today, and IAC Corp ( was up over 1% when I last
looked. I'll hang on to these for now.

That'll do for now...I'm still mulling over FX, think GBP/USD will crack
on rate differential eventually, and think a high EURO will not make
Euro Finance ministers for each country happy, as it makes exports more
expensive. I never fully understand why everyone says the dollar is so
over-priced, just walk into a McDonald's in London/New York/Paris/Toyko
and check out just how much cheaper a Big Mac is in the Big Apple!!!
This applies to so many other goods also...


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11 June, 2006 12:58  
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23 July, 2006 10:26  

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