EWZ trade ideas
OPENING (IRA): EWZ AUGUST 21ST/SEPTEMBER 18TH 23/24 SHORT PUT... for a total of 1.73 credit, with the 24 paying .80 and the 23, .93.
Notes: One of the dividend yielders on my shopping list (yield currently at 3.58%). I've been going three rung with these, but there is currently no October to take advantage of.
Believe that the economy will recover? Buy this EM ETF.Perhaps one of the best ETF in terms of technical analysis and risk/profit ratio. I got in around $25, but you can buy right now or wait for a better entry point. SL $18 (depending on your entry point), TP $50-80.
Brazilian ETF: Descending Triangle for Latin American NationGlobal stocks had a nice bounce in early June, outperforming the S&P 500 by a wide margin as the “reopening” trade took hold and the Federal Reserve kept the spigots of easy money flowing.
The MSCI Brazil ETF (EWZ) rode that wave higher at the time but has fallen flat more recently. Weakening of energy prices and a spreading coronavirus outbreak in the Latin American nation has also made matters worse.
This has produced a descending triangle for the ETF, with a series of lower highs since June 8. Downside support is around $28.50.
This creates the potential for bearish continuation if the lower price level is broken. Timing is unclear, and there could be some tests above $29.50 to the falling trendline.
However, the overall setup could be interesting because EWZ has potential downside toward the low $20s if the current support level breaks.
Going short for rest of monthA lot of negative things going on in Brazil, i think the latest news on the virus can set it off.
Started short position aiming < $30 by middle of july
Purchasing EWZ calls during June.May's monthly candle closed above April's high.
If price returns to April's high, then I will begin purchasing call options at the 26.50 strike with a July 2 expiration.
OPENING: EWZ JANUARY/JUNE 15/26 CALL DIAGONAL... for an 8.40/contract debit.
Metrics:
Max Loss: $840/contract
Max Profit: $260/contract
Debit Paid/Spread Width Ratio: 76.4%
Break Even: 23.40 vs. 23.30 spot
Notes: A neutral to bullish assumption, IRA-friendly play in the weakened EWZ. I naturally could have gone short put (the June 19th 19 shortie is paying .63), but wanted the opportunity to make something decent if it totally rips away. In a cash secured environment, you'll get some buying power relief over going with the naked.
From a delta standpoint, the back month is at the 89 delta; the front month at the 28, with the front paying just a smidge short of the extrinsic in the back month (which is why the break even is slightly above where EWZ is currently trading). The way to look at these is a form a synthetic covered call, with the back month 90 standing in for your stock.
EWZ - ShortTaking a stab here, Brazil in not so good shape fundamentally, and all this FOMO is almost certain to pass.
OPENING (IRA): EWZ SEPTEMBER/JUNE 17/19 SHORT PUT LADDER... for a 1.44 credit.
It's not much of a ladder with only two rungs, but there's no July currently (there will be one after May opex, after which I'll consider adding a third rung).
An acquisitional play in high rank/implied (53/66) to potentially grab this divvy yielder (5.15%) at a discount.
EWZ at decision Point!Dear Investor,
After falling about 60% from this year's High, the EWZ has started a correction movement in "W" shape.
If the price goes above $26,50, I believe the share will return to trade between $30 and $35 and it'll close the first GAP opened by the coronavirus crisis.
I started my LONG position in this share since $20,00. But, if you want to get in this trade, I think the better entry level is when the price breaks up the $26,50.
Good investments for all.
Best regards,
Lucas Sampaio
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Olá Investidor,
Depois de cair cerca de 60% da máxima desse ano, o EWZ está fazendo um movimento em formato de W.
Se o preço superar $26,50, acredito que alcançará a faixa de preço de $30 a $35, fechando o primeiro GAP desde a forte queda da crise do cornavirus.
Eu já estou comprado desde os $20, mas se quiser entrar nesse trade, acredito que o melhor ponto de compra é após o rompimento do $26,50.
Bons investimentos a todos!
Abraços.
Lucas Sampaio
Emerging markets at 2008 level EWZ/BrazilEmerging markets are at 2008 levels, as IMF says this is going to be WORSE than 2008. The rest of the world still needs to catch up, SPX is at Dec 2018 level and this virus is way worse than a double rate increase.
Ask yourself, are you better or worse off than Dec 2018?
EWZ is this the bottom?Hoping this is the bottom and should reverse now that COVID madness has bottomed. Hopefully.
THE WEEK AHEAD: A PREMIUM RICH MARKETOPTIONS LIQUID EARNINGS ANNOUNCEMENTS:
MU (77/112)
NKE (74/103)
EXCHANGE-TRADED FUNDS ORDERED BY IMPLIED VOLATILITY RANK:
EWZ (91/132)
USO (89/210)
XLU (84/76)
GDXJ (82/141)
XLE (77/109)
EWW (76/105)
SMH (73/105)
TLT (71/47)
XOP (63/154)
SLV (73/79)
GLD (63/37)
FXI (61/63)
GDX (57/106)
BROAD MARKET ORDERED BY IMPLIED VOLATILITY RANK:
IWM (76/71)
EEM (74/73)
SPY (73/66)
QQQ (73/60)
EFA (54/53)
VIX/VIX DERIVATIVES
VIX: 66.04
/VX APRIL: 62.00
/VX MAY: 56.95
/VX JUNE: 49.95
MUSINGS:
On Margin:
As you can see by the chart showing the top five or so exchange-traded funds having the highest implied volatility ranks, this is largely a closely correlated sell-off. Because of this, I'm somewhat hesitant to pile into a bunch of nondirectional stuff simultaneously, if at all. If we get relief from the selling, these very same instruments could whip back to the call side in closely correlated fashion, leaving me with a bunch of tested call side; whereas now I'm just put side tested (and how). Naturally, this means I have to put up with being far more directional than I would ordinarily be, but these things happen and being patient and mechanical with how you manage current positions will be more productive in the long-term than going bonkers here and bailing out of everything in panic.
Unfortunately, this likely means that I will be taking on far more shares of stock than I ordinarily like to hold on margin and then reducing cost basis over time via covered call. I'm always prepared for that, but being in stock on margin isn't buying power efficient, although you always have to plan somewhat for that possibility and go with the flow if taking on shares is really the best way to work yourself out of the trade.
In The IRA:
As pure luck would have it, leaving my SPY position monied throughout this nonsense (as well as erecting some additional call diagonals at market highs as delta cutters) has served me well. This wasn't particularly prescient or a stroke of genius; I was just doing what I felt I had to do to protect the largest element of my retirement portfolio at a point at which it made the most sense to do that and nothing else. Anyone else who did that and got lucky isn't a guru. No one saw this crap coming, and if they're saying they're a genius, well, I say you're free to call bullshit.
Is this an opportunity to pick up things on your shopping list? Maybe. I've taken this opportunity to ladder some out-of-the-money short puts out in a few things that I've had on that list for ages -- XLU, IYR, EFA, and HYG; all dividend generators which have been just far too pricey to deploy the frustratingly large bit of dry powder I've had sitting on the sidelines for ages as the market inexplicably ground up to more and more ridiculous valuations. Will I get in at the best possible prices? The jury's out. I will be getting in far lower than at the market highs we saw just a few weeks ago (assuming price stays below the rungs of my ladders) and won't let anyone talk me out of the proposition that lower is always better in your retirement account even if I don't hit the lows perfectly.
The basic strategy here, after all, isn't largely about share price; it's about assembling a portfolio that will pay out dividends regardless of growth and in which you can reduce cost basis over time via short call. It's three-legged: dividends, short call premium, and (if it happens) growth. If the grand arc of time has taught us anything, it's that growth may be an "average given" over the entire life of the market, but may not be over shorter time frames.
EWZI still believe this will bounce back. The market dipped and feels like Brazil's dipped significantly and is offered for cheap. The trend still seems to match the previous ones. I have some calls and feels like we might be reversing.
OPENING: EWZ JUNE 19TH 37/50 SHORT STRANGLE... for a 1.26 credit.
Metrics:
Max Profit: $126
Max Loss/Buying Power Effect: Undefined/$440
Credit Received/Buying Power Effect Ratio: 28.6%
Delta/Theta: -1.53/1.32
Notes: Selling a directionally neutral short strangle in the first expiry in which the at-the-money short straddle pays greater than 10% of the stock price with the intention to delta under hedge to maintain net delta < theta if possible.
EWZBrazil seems to rally and a good area to buy out here. Buying some long term calls and also buying these dips. I could see 50 coming in couple of months.
OPENING: EWZ JUNE 19TH 39/54 SHORT STRANGLE... for a 1.46 credit.
Notes: Going out to the first expiry in which the at-the-money short straddle pays greater than 10% of the stock price and selling the 16's with the intent to potentially do additive delta adjustments over time.
From a portfolio-wide perspective, I have a good sprinkling of longer-dated core exchange-traded fund positions to start out the year: some SPY, SMH, XBI, and XOP, around which I'll play single name from time to time, as well as my standard short volatility stuff in VIX, VXX, and UVXY.
