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Portfolio Positioning For Brexit Vote

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#141

Hi @Swamp_Cat, Well it’s fair to say that I agonised quite a bit over the pref purchases having lost a large sum of money there back in March due to the Aviva redemption threat. I monitor 13 pref prices each day so that I can maintain my old pref portfolio spreadsheet for comparison with my current one. Current one is about £10,000 ahead right now which says I did the right think bailing out.

If interest rates rise then pref prices are likely to fall some more. But at ~115 I can’t see these going below 10x (a fall equal to about one years worth of dividends). None of these companies are in trouble as far as I know so I don’t see their prefs trading below par.

And of course at these levels the redemption at par threat isn’t too much of a problem !. A bit different to when some were trading at 175…

Well I’ve done it now anyway, just have to see how it works out. But only about ~15% of my portfolio this time. Not 80%+ as I was in March.

ATB

Pref


#142

Hi Pref

I was not going to do anything with my share holdings/investments but changed my mind.

Sold off ( selectively ) a fair bit, took some losses.

Holding more than average in cash.

Only add is NCYF @ 57.09.
Good company and management IMO.

About 7.6 % yield, only just covered.
Never cut their divi since inception.

In a war with my derivative trading though. Struggling.

ATB

soi


#143

Hi @soi,

Yes Im starting to wish I had sold even more things than I did, but it gets to be hard work when you have a lot of holdings. Made a mistake buying ZWUK yesterday but there you go, done it now.

I already hold NCYF and have had it for a while now. Small loss there right now, but nothing significant. No plans to sell.

Still got about half of my cash left and got 6 buys planned AV., LGEN, NESF, HFEL, SEDY & ZWEU. All going in the right direction, probably need to move on the last 3 before the vote to catch the effect of the £ falling - assuming that happens of course. No guarantees !. AV. & LGEN took a big hit at the last referendum, hoping for a similar effect this time - apologies to existing holders…

I reckon Ive made about 2.5% out of this exercise so far AND the re-structuring effect on the portfolio is very pleasing. When I say “made” I just mean that the new portfolio is 2.5% higher than the old one, both are in loss of course !.

ATB

Pref


#144

Still weighing this up here Pref, done a lot of research and for me, the order of play is:-

*May deal voted down
*Labour bring no confidence in government & government win
*Possibly then 1922 committee have a go at no confidence within their own party & May wins
*May also returns from Brussels with a tweaked deal

We need to know the deal then to decide on the 2nd Maydeal.

*There is a slightly less likely (imop) chance of an EFTA proposal

As of today, there will be a blip on Mays deal down voting but to what degree as it could be largely priced in.
However, wether that will be peak carnage considering the next stage or stages of no confidence is the question.
Most folk already expect stage one, not necessarily the no confidences to physically appear.


#145

Hi @Swamp_Cat, Well there are a lot of possible scenarios arent there, didnt one of the big newspapers do a big diagram covering them all ?. Thought I saw that on the news, could be wrong. Of course market impact is quite another thing and sentiment can change very quickly and you need to watch out for that.

I am very conscious of the fact that I want to buy a set of different things. I dont really need to get THE most perfect price though to come out of this ahead. I just need to buy more stocks cheaper and when things recover I will see the benefit. My big worry is that at any second something political might happen and sentiment change in an instant and the market soar - before I’ve placed my buys. So I have now decided to incrementally pick off individual targets and not try to wait till buy everything at the optimum time.

Its a personal decision though. You must do what you are comfortable with. Just try not to miss the boat thats all…

ATB

Pref


#146

Hi Again @Swamp_Cat, A further point that I have noted for myself personally (might not affect you) but if I want to benefit from a fall in the £ caused by the vote then I need to buy my overseas target investments BEFORE the vote and not afterwards as the £ will likely move up or down very quickly after the vote is my guess.

Of course if the vote passes then the £ would likely rise, so there is potentially a significant risk in doing that…so take care !.

DYOR etc !

GL as always…

Pref


#147

It’s odd, when I saw the cash VIX at 24 something on my screen, this morning, I just assumed my stop was hit. In fact the Jan futures High was only 20.45 - hence I am well in the trade.

It reminds me of how important visualisation is in trading:

  • Trading requires a strong mental process.

  • The process involves being detached from the outcome

*It is important to return to a calm state of mind IRRESPECTIVE of the outcome.

*You then take the next action with minimal thought or emotion.

Most people are unable to separate the outcome of their trades from the emotional “charge” of trading.

“Everyone has a plan until they get punched in the face” Mike Tyson


#148

Hi MacB, would you mind elaborating on that trade as to entry point and long or short and stop? Also is higher volatility the higher number?
Not concerned with the value and more than happy if it’s not something you want to share.

I’d like to understand the market better, I’ve never spread bet, shorted, leveraged or dealt with futures.


#149

Pref, US having another downer. This makes me cautious about rebuying if it continues to D day.


#150

I shorted the January VIX contract at $18.90. The front end contract has less volume on it - hence less liquidity. It’s traded on CBOE

I have spent most of this year trying to devise a framework to trade this. I’m still unsure whether Options or Futures are better. My expertise is in futures - but liquid ones ES, where you trade the front end month, until rollover.

Personally, I favour options, mainly because, I can mentally deal with the R/R much easier. With futures I spend a lot of time staring at a screen. I need to have a minimum of 20 trades under my belt before I size up.


#151

It helps if you have the stats on this type of move. I don’t have my ‘cheat’ sheet handy, but, the S&P only finishes down 60+ down less than 2% of the time. Today could be a great day to play long, but, it could be a great day to miss. For the long, I would wait for a engulfing 30min bar to close, then get long and put my stop at the low of the day. For that trade, I most likely would use options or ETFs, rather than widen my stop on futures.


#152

Hi macbonzo

You obviously understand the VIX better than me.

I placed a short @ 21.98 via IG. Wrongly assumed rolling daily.

It shows as a December contract but cannot even see the expiry date, assume it is the 17th.
Will it automatically be closed out at the prevailing price on that day?

Thanks

soi


#153

Hi Soi,

Hopefully Mac can clarify this as I use DFTs for my SBs. My understanding of these quarterly contracts is as you say, they’ll be closed automatically on expiry date, unless before that date you choose to do an auto rollover of the contract into the next quarter. If you do roll it over, you settle any losses (or book any gains) at the expiry date. After deductions, the trade continues until the next quarterly expiry date, ie. March. This process can continue as long as you decide to roll over before expiry dates. - Regards.


#154

@soi - With the VIX Index Future you get… up to… 6 expiration weeks, 9 monthlies and 5 Quaterlies. You can check your Expiry & other contract details by going onto the CBOE site.
I don’t use IG (anymore…) so can’t comment on what they show.


#155

I really dislike SB as I really think the markets are slightly distorted.

I’m working the weekly futures exp 16/1/19 Cboe VXF19. Could get stopped 22.40. Trading the front end contract for this product is dicey. I would push it further out.

By the way I am long S&P at 2644. Heavy scale at 2654 and 2659


#156

Done out. It usually doesn’t work that easily.


#157

Hi All,

Well its been brutal hasnt it, ever since that bright spot on monday. FTSE down about 5.5% since then. No markets immune US, UK, Europe and Far East all down. Thank goodness I sold a lot of stuff on the Monday. So much for avoiding 4 digit losses, some chance of that. Down close to 2.25% this week so far and thats with my portfolio where I sold many of my FTSE holdings , the one where I didnt is down 5 digits…

Selling those 13 holdings was very worthwhile though as listed below:-

Have been spending the capital incrementally buying my targets just in case there is an unexpected recovery. Hopefully should make a fair bit out of this exercise when the market recovers.

GLA

Pref


#158

PS. I think you meant “monthly” rather than “weekly”.

I don’t trade these… VIX Index is a bit scary… and anything can crop up at any time and mess you up potentially… don’t know if anyone could have foreseen that Meng Wanzhou would be detained for instance and shock waves following that.


#159

No, weekly. There are many products (both futures and options) which you can choose for VIX.

The Cboe has a Futures exchange (CFE) where you can have up to 6 expirations per month. So VX19F or VXF19 expires on 16/1/19 or as the Americans would put it 1/16/19


#160

Interesting… I’m logged into CBOE right now and I see:
VX/F9 VX 16/01/2019 VX Monthly Jan 2019

… note ‘Monthly’.

In that case… what do you see as the Product Code for the Monthly Future for Jan 2019 ?

In fact… for all the VX roots I see (Monthlies and Weeklies):

|VX/Z8|VX|19/12/2018|VX Monthly Dec 2018|
|VX/F9|VX|16/01/2019|VX Monthly Jan 2019|
|VX/G9|VX|13/02/2019|VX Monthly Feb 2019|
|VX/H9|VX|19/03/2019|VX Monthly Mar 2019|
|VX/N9|VX|17/07/2019|VX Monthly Jul 2019|
|VX/J9|VX|17/04/2019|VX Monthly Apr 2019|
|VX/K9|VX|22/05/2019|VX Monthly May 2019|
|VX/M9|VX|19/06/2019|VX Monthly Jun 2019|
|VX50/Z8|VX|12/12/2018|VX Weekly Dec 12, 2018|
|VX52/Z8|VX|26/12/2018|VX Weekly Dec 26, 2018|
|VX01/F9|VX|02/01/2019|VX Weekly Jan 2, 2019|
|VX/Q9|VX|21/08/2019|VX Monthly Aug 2019|
|VX02/F9|VX|09/01/2019|VX Weekly Jan 9, 2019|
|VX04/F9|VX|23/01/2019|VX Weekly Jan 23, 2019|

Academic interest only… but interested to see if IG are telling you something different… as long as you know the Expiry you’re trading then all’s OK!