Diversification in non-correlated products reduces risk. Watch full video here.
Managing At 50% Works
Interesting video on portfolio allocation. Holding strangles to expiration does not beat buying SPY stocks outright. Managing strangles at 50% did.
Good Job Ratio Spreads – Round 2
Ratio spreads better than Broken Wing Butterflies.
Good Job Ratio Spreads – Round 1
Ratio spread performs better than credit spread and naked call/put
Getting To Know Your ETFs
Cherry Picks newsletter gave a good summary of country ETFs. I decided to keep the list here for future reference.
| ETF | Description |
| SPY | S&P 500 |
| EWY | South Korea |
| EEM | Emerging Markets |
| FXI | China |
| EWJ | Japan |
| EWZ | Brazil |
| RSX | Russia |
| EWW | Mexico |
I recall some time back Cherry Picks also published a list of futures and their alternative ETFs:
| Category | Description | Alternative ETF |
| Equities | S&P 500 | SPY |
| Dow Jones | DIA | |
| Nasdaq | QQQ | |
| Russell 2000 | IWM | |
| Interest Rates | 20-US Treasury Bond | TLT |
| 10-US Treasury Bond | IEF | |
| 5-US Treasury Bond | IEI | |
| 2-US Treasury Bond | SHY | |
| Metals | Gold | GLD |
| Silver | SLV | |
| Energy | Crude Oil | USO |
| Natural Gas | UNG | |
| Agriculture | Corn | CORN |
| Wheat | WEAT | |
| Soybeans | SOYB | |
| Foreign Exchange | Euro FX | FXE |
| Pound | FXB | |
| Yen | FXY | |
| Canada | FXC | |
| Aussie | FXA |
Some other popular ETFs:
| ETF | Description |
| GDX | Gold Miners |
| GDXJ | Junior Gold Miners |
| OIH | Oil Services |
| XLP | S&P 500 Cons Staples Sector |
| XOP | S&P Oil & Gas Exploration & Prod |
| KRE | S&P Regional Banking |
| XME | S&P Metals & Mining |
| FEZ | Euro Stoxx 50 |
| XLU | S&P 500 Utilities Sector |
| XLB | S&P 500 Materials Sector |
| XBI | S&P Biotech |
| XLI | S&P 500 Industrial Sector |
| XLE | S&P 500 Energy Sector |
| XLF | S&P 500 Financials Sector |
| XLK | S&P 500 Info Tech Sector |
| XRT | S&P Retail |
| EFA | EAFE Ishares MSCI |
Calendar Spreads Are Better Than Debit Spreads
So during low volatility environments, debit spreads are a strategy to consider. But there is better strategy – calendar spreads.
1 strike OTM (55% OTM) calendar spreads outperform debit spread
Put calendars are preferred to call calendars
When To Adjust Strangles
When should we adjust strangles?
Study shows that it is more profitable to adjust when the strike has been breached.
Volatility Reduces, Even When Close to Earnings
Wow! Tom says past research shows that volatility generally still decreases despite earnings is close to expiration! Mind blown! I will dig up past videos and look into this.
Also don’t understand the part where Tom says when VIX is high, it’s not so much of a concern. Does he mean when VIX is high, there is so more underlyings to choose from and we can trade those which expiration is not close to earnings.
Undefined Risk is Less Risky
What??!! Can’t really understand this one. But sounds like Kai is saying that there is a <1% chance of strangle losing an amount that is the same as premium collected. Iron Condors on the other hand, have 4% chance of losing BPR. As a result, portfolio is more volatile if it comprises mainly of defined risk trades. I need to look at this more in depth.
QCOM Post Mortem
26 Mar 19 – STO QCOM 50/65 17 May Strangle @ 1.07
QCOM won court case against AAPL and that caused the long green bar. It happened so fast that I couldn’t adjust my untested side in time. There was simply not much credit left in the untested put option. I wasn’t confident in going inverted because I just read up on going inverted after the long green bar.
22 Apr 19 – BTC QCOM 50/65 17 May Strangle @ 17.46
I decided to just cut my losses before earnings in case the price head further north after earnings. On hindsight, my losses could be much lesser if I had waited it out. Then again who knows. Subsequently saw a Tastytrade video that describes loss > 3x initial BPR is far and few between. I don’t know. Perhaps I would be more confident if armed with this info?
20 Percent Freedom 