South Africa: fundamental issues warrent caution EZADate released on the 1st show South Africa to be contracting at a faster pace (worsening), express caution!
EWZ
THE WEEK AHEAD: EWZ, XOP, MU, IWMTrade of the Week (May Cycle):
Pictured here is an EWZ (29/34) May 17th 37/45 short strangle: 1.14 credit, .57 at 50% max, break evens at 35.86/46.14, delta -1.46, theta 2.87.
Obvious Alternatives: EWZ May 17th 41 short straddle, 3.91 credit, .98 at 25% max, break evens at 37.09/44.91, delta -4.6, theta 4.01.
Notes: Pros: High implied, high implied relative to broad market (i.e., SPY 16/13), non-closely correlated with broad market (.4 3-month SPY correlation). Cons: Preference is for implied to be higher within 52-week range.
Exchange-Traded Funds
XOP (20/30): May 17th 31 short straddle, 2.67 credit, .67 at 25% max, break evens at 28.33/33.67, delta 1.89, theta 2.73.
Obvious Alternatives: May 17th 29/33 short strangle,* 1.15 credit, .57 at 50% max, break evens at 27.85/34.15, delta 2.07, theta 2.29.
Notes: Pros: High implied relative to broad market, non-closely correlated with broad market (.3 3-month SPY correlation). Cons: Preference is for implied to be higher within 52-week range.
XBI (21/26): May 17th 84/97 short strangle,** 2.48 credit, 1.24 at 50% max, break evens at 81.52/99.48, delta -.26, theta 5.62.
Obvious Alternatives: May 17th 79/84/97/102 iron condor, 1.65 credit, .83 at 50% max, break evens at 82.35/98.65, delta -3.15, theta 2.47.
Notes: Pros: High implied relative to broad market. Cons: Preference is for implied to be higher within 52-week range.
Single Name With Earnings in the Rear View Mirror
MU (10/40): May 17th 37/47 short strangle, 1.36 credit, .68 at 50% max, break evens at 35.64/48.36, delta .86, theta 3.41.
Notes: Pros: High implied relative to broad market, non-closely correlated (.42 3 month SPY correlation). Cons: Preference is for implied to be higher within its 52-week range.
Other Passing Observations:
Broad market volatility remains in low gear here with VIX finishing the week with a 13.71 print, although VXN is at 16.62, and RVX at 17.80, so "the frisk" is in small caps with the IWM (20/18) short strangle nearest 25 delta in the May cycle -- the 147/159 -- paying 3.02 at the door and 1.51 at 50% max and the 142/147/159/164 iron condor paying 1.76, .88 at 50% max.
* -- I'm in a May 17th 28/33 short strangle. (See Post Below).
** -- I'm in the May 17th 80/85/98/103 iron condor. (See Post Below).
ewzewz correction is most likely over stop at 40.11 in case it extend lower to make a bit longer zigzag extension that could go extend around 37.50-$ area but should still continue uptrend
THE WEEK AHEAD: NIO EARNINGS; XOP, EWZ PREMIUM SELLINGMy screeners aren't showing me a ton of things for either earnings-related volatility contraction plays and/or just Plain Jane premium selling, so I'm largely looking just to work what I have on, do any adjustments that are necessary, and wait for a higher volatility environment (VIX is at sub-15 here) to deploy capital back into premium selling.
The Chinese "Tesla killer" NIO (82/136) announces in two days and with a background implied clocking in at 136, who can resist putting something on. Pictured here is a fairly delta neutral 11 Short Straddle in the April expiry that is paying a whopping 4.18 at the mid (1.04 at 25% max) with break evens that encompass most of the underlying's whole data set -- 6.82 to 15.18. Even skewed to the call side, the net delta is -2.59 with a theta metric of 4.08.
Obvious alternative plays:
April 18th 7/11/11/15 iron fly: 3.10 at the mid, max loss of .90 versus max profit of 3.10 (.78 at 25% max), delta -.97, theta 1.43. I would note the rarity of the substantially better than risk one to make one metrics of this setup.
April 18th 7 short put, .72 at the mid with a downside break even of 6.28.
On the exchange-traded fund front, the vast majority of underlyings are at the very low end of their 52-week ranges, with the highest implied underlyings in XOP (16/30) and EWZ (10/30), which again militates in favor of not putting on a ton of nondirectional premium selling stuff here.
I did look at ASHR, which did stick out at 75/34, but the options chains in April, May, and July have wanky strikes (i.e., the April 28th 27.71 (WTF?) short straddle), and I don't like having to roll from "wanky" to an even Steven strike if I have to. If I'm going to play China, it's going to be in the more liquid FXI (16/21), which doesn't suffer from similar oddities that make trading it potentially harder than it has to be.
UPDATE: Brazil (EWZ) is now up 48%, reduce RISKLast July I put out a video suggesting that Brazil was a great opportunity to allocate capital (linked below). At the time the business cycle had turned from contraction to expansion and from a technical standpoint, we were sitting on support.
Today, +48.6% higher the risk is rising, the cycle is still relatively strong but our technicals are suggesting we reduce risk here.
Watch for 11.55 - 11.60If the price holds above this level by tomorrow, we are going for another bullish leg.
Espectacular amounts of money have gone into Brazil. Will this continue?
Bradesco might be the best proxy for this.
Buy Anim3 on bullish flagAfter freezing itself from a clear downward channel, Anim3 confirmed major inverted head and shoulders bottom pattern. Now, there may be a short swing trade buy opportunity as ANIM3 just confirmed bullish flag pattern with strong volume, continuing medium to longterm rising trend.
BUY JSLG3 on Beautiful Inverse Head and Shoulders BottomBUY JSLG3 on textbook Inverse Head and Shoulders Bottom: broke out from neckline, made brief pullback, and now strongly up again. Minimum target around 13 (projected amplitude of head and shoulders figure from neckline), but fundamentally the stock may go much higher if macroeconomic conditions in Brazil improve more than expected.
Looking for EWZ to retrace as it should. Patience on re-entry.Trading EWZ with options.
Calenders and Verticals in specific.
looking for a retrace so im open ended on the position to the down side.
Im long term Bullish.
Short term Bearish.
Also note, if retracement actually matures, it will leave a bearish formation producing resistance levels.
The market will have to fight back a little harder to bring back the current high levels.
GL luck all
Head and Shoulders Pattern on Brazilian Real = TailwindEWZ is a derivative of the Brazilian stock market ( IBOV ) and the USD/BRL relationship. There is a clear head and shoulders pattern developing in the Brazilian Real. The drop in the Real should provide a tailwind for Brazilian stocks. On top of that, the IBOV just broke out above 90,000. I see continued upside in EWZ and BRZU as a result. This can be seen in the clear bullish channel in the EWZ chart
EWZ - Brazil breaking outThe Latino Trump was inaugurated, and it looks like EWZ (Brazil ETF) is now breaking our of a bull flag similar to last year. Can't say I'm bullish on the market, but this might be a good short term trade. Long EWZ Jan 11 calls. I've been playing with EWZ for a while, surprising amount of liquidity in options for EWZ (Brazil) and EWW (Mexico).
Also long on XRT and GM, but I think we're looking at day trades there.... closing both when GM or SPY closes the morning gap.
For those following me.... flipped the MNK and FB puts on open, as usual.
Are you ready for Round 2? Buy, buy, buyAmazingly bullish setup.
As soon as it tested the MA200 and the .618 of the previous uptrend, the buyers appeared.
This is an absolute clear buy.
EWZ: Ready to move up from here after consolidating?$EWZ looks poised to rally above the 'Temer almost impeached' fundamental key levels.
These 3 price levels acted as key support and resistance zones since the market bottomed as per my previous publication, good time to rebuy Brazilian stocks. Bolsonaro being elected president might please investors in the long run, is what I think.
Cheers,
Ivan Labrie.
Short EWZ setup (Brazil index)Brazil has been bullish lately with elections and central bank lifting interest rates. $USDBRL has been down for quite a lot. However, the move is short term, here is why:
1. Brazil cannot sustain high interest rate for such big deficit (it's not financially strong as U.S)
2. Election effect is priced in and will be gone after the event. Although the candidates are all business friendly(it seems), the effect will need to build over time, not in 2 months.
Watch for exhaustion at 44-46 level for a short set up for continued downside. Weekly cloud suggests bearish price action ahead in 2019.
EWZ NOV 16TH 34C/39P INVERTED SHORT STRANGLEJust updating an EWZ trade that I started out some time ago as an iron fly (See Post Below). Currently, it's morphed into an inverted November 16th 34C/39P -- a 5-wide, inverted short strangle that I've collected 6.87/contract in credits to date.
Currently, this broken setup is valued at 7.16, so if I closed it out here for 7.16, I'd realize a small and very tolerable loss. The max I can earn on it is 1.87 (total credits received minus the width of the inversion -- five).
With a current theta of 5.36, I'm going to hang in with it a few more days ... .
Late Buy LOGN3Even though best opportunity on double bottom with extreme OBV divergence already passed, the recent breach of the previous top may be a good buy opportunity with stop loss at 4.00.
BUY SNSL3 On double bottom and breakout from negative trend lineBUY SNSL3 On double bottom and breakout from negative trend line. MACD highly divergent.
THE WEEK AHEAD: DAL, C, JPM, WFC EARNINGS; EWZ, TLT/TBTAlthough the earnings season has already kicked off modestly, a bevvy of financials announce next week: C, JPM, and WFC (all on Friday). I generally don't play these underlyings for volatility contraction around earnings primarily because the implied volatility just doesn't ramp up to the degree I'd like to see for a play. I thought I'd mention them here since there will be possible broad sector (XLF) impact depending on how these earnings go -- i.e., there could be a play that develops in one of these underlyings post-announcement or in the sector as a whole that may be worth playing.
Other Earnings: DAL (rank 41/30-day 32) announces earnings on Thursday before market open. The metrics don't look promising here for a directionally neutral premium selling play, but I could see going for something bullish if earnings experience engine failure and crash into the 52-week low around 48 and implied volatility remains high such that a bullish assumption play would be productive (e.g., short puts, Jade Lizard, etc.).
Although there are some other single names that are "ripe" for a volatility contraction play right here (TSLA (earnings in 31) comes to mind), my general tendency is to resist the urge to put plays on in single name with earnings announcements that are near the monthly and instead wait until the eve of the announcement. With a rank of 99 and implied of >100%, though, it's understandably tough to sit on one's hands and wait.
On the Exchange-Trade Fund Front:
Brazil is voting today, so it's likely that you're too late to get into a volatility contraction play that may evolve after the results are finalized (the time to have put that play on was last week). That being said, it's also possible that EWZ gets even more volatile depending on the outcome, even though implied volatility is at the top of its 52-week range at 56.2%.
The financial media has returned to covering 10-year T note yield hand-wringing and/or the spiking of bond yields in general as a general, explanatory theme of why the broad market gave some up last week. TLT broke through long-term support at 116 last week, cratering to 113. I was previously shorting TLT from the 122 level via put diagonals, but it appears that play may have temporarily played out in the absence of some risk-off event that drives treasuries back up. I will continue to short TLT on retrace, but there is little that sticks out to me in terms of horizontal resistance other than 122 and 116, and I'm hesitant to short from 116, since it literally just broke that level "seconds ago" in the scheme of things.
