June 2015 – Travels and Trades

Jun 30 – Trade Plan

The SPX options are now open and we’ve got a nice little bounce on a rumour that China pension plans are looking at buying equities. A bit of volatility is seeping out of the option pricing and I am seeing a big bounce in the paper balance of my account. The market is closed on Friday so we should see some accelerated time decay through the next 3 trading days. I plan on entering this long weekend close to delta 0 with a more elongated risk profile. I want to be able to handle a 30 point swing in any direction with modest effects and I’ll likely close the entire trade on Thurs/Fri of next week if there is no significant bounce.

Yesterday, the SPY closed at 205.5 and has erased all gains this year. Our protector equities are up 4.5% and our hedge portion is down 1.5% putting the overall portfolio up about 3% for the year while the SPY is just below 0%. I like that, I mean, considering the market movements and environment. Relative to the non-directional options strategies it isn’t a whole lot but during better runs, it’ll do just fine. The trade lost about 1.2% yesterday.

The July MICs are sitting at about 0-1% P/L but that’s with all that volatility packed in the pricing of the options. Not bad considering yesterday was a 2% down day for SPX and 2.5% down day for RUT. I’d guess that a slow consolidation day would put the trade up to 2-3% as volatility decreases and the time to expiry gets shorter. The potential in the trade has gone up and if the market goes our way, I am looking to close it at around 5-6% P/L for the month which wouldn’t be bad considering the whipsaw movements which required adjusting (on the upside) and now on the downside. Anything can happen and more sharp and sudden movements down could affect the trade and its profitability. All we can do is manage risk and exploit theta.

The bearish butterflies for Jul and Aug are all up obviously. Nice trade compliments.

I used Friday and yesterday as opportunities to enter some of the AUG MIC. I’ve got about 15 units on. I can’t really put on too many more until we start getting rid of the July ones. I’ll be considering this as we go forward. I sold 1890/1870s and 2175/2200s (almost 290 points between the shorts) yesterday for a good price! Gotta love that. Huge width in what I could see. On another down day, I’ll probably enter another 5 units for Aug.

Wurzburg -Trip Report (Ash)

Wurzburg

After leaving Rammingen we had about a 2 hour drive to Wurzburg. We rented a house just on the outskirts of the city, about a 10 minute drive out. The house itself was great, especially for the kids. There was a huge playroom that was filled with cars, lego, colouring books, stuffed animals and a huge car carpet with roads and buildings. The kids were in Heaven! This was definitely one of the nicer airbnb’s that we’ve stayed in.

Driving into Wurzuberg from the house was pretty easy. Once you get into the city, there was plenty of parking lots all around with paid parking. We never had a problem finding a place to park. Wurzberg itself is a beautiful city and the history is also pretty amazing. It was small, easy to navigate and had a great vibe.

In April of 1945, 90% of the city was destroyed in 17 seconds from the Allied bombers. 5000 people were killed and the medieval and historical buildings were completely destroyed. It took the Trümmerfrauen (rubble woman) of Wurzberg 20 years to complete the rebuild of the city. It was done mostly by woman as the majority of men perished in the war. Looking at the city now, you would have no idea the state it was in 70 years ago, it truly is a beautiful city.

The food in Wurzburg was pretty awesome. We were excited to see that one of the top 10 places to eat in the city was a vegetarian restaurant called Veggie Bros. Its basically a glorified falafel restaurant with different kinds of wraps, salads, juices and sauces. They make their own vegan mayo as well, which was absolutely amazing on their french fries. A great find for us as we are all vegetarian.

The main site we had in our sights (no pun intended) as the Residenz. Well, it made the entire trip, it was literally one of the best things we’ve seen. It is up there with the Segrada, Vatican and St. Johns church in Valletta. Astounding. Highly recommend as a bucket list “must see”. The next site was the fortress which we decided to visit when we had poor weather. We checked out the museum and walked around. It was anti-climatic compared to the Residenz, however.

Jun 29 – Travels

We’ve arrived in Berlin, our first official “big city” stay. We’ll be here until the 6th at which point we’ll depart for Copenhagen. A week after that will be Stockholm and a week after that will be Helsinki.

I’ve got a shit-ton of updating to do tomorrow on this blog. I’ve been busy with catch-up of all sorts in business that has put a big limiter on free time outside of the obvious traveling/experiencing.

Pictures from Wurzburg and Nuremberg below:

Emma lost a tooth in Nuremberg

Standard pic. Nuremberg

Beach bar (summer in the city) Nuremberg. Super cool and extensive

Just a pic of the three weirdos that I call my family

The lead weirdo

Nuremberg nazi rally grounds

A paddle boat excursion near the rally grounds

A Wurzburg castle stroll

A night out in Wurzburg

A night out in Wurzburg #2

A night out in Wurzburg #3

Fun in the backyard (Wurzburg)

Jun 29 – Trade Plan

Wow. That was probably one of the biggest down days I’ve experienced. It was the worst day this year thus far. A 46 point drop in the SPX futures. Neat. First 2% decline since Oct 2014.

The increased volatility is hurting the positions a little. I was quick to start balancing on the early morning bounce from the futures lows. I added 32 units throughout the AM of debit spreads to hedge my 22 units of SPX MIC. The thing kept falling and the VIX is up 35% this means the insurance (credit spreads) we sold are now getting expensive to buy back. Our positions are packed with volatility premium and they (at the moment) are hurting a bit. The good thing is that there is only 17 days left and time decay is high. That premium will suck out of the positions on any stall or bounce quite quickly. The trade could do better (even much better) than expected but right now (as is usual in a big drop near the end of the trade), our paper P/L is sobering. I’ve seen this type of thing many times before, I’ll need to be vigilant in adjustments and risk management. Hopefully the worst is over. I’ll close the trade sometime next week when we’re about 5-10 days to expiration (DTE) as I usually hold the trades a bit longer when we’ve got a big volatility inducing drop around this time in the trade. There’s a ton of juicy premium waiting to be sucked out by the time vacuum and we’ve got so much room to the downside (we sold the 1980/1940s and 1950/1930s on the SPX and we’ve still got 90 points to the downside with only 17 days left. Still, the SPX trade is hurting the most as it started the week delta positive while the RUT started borderline max delta negative. However, even though our RUT trade went from borderline limits of delta negative to just slightly positive delta, the position P/L has fallen (on paper) due to the massive increase in volatility. It moved in the direction we wanted but it came with an amount of volatility that hurt the trade.

On Friday, I entered a few bearish butterflies (timing was impeccable!). These bearish butterflies will soon compliment the MIC portfolio. They’re based on the same concepts and do well in any market despite the name. Though, they do prefer down movement. I also sold a a lot of longs on the Alpha portfolio in an attempt to reduce it. Obviously good timing again.

A bounce is likely as soon as tomorrow. The daily RSI of the SPY is <10 and the daily RSI of the VIX is >90 and was up 30% in a single day. Too much too soon. The SPY Futures are about 6 points away from the 200d moving average as well.

Jun 25 – wurzburg and ulm

Jun 24 (last full day near Munich)

Yesterday, Ash and I took the Tesla in for servicing and got a loaner P85+ which was interesting to drive. The differences? This one is the + package which includes a different suspension, brakes and 21 inch rims. It also included some auto pilot functions. All in all, just a bit different. We talked to a few car dealerships in UK already about selling our Tesla in August. The going price seems decent, we’ll probably put it with one of the dealers and do a cruise to end the trip (a cruise around either the British Isles or Scandinavia) rather than spend it in Airbnbs. Ideally we can sell the car in August and get one in the US for Cayman.

After dropping off the car, we then made our way into Munich for a little night out and ended up buying a few apple watches. I’ll probably only wear mine during work outs or market hours as a way to keep track of the market/alerts without having to pull my phone out and/or being distracted at my computer. Will be a bit of a game changer for that. I’ve got it setup to display the RUT on my watch face 🙂

After that, we went and found a few beer gardens to enjoy some TapX and also some Augustiner beer (my personal favourite). You can’t export that beer, it’s got no preservatives and is brewed according to the purity law in Munich. Munich beer is just different. I don’t know how to explain it. The Augustiner beer history dates back to 1328 when the Augustinian brotherhood of monks brewed the beer in the Munich (which means monk by the way and so does Monaco).

Today, we will go back to pick up the car and I’ll probably get a haircut and stop at a Vegan restaurant we found. Tomorrow we depart for Wurzburg with a stop in Uln along the way. We spend four days in Wurzburg then will make our way to Berlin for a week followed by Copenhagen for another week. After that, who knows!

Jun 23 – Trade Plan

The RUT has been on a tear breaking to all time highs (1293) while we entered at 1210-1220. This has put pressure on our RUT MIC trade and it’s sitting at break-even right now. I’ve been very diligent removing call spreads as we move up and I am happy we’re at break-even given the large move up which this trade hates. We’re in only 2/3rds unit as I couldn’t get a good entry for the rest. We’ve got about half the call spreads off now. We still have some upside pressure but I expect the RUT to cool off around 1295-1300. I don’t doubt that by the end of the year, we’ll hit 1350 but not right now. The big up move is likely due to the negative headlines and increased short pressure which tends to fuel these V recoveries.

The SPX has been lagging while the RUT is leading. The SPX MIC trade is doing well up about 2.5%. As with the RUT MIC, we’re only 2/3rds entered this month. I just couldn’t find good entries after that fantastic last month.

Overall both trades combined are sitting at about 1.5% with 14-20 days left in the trade. I wouldn’t expect much more than 4% for this month.

The protector alpha portfolio is doing fantastic due to some great picks in the healthcare/insurance sector. There’s been buyout rumours which have fueled huge runs in AET, CI etc. I held CI which had a 30% run (just sold) and I currently hold AET and UNH. The protector is up about 5% for the year vs SPY up 2.6% and we are fully hedged! I leverage this at about 6-7x because of its low risk fully hedged nature. So for that, I am up 30-35% on equity less whatever the margin costs are.

So far the year is going very well, my account is at all time highs and I am expanding my options education. I never thought I could be so challenged w/ options as I am with the new material I’ve been learning via John Locke (M3, Bearish Butterfly, Rock and specifically the M21 trade). These are all non-directional theta based trades that are more or less based around the same concepts the MIC is but quite a bit more complicated. Looking forward to implementing these strategies in the fall as a nice diversification to the MIC and protector alpha.

Germany (Pictures)

Ravensburg (Where they make those puzzles!)

Landsberg am Lech locks

Landsberg Am Lech during a hike

Andech Monastery beers! Kingston is admiring them.

landsberg Am lech

U-boat revealed

Ravensburg poseMunich (Marienplatz) The start of the beer hall Putsch

U-boat control room

Landsberg Am Lech guard tower

Landsberg am Lech Umbrella crew

Landsberg Am Lech log pose #1

A beer in Turkheim

Trying on hats in Ravensburg museum

Marienplatz, Munich

Ravensburg

There we go. Nice Hat

Deutches Museum, Munich (Awesome!)

Entering Marienplatz

Roar
More U-boat cut outs

Jun 23 – Rammingen (near Munich)

We’ve been in Rammingen for the past 3 days and are staying in a fantastic airbnb that I’d recommend to anyone. The drive took a bit longer than expected (8 hrs) and probably will be our longest of the trip. It was relatively uneventful though fun to drive 160+ on the autobahn. We stopped to charge in Ljubljana, Villach and just outside Munich.

The following day we checked out landberg am Lech and an the Andech monastery for some much looked forward to Monk beer. The day after that we checked out Ravensburg and visited a museum there and bought some memory match games from the Ravensburger museum store. Ravensburg is a small town in Germany where all those puzzles/games you see at book stores are made (IE Camana Bays). The day after that we went into Munich and visited the Deutches museum which was awesome. They had a u-boat cut in half and that alone made the museum worth while to me. The kids loved it.

Jun 19 – About Koper

Koper is a little town about 25 mins from where we were staying. It was located at the bottom of the mountain that had really windy roads. For the most part we had no problem driving the Tesla up and down these roads. There were a few spots that were really thin and if there was another car coming we’d have to pull to the side but that only happened a few times.

Koper itself was a beautiful little town. We parked our car in the parking lot down by the port and it only cost us a few euro for a couple of hours parking. The port area is where a lot of the restaurants, bars, market and parks were located. They have 3 parks along the waterfront for children and, for the most part, the whole area is closed off to cars so we didn’t have to worry about our kids scootering around.

I was amazed at how clean the city was. There were garbage bins everywhere and I dont remember seeing a single piece of trash on the ground. Walking along the waterfront we came to a beach area. There were quite a few people there with their children just hanging out on the grass, playing in the playground or sandbox and a few brave ones were swimming in the cordoned off swimming area. It was a rocky beach with no sand but that might be normal for this area. Coming from Cayman Islands, this wasn’t really our type of beach 🙂

As always, we looked at Trip Advisor to see where we should eat lunch. There were about 70 restaurants listed in Koper and we were happy to see that two of the top ten places to eat where vegetarian! We headed to a little tiny place called Hisa De Rin. It had 3 (tiny) tables and it was packed. All the tables were taken and there were about 5 people ahead of us in line. The selection of food was quite small but the special of the day, or the Workmens meal as they call it, was Vegan. We ordered the special all around and it was a Vegan Moussaka. It was delicious! The portion size was huge and it only cost 5 euros. We visited that restaurant 2 times during or stay.

The old city part of Koper was quite small with one walkway through it that was lined with little cafes, shops and a few bars. We stopped at one of the cafes for a coffee and were happy that they had Rice milk. We saw that they had quite a few craft beers so we decided that we would head back there at some point for a beer. Oh yah, for the beer drinkers out there, there is a cool app called Untappd which lets you track your beers, cheers friends, and find the coolest beers in whatever location you’re in.

Koper is quite a small little town but its definitely a nice one and, if driving by it, one should stop to check it out. The people are friendly, the waterfront is beautiful and you can get a great Vegan meal there too!

We rented a place on airbnb and it was located up a smaller mountain in a little town called Kostabona, just outside of Koper. The town only has about 50 homes, one restaurant and two churches. Our navigation stopped working as we went further up the mountain and we did get a little lost. Funny enough, after driving up a really tiny road, we turned around in a driveway and went back down the hill. It turned out, the driveway we turned around in was the place we were staying in.

The views from the house were pretty nice. Being out in the countryside meant there were a lot of bugs. For the most part we weren’t bothered by this but the girls weren’t too happy about the 3 scorpions that we came across. We all survived and all managed to get away, sting free.