Portfolio screen shot added to provide credibility. I’ve noticed some ET members prefer to call BS than write constructive comments and others tend to comment more when they believe the OP is sincere. SUMMARY (TL; DR) ASSUMING you know COVID-19 will continue to impact world economies for at least several more months and maybe years, what positions would you hold in the markets? Please debate the validity of this assumption in other threads, not here. +239% YTD ON COVID-19: NEXT STEPS This wasn’t highly leveraged dumb luck. My individual trades gained MUCH more than 239%. In fact, I’ve been mostly in cash this year and I put a small portion of my portfolio long VIX options and VIX futures six weeks ago based on two models I built involving a hundred years of data. I sold many of my positions through mid- to late- March. My value at risk has always been very clearly defined and monitored. Several of my best trades ranged from 1000% to 1500% (OTM VIX calls). MY QUESTION TO YOU ASSUMING COVID-19 will continue to impact the world economy and world markets, what are the best strategies and positions to hold for profit? This is not about day trading. This is not the place to discuss whether COVID-19 will continue to impact world economies or for how long they will impact world economies. Please do that in other threads. CONTEXT I have robust models for anticipating major changes in volatility and for anticipating recessions. Using them, I exited my long-term equity positions earlier this year and in late February and early March put a portion of my portfolio long OTM VIX calls and VIX futures. I’ve now closed many (but not all) of these positions. When I entered these positions, premiums on volatility options were much lower than they are now. Even if we continue to see new stock market lows, I’m not sure that being long volatility is still going to be the most effective way to profit from the declines. How would you express an assumption of further COVID-19 impact on economies and markets over the next several months (whether you believe this thesis or not.) What would you suggest as an attractive alternative to establishing positions in volatility? Long OTM Russell 2000 (RUT) puts? Currency options? Credit? Specific commodity options? Long/short positions across specific stocks or sectors? Long/short specific regions of the world? (I often like buying options to clearly define my maximum loss, particularly when my thesis is uncertain, as is the case here.) I have a laundry list of ideas, but I’m inviting the ET community to brainstorm and for you to share yours here. DETAILS The strategy depends, in part, on your beliefs as to the timeline and depth of economic disruption due to COVID-19. I’m asking you to assume there will be further disruption, but the exact nature of that disruption is wide open to speculation. In February, volatility futures and options were an effective way to express my opinion in the market. Now, the optimal trading strategy might be X for the next A months, Y for the next B months, and so on. Will credit defaults lead to weaknesses in banking? Will falling prices lead to deflation? What path will this all take? There are a lot of assumptions here, so feel free to add specifics if you have opinions. I don’t presently have (much of) a prediction on the timeline, depth of disruption, and which economies and sectors of economies will be hit hardest at different stages of the evolving pandemic. Having a bias toward a specific trajectory would influence my belief in the most effective way to profit. Feel free to provide as many details and opinions as you wish on the potential trajectory and how this would inform your market strategies. Personally, I’m seeking the most robust way to profit if COVID-19 continues to impact economies: I prefer ways that are likely to profit irrespective of the specific path or types of negative impacts. IT’S NOT ABOUT DAY TRADING This all has little to do with day trading. I do a little day trading, but I mostly focus on periods from a few days up to about a year, and this seems to be where I am personally most profitable. Increased volatility is undoubtedly good for profitable day traders, but that’s not what this post is about.
I personally think we might have the worst damage over by mid summer, but the recovering might be slow to non existant. Therefore your best chance is to play on more downside until fall or winter and sideways thereafter in anything that is real estate related. Mainly because selling might occur and investments postboned. This is the only sector that is really predictable. Others depend heavy on what the Fed and other cbs will do and when covid is really no more threat to the economy. Short term plays are the initial job less claims in terms of vola and also the fomc meeting. But since you are here for long term I just can't contribute more. Ty for the insight into your plays
What Screenshot is that? Your own? Any software? Never seen it. And I am highly confused. You claim unreal returns and next ask other users what to trade next? But I am game: Trading macro there are two trades in town: risk on or risk off (all else in my book are micro strategies (such as curve plays) that add relatively little to an overall book) . Most assets currently are highly correlated. I am convinced that the market has not yet priced in a prolonged economic shutdown. Hence I believe equity indexes will retest lows if not dip further south. Risk currencies lower; usd, yen, and Swiss frank in demand. Corporate debt yields up. I would stay far away from gold, euro, oil bets, and also don't see value in vix anymore. Timing is key as always
Why do you expect another riskoff phase but do commend to stay away from XAU? (no offense, only wondering).
Because Gold works well with inflationary expectations. And gold is often sold off during times of extreme stress when certain funds are forced to liquidate certain holdings. It gets axed before any short equity exposure. Just an observation from past experience. Gold gained 2.2% since the end of Dec 2019. Not an awesome hedge if you ask me. Also, I believe gold is a bit of a retail traders' overhyped commodity. Not much loved by hf. But retail traders jump aboard the bandwagon each time they read a story hyping gold.
It's the Interactive Brokers Client Portal. For those of you using IB, you click the three bars in the upper left hand corner and then "Portfolio." I should clarify something. It's easy to make a list of all the trades that would profit under the assumption of more disruptions in the markets. That's easy and I don't need to ask anyone about that. My question is basically about risk/reward. I believe there's too much premium in volatility options for them to (necessarily) be the best way to profit if COVID-19 continues to impact markets, EVEN IF buying more VIX calls tomorrow could result in further profits in two months. I'm asking people's opinions on what the most attractive risk/reward opportunities are given the assumption that there will be more economic disruptions. Then I'll go back to research and building models. I am a HIGHLY systematic, model-based trader. I don't have time to test everything I want to. I have my intuitions about where I should be looking next, but I'm curious about others' opinions, too.
Sounds like you don't need advice. Fishing for compliments or trying to find the forum with traders who are up 240%+ YTD? Sounds like you should just keep doing what you are doing. Why take advice from traders who have most likely returned less?