Welcome to this week's Trade of the Week by TradePartner where we show you one trade you should be looking into for the week. We do this every week for you, so keep an eye out for another one next week.
We got some activity last week so let's get to it.
Open Positions Summary
COIN
Off of the advice we gave everyone last week in not regretting any of your trades, we got the pop in COIN we were looking for and this time we closed out in our profit. Stay disciplined at all times. You hear this often but rarely does anyone actually put it into practice. You WILL make mistakes in trading. It's the ones that take note and don't get emotional that come out ahead. It's a zero-sum game. We net $243 on the trade. Moving on….
Micro ES/ VXX
This has been a great trade. So, we got a pop in volatility last week but nothing to threaten our short put on the Micro ES. We repositioned our VXX hedge by closing out the last spread for around a 61 cent gain (on 4 contracts = ~$244). We are holding the short Micro ES put which has degraded to 56 pts as of this writing. We were in at 76 pts so we're sitting on around a $550 gain. The VXX hedge is net positive actually (after the two previous closings) at $36. Not common but we'll take it. The goal of the trade is to net around 40% of max profit on the short put which would be $920 net of any VXX hedges. We're about halfway there. We opened a new VXX hedge with the following:
Buy 3 VXX 25 Dec17 Call @ 8.72
Sell 3 VXX 43 Sept17 Call @ 2.22
This puts the hedge a bit ITM giving us some Vega exposure should the market fall quickly. We are trying to keep pace with the market against a selloff but remember, no hedge is perfect, so we simply play the probabilities and adjust when we can.
Grains: Corn, Soybeans, Wheat
Another excellent trade which came in quite a bit last week. That means premium was taken out netting us a healthy gain VERY early. This was to be a longer-term play but we are looking at closing this trade this week or most likely by next update. There has been no management on this trade as we were playing the volatility contraction.
AAPL/Nasdaq
This trade rewarded us quickly last week with the Nasdaq's quick dip. Apple was weak but not as weak as the overall index like we guessed so we closed this entire trade at a gain of around $47 per contract played.
This Week's Trade
The Nasdaq has been on a tear, outpacing all other indices in recent weeks. We wanted to play the Nasdaq short while going long the /ES and /RTY but we will hold off. Instead, we are going with this strictly short play on the Nasdaq and see how she pans out:
Buy 1 /MNQ 14100 Dec17 Put @ 535.75
Sell 1 /MNQ 14800 Dec17 Put @ 770.00
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Buy 1 14900 Dec17 Call @ 802.25
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Sell 1 /MNQ Dec17 Micro-Futures @ 14884.75
This entire trade has us short the Nasdaq while completely limiting our upside exposure should she rally. Note: we are using the Micro Nasdaq futures. Max loss is capped at $1136 to the upside and we'd look to exit at around 14,000. We can also lose if the market goes nowhere within 30-45 days so be mindful and exit on any hard and fast push down.
Remember to let us know how you are enjoying these updates. We love to hear from all of you and I thank you again for joining me on slaying all market monsters in our path!
Trade well,
Benjamin – Market Monster Hunter
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