Thursday, January 9, 2014

Thursday's Outcomes: XLV, EWZ

I've opened a bull position in XLV and updated my analysis with details. See "XLV: Bullish on health care".

My bear position in EWZ expired in December and I've been looking for an opportunity to roll it forward into a new position. However, implied volatility has fallen sharply since I entered the position on Nov. 8 and now stands squarely on the 50th percentile.

By the book, issues with middlin' volatility, neither low nor high, are best traded as shares, long shares for a bull position and short shares for bear. I define middlin' as anything between the 40th to the 60th percentiles of the three-month range.

I'm unable to sell EWZ short because it's insufficiently liquid, according to my brokerage. So I'm holding back and thinking about how best to handle the situation. See "EWZ: Bearish on Brazil" for my analysis back in November.

References

My shorter-term trading rules can be read here. And the classic Turtle Trading rules on which my rules are based can be read here.

Disclaimer
Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.
No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.

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