TIB - An Investors Journal #647 - Europe Financials, US Media, Healthcare, Silver Mining, Alternate Energy, ASX Stocks, Altcoins (LRC), US Oil + more

This feels like the week investors decided the recession bogey is coming especially in Europe. Bank jitters scare more in Europe than they do in US. The contrarian investor is looking for "too big to fail" opportunities and is preserving capital for next month

Portfolio News

In a week where S&P 500 rose 1.06% and Europe dropped 2.71%, my pension portfolio dropped a bigger 3.07%. The drags were in Europe with 8 stocks dropping more than 10% - largest value wise were Volkswagen (VOW), Fresenius (FRE.DE) and Eramet (ERA.PA) and 6 stocks dropping in US more than 10%, the biggest value wise were Navios Maritime (NM), SPDR Regional Banking ETF (KRE) and Dutch Bros (BROS). Only positive region was Canada.

Big movers of the week were Delivra Health Brands (DHB.V) (+25%), Dawson Geophysical (DWSN) (+24.1%), Bayhorse Silver (BHS.V) (+20%), Barrick Gold (GOLD) (+13.9%), Panther Metals (PNT.AX) (+12%), Honey Badger Silver (TUF.V) (+11.8%), Yamana Gold (AUY) (+11.1%).

One very clear theme in this week's movers - gold and silver mining - tells me this is the week the markets bought into the looming recession story, especially in Europe.

Banking fears moved onto First Republic Bank, which was bailed out by major US banks in the week. The market gyrated from steep losses to a bit of a bounce to móre losses. Friday trade action saw a diveregece with the Dow Jones Index fall and the S&P500 and Nasdaq rise.

Major casualty of the week was Europe dragged down by fears of Credit Suisse (CSGN.SW) fallout.

Weekend news is UBS (UBSG.SW) buying out Credit Suisse with support from the Swiss National Bank and Swiss Monetary Authority. Th terms are 1 share for every 22.48 Credit Suisse shares. At Friday close of SFr17.11, this is SFr0.76 per share = a 60% discount to Friday close of SFr1.86. One can only hope the combined business is worth more than the SFr17.11 UBS was worth on Friday. Market open on Monday is ugly with Credit Suisse dropping more than 60% and UBS over 10%

https://www.cnbc.com/2023/03/19/ubs-agrees-to-buy-credit-suisse-as-regulators-look-to-shore-up-global-banking-system.html

Crypto booms

Crypto markets decoupled from stock markets this week as fears of a financial system collapse sent investors scurrying into alternatives (like gold and silver and quality crypto)

Bitcoin price pushed higher all week with a trough to peak range of 29% and ending the week 26% higher

Ethereum trough to peak range was 17% and ended the week up 12%

My largest crypto holding, HIVE, caught a bid and went up 27% on the week in the middle of the pump on Monday morning

Not many coins went up compared to Bitcoin - one exception was NEO up 47% vs USD

I wrote above about decoupling and quality crypto. The next chart shows one of the top 20 measured by market capitalisation, Polkadot (DOTBTC) down 27% against BTC since the last week of February. Litecoin is down 28% in the same time, Polygon (MATIC) even worse at 35%

Bought

Gannett Co (GCI): US Media. Long standing pending order of a call spread risk reversal hit as price sags 13% to close at $2.13 (Mar 13). Set up was an October expiry 3/4/2 call spread risk reversal. With net premium of $0.21, the call spread offers maximum profit potential of 376% for 66% move from the $2.40 open (Mar 13) in its own right. The sold put fully funds the trade with coverage of 20% - too bad that price dropped 13% of those in one day.

[Means: Call Spread Risk Reversal. Buy a bull call spread and fund the premium by selling an out-the-money put option below the strikes for the call spread]

Let's look at the chart which shows the bought call (3) as a blue ray and the sold call (4) as a red ray and the sold put (2) as a dotted red ray with the expiry date the dotted green line on the right margin. The arrow points to the initial stock purchase (Feb 23) made after running stock screens in US last month. The trade idea was to look for a continuation of the upward trajectory as the business completes the cost cutting and continues the transition from a print business to a digital business. The drop in price in the last week makes this look like a possible Elliot Wave move (provided price does reverse soon).

Aegon NV (AGN.AS): Dutch/US Insurer. Averaged down entry price 9% below level of January assignment. Wrote April expiry covered call for 3% premium with 5.2% price coverage.

Commerzbank AG (CBN.DE): German Bank. Price fell off a cliff with a 20% drop - too good an opportunity to pass up. Nice to get in at the bottom for the day.

Entry is still at a 10% premium to the January assignment. Wrote March expiry covered call for 3.4% premium with 3.1% price coverage.

Fresenius SE (FRE.DE): German Healthcare. Averaged down entry price 18% lower than initial entry.

Barclays plc (BARC.L): UK Bank. Averaged down. Wrote April expiry covered call for 2% premium with 7.4% price coverage.

CVS Health Corporation (CVS): US Healthcare. Assigned early on sold leg of 84/80 credit spread. With price closing at $75.56 (Mar 14), the bought put is in-the-money. Decided to hold the stock for the rebound. Sold the bought put for a tidy profit. Breakeven is $78.52. Dividend yield 3.14%. Wrote April expiry covered call for 0.05% premium with 5.1% price coverage on breakeven price

Stroud Resources (SDR.V): Silver Mining. Doubled position size to scale in - still under $1000 holding - treating this more like an options trade.

Clear Secure (YOU: Travel Services. Assigned early on sold leg of 30/25 credit spread. With price closing at $25.49 (Mar 15), the bought put is out-the-money. AsAAPlus have been adding to their holding, will let this stand and will sell the bought put. Sold the bought put next day. Taking into account all the put income trades, breakeven for the trade is $24 compared with $25.32 close (Mar 16). Wrote April expiry covered call for 1.7% premium with price coverage.

Credit Suisse Group (CSGN.SW): Swiss Bank. Price edged up as the Swiss National Bank provided emergency funding. Contrarian buy to claw back some of he losses. Credit Suisse is too big to fail in Switzerland. Now I have a back sotry here - I worked for both Credit Suisse and Swiss Bank Corporation (now part of UBS) in the 1990s - was never impressed with top management then. The bank is lost in the old world of old money - things have moved on in a technology enabled world. Wrote April expiry covered call for 10.6% premium with 16.5% price coverage.

Deutsche Bank AG (DBK.DE): German Bank. Used the banking sell off as a chance to average down entry price 18% lower than my last purchase. Price did keep drifting lower. Wrote April expiry covered call for 2.3% premium with 13.4% price coverage.

First Trust NASDAQ Cybersecurity ETF (CIBR): Cybersecurity. Assigned early on sold leg of 42/40 credit spread. With price closing at $40.32 (Mar 15), the bought put is out-the-money but not far off. Breakeven price is $40.77 - easily covered with a few covered calls. AAPlus added to their holdings a few weeks back

iShares Global Clean Energy ETF (ICLN): Alternate Energy. Assigned early on sold leg of 20/18 credit spread. With price closing at $19.02 (Mar 15), the bought put is out-the-money midway in the spread - have an order in to sell it. Breakeven price is $18.87. This is a trade for the long haul on energy transition.

Bank of America Corporation (BAC): US Bank. AAPLus added this last week. Chose to hold off a week to see how the Silicon Valley Bank event played through - waiting a week produced a 9% lower entry point. Wrote April expiry covered call for 1.04% premium with 15.1% price coverage. Also added a 26/23 credit spread offering 23.5% ROI with 7% price coverage.

Coty Inc (COTY): Personal Products. AAPlus added to their holdings. Also added in 9/8 credit spread offering 11.1% ROI with 21% price coverage.

Vulcan Materials Company (VMC): Building Materials. AAPlus added to their holdings. Added last tranche to be able to write covered calls. This averages down entry price aand is below the bottom of the credit spread that went TTB

Cameco Corporation (CCJ): Uranium. Assigned on sold leg of 25/23 credit spread. Breakeven of $24.76 is better than the $24.94 close (Mar 17)

Sold

American Patriot Oil & Gas (AOW.AX): US Oil. Small parcel compulsorily acquired as new buyer contrls 90% - petrol costs to drive the A$0.60 cheque to the bank was worth more than the value of the cheque. Shares bought in 2014 as part of the US Oil boom - did not work out for an Australian run business operating in strange lands.

ASX Portfolio

Quiet week in a down week on the ASX with only one scale in (holding of $200 and return better than 10%). Quite a few dividends collected.

Scale In

EBOS Group Ltd (EBO.AX): Healthcare. Dividend yield 2.02%.

Hedging Trades

Vanguard European Stock Index Fund (VGK): Europe Index. Last week had set up a 58/55 ratio put spread that was not cash neutral. Adjusted that by selling the 58 strike put and replacing with a 57 strike put. This locked in 75% profit on the sale and now offers cash neutral protection for a drop between 2.2% and 6% from $58.25 closing price (Mar 13). Mar 17 close of $57.08 will bring the bought put into profit though still out-the-money.

Invesco QQQ Trust (QQQ): Nasdaq Index. With price closing at $305.36, 290/280 ratio put spread expired for a small profit - the ratio worked.

Cryptocurrency

Loopring (LRCETH). Ran the weekly review looking for reversals - of note these are always done relative to ETH or BTC as that is what I am selling to buy.

Price has made a double bottom and had one pump higher which ended with a higher low - looking for another such pump. The previous entry is the blue ray on the left - some way to go to get back there. Set a 50% profit target to exit this holding

Income Trades

61 covered calls expired (UK 3 Europe 25 US 33) with none going to assignment makes for a good call income month. Wrote 21 new covered calls for April expiry - essentially making up for a lower writing month last time.

The challenges for the week were in the credit spreads. Of the 19 across the portfolios open coming into the week of expiry, 4 went TTB, 2 were assigned early, 4 were kicked down the road and one went to assignment. The TTB loses made a large dent in monthly realized gains but the overall gains were positive in each of the portfolios.

Naked Puts

American Water Works Company (AWK): US Utility. With price closing at $136.37 (Mar 13), the March expiry 145 strike naked put is solidly under water. Kicked the can down the road to April with $1.00 extra premium earned to avoid margin pressure in the account. AAPlus idea - happy to buy when the time comes.

Danone S.A. (BN.PA): Europe Food. With price trading up to close at €55.03, there is a chance my covered call will trade to assignment. Sold an April expiry 55 strike put option to be able to buy back at 2.3% discount to possible assigned price - why? My holding is not yet positive but not far off. As it happens price did not stay above €55

Bristol-Myers Squibb Company (BMY): US Pharmaceuticals. With price opening at $67.33 (Mar 17) and trading lower, the March expiry 67.5 strike naked put is at risk of being assigned. Kicked the can down the road to April 65 strike. Profit on the buy back and the sold premium will bring breakeven down to $63.47 if price drops below $65 at expiry. This structure will recover the loss made on the call spread risk reversal that expired in January 2023.

Credit Spreads

New spread not reported above

Crédit Agricole S.A. (ACA.PA): French Bank. ROI 17.6% Coverage 6.8%

Pioneer Natural Resources Company (PXD): US Oil. With price closing at $195.36 (Mar 13), the 200/190 credit spread is at risk of exercise. Sold the bought put (190) for a 20% profit and rolled the sold put (200) out to April with a 52% step up in premium (way better than cash neutral). Also a margin protection move. This leaves a naked put in place.

AMN Healthcare Services (AMN): US Healthcare. With price opening at $84.84 (Mar 16), the 90/80 credit spread is at risk of exercise. Rolled the sold leg (90) to April expiry at premium way better than cash neutral. This suggests the market is thinking there is more downside. Sold the put option to grab back some premium.

Fiverr International (FVRR): Internet Services. With price opening at $34.07, the 40/30 credit spread is at risk of exercise. Rolled the sold leg (40) to April expiry at premium 10% better than cash neutral.

Airbnb, Inc (ABNB): Travel Services. With price opening at $119.71, the 120/110 credit spread is at risk of exercise. Rolled down the sold leg (120) to April expiry (115). Roll down and out was 88% better than cash neutral.

The following spreads traded through the bottom (TTB) and chose not to adjust. Will rather buy the stock below the bottom of the spreads.

ERAMET S.A. (ERA.PA): Base Metals.
Alerian MLP ETF (AMLP): US Oil.
QuantumScape Corporation (QS): Battery Technology. ChargePoint Holdings (CHPT): Electric Vehicles.

Resources

Cautions: This is not financial advice. You need to consider your own financial position and take your own advice before you follow any of my ideas

Images: I own the rights to use and edit the Buy Sell image. News headlines come from Google Search. All other images are created using my various trading and charting platforms. They are all my own work

Tickers: I monitor my portfolios using Yahoo Finance. The ticker symbols used are Yahoo Finance tickers. Crypto tickers come from TradingView

Charts: http://mymark.mx/TradingView - this is a free charting package. I have a Pro subscription to get access to real time forex prices

Investing: Interactive Brokers provides comprehensive global markets coverage with very competitive commissions. Open an account to earn up to USD 1,000 in IBKR stock. https://mclnks.com/ibkr

Crypto Trading: Binance offers a wide range of coins to trade, tight spreads and low fees if you use BNB to pay https://mymark.mx/Binance

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March 13 - 17, 2023

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