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Started By
Message
Trading the Greek Crisis
Posted on 6/29/15 at 6:30 pm
Posted on 6/29/15 at 6:30 pm
I have a few trading ideas to take advantage of the crisis. If anyone could provide input, that would be great. I'm also keen to hear anyone else's plans.
1. NBG Straddle: plain and simple, just buy calls and puts at a decent strike price. One or the other will make you a profit.
2. Buy EPV: EPV is a 2x leveraged short Europe ETF. European markets are more affected by this crisis than the US market. EPV went up 6.7% today alone, but leverage also obviously carries more risk.
3. Short UPV or EURL: both are long leveraged European ETFs. UPV is the exact opposite of EPV, and EURL is 3x. Although there would be a borrow rate to short these ETFs, the decay would also work in your favor a bit, correct?
4. DWTI: 3x leveraged short crude oil ETF. More of a play on the $ than oil. If the euro tanks, the $ goes up in value. Throw in Iran re-entering the oil market and Chinese market troubles (which could also raise the value of the $), then oil prices should plummet since oil sales are denominated in USD. The obvious risk is in the leverage and possible decay.
Obviously, I like a bit of risk with my reward, but I am sure #2-4 could also be done with unleveraged ETFs. Thoughts?
1. NBG Straddle: plain and simple, just buy calls and puts at a decent strike price. One or the other will make you a profit.
2. Buy EPV: EPV is a 2x leveraged short Europe ETF. European markets are more affected by this crisis than the US market. EPV went up 6.7% today alone, but leverage also obviously carries more risk.
3. Short UPV or EURL: both are long leveraged European ETFs. UPV is the exact opposite of EPV, and EURL is 3x. Although there would be a borrow rate to short these ETFs, the decay would also work in your favor a bit, correct?
4. DWTI: 3x leveraged short crude oil ETF. More of a play on the $ than oil. If the euro tanks, the $ goes up in value. Throw in Iran re-entering the oil market and Chinese market troubles (which could also raise the value of the $), then oil prices should plummet since oil sales are denominated in USD. The obvious risk is in the leverage and possible decay.
Obviously, I like a bit of risk with my reward, but I am sure #2-4 could also be done with unleveraged ETFs. Thoughts?
5
Posted on 6/29/15 at 6:52 pm to Omada
Straddle doesn't make much sense to me. About .50 in premium for something trading only marginally higher nearest month. I guess you could calender straddle leaps. But if you straddled a buck, it would cost you $1.24. Doesn't make much sense.
I'm long NBG. It's the largest bank there. There are better Greek banks. But NBG has a fairly wide reach outside of Greece. This is largely unknown. Just beware, it's never liquidity with banks, although they will deny this. It is always capital.
Personally I don't think you can trade this. I think you could probably trade around it. And there is a difference.
I was poking around the futures market at yesterday evening's low. There were no put buyers at the low. Leads me to believe the sentiment is a stronger dollar, but not a huge bull dollar, and a continued equities bull.
Anyway, I'd personally try to find a way to go longer than long on Greece. Long time horizon. I think the technical guys will eat your lunch if you try to outsmart them short term on this blip on the radar.
This isn't Lehman. Although in some ways it is being handled better than Lehman, but that is entirely my opinion for reasons I won't bore you with.
Now I'm not saying don't take a position on Greece. I've done precisely this. The difference is I did it over a year ago.
Having said all of this, I'm not really a trader per se any more either. I make trades, but certainly not day trades, or short term trades.
I'm long NBG. It's the largest bank there. There are better Greek banks. But NBG has a fairly wide reach outside of Greece. This is largely unknown. Just beware, it's never liquidity with banks, although they will deny this. It is always capital.
Personally I don't think you can trade this. I think you could probably trade around it. And there is a difference.
I was poking around the futures market at yesterday evening's low. There were no put buyers at the low. Leads me to believe the sentiment is a stronger dollar, but not a huge bull dollar, and a continued equities bull.
Anyway, I'd personally try to find a way to go longer than long on Greece. Long time horizon. I think the technical guys will eat your lunch if you try to outsmart them short term on this blip on the radar.
This isn't Lehman. Although in some ways it is being handled better than Lehman, but that is entirely my opinion for reasons I won't bore you with.
Now I'm not saying don't take a position on Greece. I've done precisely this. The difference is I did it over a year ago.
Having said all of this, I'm not really a trader per se any more either. I make trades, but certainly not day trades, or short term trades.
Posted on 6/29/15 at 7:32 pm to Iowa Golfer
damn, an omada/IG thread.
I just read both posts and I have no idea what y'all are saying, but I feel smarter after reading it.
I just read both posts and I have no idea what y'all are saying, but I feel smarter after reading it.
Posted on 6/29/15 at 7:32 pm to Omada
I'm just gonna buy Exxon and say frick it.
Posted on 6/29/15 at 7:43 pm to Iowa Golfer
First off, thanks for the response, IG.
I am also aware of NBG's (and other Greek banks') presence outside of Greece. The other Balkans countries were scrambling today to make sure no issues happened with those branches.
quote:I'll admit I didn't check options prices before posting that strategy. I don't even have approval to trade options yet, so I was really just looking to do it in a paper account/get input from others. I might also just buy NBG stock.
Straddle doesn't make much sense to me. About .50 in premium for something trading only marginally higher nearest month. I guess you could calender straddle leaps. But if you straddled a buck, it would cost you $1.24. Doesn't make much sense.
quote:I've seen your posts about NBG. When you first brought it up back in December or January, I took the suggestion and ran with it. Did my own research and figured that since a politician's #1 priority is his own job security, a deal would be struck. I bought NBG @$1.25 and sold @$1.74. Wish I had gotten out at $2, but I watched it slip down from there before realizing it wasn't going any higher. That money was then thrown into CAK. Thanks for the tip!
I'm long NBG. It's the largest bank there. There are better Greek banks. But NBG has a fairly wide reach outside of Greece. This is largely unknown.
I am also aware of NBG's (and other Greek banks') presence outside of Greece. The other Balkans countries were scrambling today to make sure no issues happened with those branches.
quote:Wouldn't DWTI's triple leverage mean I won't need much of a stronger dollar though, especially with an Iran deal? Either way, none of the leveraged ETFs I mentioned would be long-term holds due to decay. Plus, the leverage means I need to keep aware when things start to turn around, or else I'll get hammered.
Leads me to believe the sentiment is a stronger dollar, but not a huge bull dollar, and a continued equities bull.
Posted on 6/29/15 at 8:21 pm to white perch
quote:
I just read both posts and I have no idea what y'all are saying, but I feel smarter after reading it.
If my memory serves me correctly, you have mentioned on this board that you are a doctor (remember I lurked this board for a long time). If so, I am sure that, if you discussed subjects in your area of expertise, that we would also be dumbfounded, or I certainly would, at least.
For basics on my post, leveraged ETF's provide X times as much daily return as they are leveraged. So if the S&P is at +/-2% in a day, a 2x leveraged S&P ETF is at +/-4%. You can find a leveraged ETF for just about anything. (Leveraged) inverse ETFs also exist, and they go in the opposite direction of whatever index or commodity they are following, so it is like shorting. However, leveraged ETFs are for trading, not investing, due to decay. This link explains how decay works, but it is simplest to say that, over the long term, leveraged ETFs lose value. Of course, with any rule, there are exceptions. I have heard of people who bought Dow Jones and S&P leveraged ETFs in 2008/2009 once the crash ended. They made quite a bit of money, much more than they would have with regular index funds.
If my explanation is clear enough, I can explain my aforementioned strategies in further detail, if you would like.
Posted on 6/29/15 at 8:33 pm to Omada
If you can find a levered ETF that you can short at any kind of non ridiculous securities lending rate, please point me to it.
I appreciate these kinds of intellectual threads, but shortingn leveraged ETFs is not something you can really do. If you could, there would be a huge arb opportunity.
I appreciate these kinds of intellectual threads, but shortingn leveraged ETFs is not something you can really do. If you could, there would be a huge arb opportunity.
Posted on 6/29/15 at 8:34 pm to Iowa Golfer
IG is your NBG thesis mainly a TBTF one? I have no problem with that, but I am kind of interested in buying into something risky and this seems like an interesting opportunity.
However, at a ~$5B valuation, I'm thinking im going to watch this knife drop for a while before I jump in.
However, at a ~$5B valuation, I'm thinking im going to watch this knife drop for a while before I jump in.
Posted on 6/29/15 at 8:50 pm to TheHiddenFlask
I think it's partially a TBTF situation. It has value, and I speculate it would be purchased before the other alternatives. I don't think they will be allowed to not lend for lack of collateral. If I'm wrong about this, theoretically the share price would go to zero.
They have made significant efforts to gain exposure to places outside of Greece. Politically, I think this makes them TBTF for a multitude of reasons.
I don't think the ride will be short, painless, and it is certainly not guaranteed. It belongs in one's speculative portion of their portfolio.
Look, there's a guy that combs 52 week lows with a lot of success. He buys Radio Shack etc. He has a valuation method. Less than 3 out of his 10 selected stocks makes it. But when they make it, they make up for the 70% losers. It really is a matter of consistency outperforming occasional brilliance. I'm not sure you can pick one speculative stock and expect any amount of success. I think a percentage of your available funds needs to be allocated to speculation, and this allocation needs to include a systematic purchase of many equities.
In my case recently, NBG, CAK now ERN, AIVI, PALDF and BAA. I've taken profits on AIVI and ERN. I'm break even on BAA. I cut losses to a manageable level on PAL, now PALDF, and I'm down on NBG. But in the aggregate, because of the larger than normal upside, I'm up.
Edit. I find Greece and interesting play. Extremely risky, but potentially large rewards. If it goes south on me, it's no big deal in my case. Thanks to ERN and AIVI.
As an aside, you can short a leveraged EFT. Interactive Brokers and maybe a handful of other places. It's not an expensive trade to carry, notwithstanding what the guy on the BOIL thread said, but it needs to be watched all the time. With respect to arbitrage, I think most of us would get killed trying to do this. Their trading this stuff off exchange, and for average traders like myself, the party would be over before I was even aware it started. On IB you have access to dark pools. Kind of. There are so many places the average guy can't get to in order to fairly compete it isn't even fair. I know factually ERN trades on at least 19 exchanges. Although I haven't checked, or more accurately asked their CFO and IR guy, I'm guessing you can't access at least half of these places.
They have made significant efforts to gain exposure to places outside of Greece. Politically, I think this makes them TBTF for a multitude of reasons.
I don't think the ride will be short, painless, and it is certainly not guaranteed. It belongs in one's speculative portion of their portfolio.
Look, there's a guy that combs 52 week lows with a lot of success. He buys Radio Shack etc. He has a valuation method. Less than 3 out of his 10 selected stocks makes it. But when they make it, they make up for the 70% losers. It really is a matter of consistency outperforming occasional brilliance. I'm not sure you can pick one speculative stock and expect any amount of success. I think a percentage of your available funds needs to be allocated to speculation, and this allocation needs to include a systematic purchase of many equities.
In my case recently, NBG, CAK now ERN, AIVI, PALDF and BAA. I've taken profits on AIVI and ERN. I'm break even on BAA. I cut losses to a manageable level on PAL, now PALDF, and I'm down on NBG. But in the aggregate, because of the larger than normal upside, I'm up.
Edit. I find Greece and interesting play. Extremely risky, but potentially large rewards. If it goes south on me, it's no big deal in my case. Thanks to ERN and AIVI.
As an aside, you can short a leveraged EFT. Interactive Brokers and maybe a handful of other places. It's not an expensive trade to carry, notwithstanding what the guy on the BOIL thread said, but it needs to be watched all the time. With respect to arbitrage, I think most of us would get killed trying to do this. Their trading this stuff off exchange, and for average traders like myself, the party would be over before I was even aware it started. On IB you have access to dark pools. Kind of. There are so many places the average guy can't get to in order to fairly compete it isn't even fair. I know factually ERN trades on at least 19 exchanges. Although I haven't checked, or more accurately asked their CFO and IR guy, I'm guessing you can't access at least half of these places.
This post was edited on 6/29/15 at 8:57 pm
Posted on 6/29/15 at 9:19 pm to TheHiddenFlask
quote:I have never shorted a security with my trading account before, honestly, so I haven't figured out how to come up with the lending rates. That's why I will most likely just buy NBG, EPV, or DWTI.
If you can find a levered ETF that you can short at any kind of non ridiculous securities lending rate, please point me to it.
In a private trading competition I am in, UPV is not shortable, but EPV is at 5.75%, and EURL is shortable at 4.5%. Those rates could be very different from the actual rates, but the game is pretty realistic: stock is bought and sold based on 5,000 shares of real volume in the market, and the amount of shares available to short, along with the rate, seems to reflect recent price movement. It may be worth looking to see.
quote:Supposedly arbitrage-focused hedge funds do short leveraged ETFs, though perhaps not long term. One such firm is in Dallas, and one of the partners discussed a strategy they implemented on an unnamed 3x oil ETF. The strategy was partly about decay, and partly about the fact that the ETF was one of the biggest players in the market during the daily required time it had to be restructured. That story could have just been an example, though.
I appreciate these kinds of intellectual threads, but shortingn leveraged ETFs is not something you can really do. If you could, there would be a huge arb opportunity
Posted on 6/29/15 at 9:35 pm to Omada
I invest into tax sheltered IRA's and college funds
I trade with UGAZ/DGAZ/UWTI and just play off the volatility. I just wait for a 5-10% drop then buy and wait for it to go back up. I don't really hold for more than a week normally.
I also have a post tax savings account that I do invest with, but these are mostly ETF's
I trade with UGAZ/DGAZ/UWTI and just play off the volatility. I just wait for a 5-10% drop then buy and wait for it to go back up. I don't really hold for more than a week normally.
I also have a post tax savings account that I do invest with, but these are mostly ETF's
Posted on 6/29/15 at 10:43 pm to white perch
Yes, I noticed your posts in the BOIL/UGAZ/DGAZ thread. Congrats on your 70% gain in your Robinhood account! Any trader would be quite happy with that return.
Posted on 6/29/15 at 11:07 pm to Omada
Loaded up on EURL at close, we shall see.
Should be a nice play if you think the Eurozone is going to bounce in the AM.
The only inverse leveraged ETF's I know of are some very specific DAX stuff I am going to avoid for now.
Should be a nice play if you think the Eurozone is going to bounce in the AM.
The only inverse leveraged ETF's I know of are some very specific DAX stuff I am going to avoid for now.
Posted on 6/29/15 at 11:28 pm to Omada
You can buy puts on them, which many HF guys will loosely refer to as shorting. Please link the article, I would be interested in reading it.
I have not looked at the mechanics available for shorting ETFs, but I did extensive research a few years back and I came to the conclusion that you can't beat the game. Every angle I found was unable to be implemented.
I have not looked at the mechanics available for shorting ETFs, but I did extensive research a few years back and I came to the conclusion that you can't beat the game. Every angle I found was unable to be implemented.
Posted on 6/30/15 at 8:08 am to TheHiddenFlask
Futures up 80+. Wtf is going on?
Posted on 6/30/15 at 8:39 am to LSUchuck
quote:
Futures up 80+. Wtf is going on?
Yesterday was panic selling, today the cooler heads are prevailing.
Posted on 6/30/15 at 8:49 am to Omada
VXX should be a good trade this week.
Posted on 6/30/15 at 9:00 am to cave canem
I'd like another day of panic selling so I can get some discounts.
Posted on 6/30/15 at 9:08 am to LSUchuck
quote:
I'd like another day of panic selling so I can get some discounts.
I went ahead and bought some. I'm thinking people will realize that the Greece stuff isn't as big of a deal as they thought yesterday.. With my luck, panic selling will continue soon.
Posted on 6/30/15 at 2:03 pm to TheHiddenFlask
I'm afraid there is no article or link, HiddenFlask. It was an in-person talk to a class I was taking.
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