Wednesday, April 26, 2017

Bought top performing emerging market ETF

As stock market shot up 2 days ago after the French Election, the 2 best performing emerging market ETF (EEM & EPI) that I have been watching were also outperforming as well. These two ETF's has been showing strong relative strength to SPY recently. EPI, the ETF for India, was particularly strong in the last couple of months. But the ETF's option interests was relatively low and the bid and ask differences are over 20%. So, I just purchased the ETF stock as it broke out near term resistance on April 4, after the French election.

I plan to hold these intermediate term positions for a few months. The stop exit will be somewhere they break 20+ day support that I identify along the way and the profit target exit will be the uptrend shows signs of ending or when the general market start to show weakness.

For EEM which has abundance of option liquidity, I bought the 2018 Jan 19 $38 Call (LEAPS) and plan to use my favorite diagonal spread strategy to manage this position. The stop & profit exit rules are similar to that of the EPI, with one extra rule of the profit exit: I plan to exit the position when the Delta of the LEAPS exceeds 0.80.

On the other hand, NFLX broke out with strong volume from a 3 month base today. I bought the September 15 $145 call as an intermediate term position as well. I'll follow up on these trades when I get time.

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