Swing Trades (SGEN, AKAM)...

Seattle Genetics (SGEN) is biotech that has shown incredible growth over the last 3 years and is currently in a breakout pattern.

The trade:

     Long the stock at $50.71
     Long the September $42 Put at $1.65
   Stock to option ratio is 30:1
   The September put admittedly gives us scant leverage at just over 7x
     Breakeven prices on the trade are $56.21 on the upside (just over 3 ATRs to the upside) and $35.91 on the downside at expiration of the option

*I would be sure to size this trade accordingly because the option protection isn't great and there is a considerable amount of downside... that said, I like the stock and would definitely put on this trade.

Akamai Technologies (AKAM) is a cloud services technology company. The sector has been hit hard of late (QCOM, WDC, RAX, etc...) and AKAM is showing signs of a long term downtrend after recently reverting back to its 50 day moving average.

The trade:

    Short the stock at $72.78
    Long the September $77.5 Call at $1.44
    Stock to option ration is -40:1
    The September call provides >14x leverage
    Breakeven prices on the trade are $69.18 (slightly more than 3 ATRs to the downside) and $83.05 on the upside at option expiration

Comments

Modeling Credit Risk...

Here's a link to a presentation I gave back in August on modeling credit risk. If anyone would like a copy of the slides, go ahead and drop me a line... https://www.gotostage.com/channel/39b3bd2dd467480a8200e7468c765143/recording/37684fe4e655449f9b473ec796241567/watch Timeline of the presentation: Presentation Begins: 0:58:00 Logistic Regression: ...

Modeling Black-Litterman; Part 1 - Reverse Optimization

"The 'radical' of one century is the 'conservative' of the next." -Mark Twain In this series, I'm going to explore some of the advances in portfolio management, construction, and modeling since the advent of Harry Markowitz's Nobel Prize winning Modern Portfolio Theory (MPT) in 1952. MPT's mean-variance optimization approach shaped theoretical asset allocation models for decades after its introduction. However, the theory failed to become an accepted industry practice, so we'll explore why that is and what advances have developed in recent years to address the shortcomings of the original model. The Problems with Markowitz For the purpose of illustrating the benefits of diversification in a simple two-asset portfolio, Markowitz's model was a useful tool in producing optimal weights at each level of assumed risk to create efficient portfolios. However, in reality, investment portfolios are complex and composed of large numbers of holdin...

Bitcoin Contagion?...

Same Song, Next Verse... On April 6th, the cryptocurrency market breached the $2 trillion mark in asset valuation for the first time. However, on April 19th, Bitcoin traded below its 50-day simple moving average (SMA) for the first time since October and has, thus far, failed to reclaim that technical safety level. Also, another bearish indicator is forming as it looks like the 20-day SMA will cross below the 50-day today. As someone who graduated college in December of 1999 right into the waiting arms of the dotcom crash of 2000 and then, about 7 years later, had a front row seat to the housing crash and subsequent financial crisis, this all looks eerily familiar... Bitcoint has had a 6x run-up within the span of a baseball season and crypto - in aggregate - is currently about 2% the size of the US equity market. This all begs the question... 'What happens if this bubble bursts?' On the surface, it's hard to imagine a repeat of the contagion o...

Blue Horseshoe Loves This Finance Blog

Search This Blog