VTS Community,

It goes without saying  (but allow me to say it anyway)  that the VTS Discretionary Options strategy’s primary purpose is to add diversification and performance to our portfolio.  In my opinion, effective options trading should be uncorrelated to the broad markets.  And in this Fed-fueled market, that’s hard to come by.  Introducing some derivatives exposure to a small portion of one’s portfolio is a great way to cover more of the neutral action we often see towards the tail end of a bull market.

However, VTS Discretionary Options is also meant to be a teaching strategy to help introduce more people to the wonderful world of options.  So I figured we could try something a little different and actually do a community exercise for our next trade.

MSCI Emerging Market ETF  (EEM)

 

So emerging markets are now in “bear market” territory being down over 20% from their highs at the beginning of 2018.  Now obviously the S&P 500 has decided that it doesn’t care, but as options traders, there’s definitely some opportunity here.  The Emerging Market ETF EEM has it’s own VIX style index that we can use to get a rough gauge of volatility.

CBOE Emerging Market ETF Volatility Index  (VXEEM)

 

So EEM volatility isn’t the highest it’s been, that’s been reserved for a few short-term spikes during February and March, but it’s definitely in its high range.

The price action is obviously very negative, volatility is elevated, and the US market doesn’t seem to care about any of that.  The question I pose to the VTS Community:

What options trade do you like in this situation?

 

I’ve got mine chosen for the official trade in our Discretionary Options portfolio and will likely put it on tomorrow or the next day, but if you are interested in brainstorming a few of your own ideas feel free to email me and we can talk about it.

volatilitytradingstrategies@hotmail.com

 

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Daily Trade Signals   –  No new trades today

 

VTS Tactical Balanced Strategy:

–  Currently Long MDY Stocks     (since Aug. 23, 2018)

Today’s Trade:  NO NEW TRADE

Maintain current MDY position

 

* Choose the volatility strategy that suits your risk tolerance

 

VTS Conservative Vol Strategy:

*  Volatility Strategy for investors with lower risk tolerance

–  Currently in Cash     (since Sept. 6, 2018)

Today’s Trade:  NO NEW TRADE

Maintain current Cash position

 

VTS Aggressive Vol Strategy:

*  Volatility strategy for investors with higher risk tolerance

–  Currently long SVXY     (since Aug. 22, 2018)

Today’s Trade:  NO NEW TRADE

Maintain current SVXY position

 

VTS Tactical Volatility Strategy:

*  Volatility strategy using stock replacement through options

–  Currently in Cash     (since Jul. 25, 2018)

Today’s Trade:  NO NEW TRADE

Maintain current Cash position

 

* Sign up for a paper trading account and follow along:

 

VTS Discretionary Strategy:

25,000 Model Portfolio reset annually   (current:  26,035.35)

–  Currently in 2 positions

Today’s Trade:  NO NEW TRADE

Maintain current position #17
Maintain current position #18

 

Current VTS Total Portfolio Solution Allocations

6.7% VTS Conservative Vol Strategy  –  Volatility strategy for lower risk tolerance investors

6.7% VTS Aggressive Vol Strategy  –  Volatility strategy for higher risk tolerance investors

6.7% VTS Tactical Volatility Strategy  –  Volatility strategy using stock replacement through options

50% VTS Tactical Balanced Strategy

30% VTS Discretionary Options Strategy

 

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