Someone just mentioned in the comment section that the media was long volatility and hence the bus was pretty empty right now. Point taken, good sir, but even I, a notorious market megalomaniac, have a hard time justifying a positive delta portfolio if I see Mr. VIX scrape the bottom of the barrel again:
There are times to be a contrarian and then there are times when it’s best to be running with the crowd. And then again there are times when you try to be as delta neutral as possible. And guess what, today is one of those times. In other words – just because the bus is empty means it’s taking off in the direction you think it will. But that’ doesn’t mean we can’t get positioned – let’s just make sure we keep it delta neutral.
In case you don’t know what that means – here it is right out of investopedia: A portfolio consisting of positions with offsetting positive and negative deltas. The deltas balance out to bring the net change of the position to zero. As a result, you neutralize the response to market movements for a certain range.
In English this means that your long exposure should match your short exposure. Got it? Good! So let’s look at some setups, shall we?
The Dollar – I love this setup! Long at the 25-hour/25-day SMA (both are in sync right now). Short on a breach. I hope it’s an SMA retest which would be extremely peachy.
Nice inside day setup developing over at the evil empire. Long/short triggers shown on the chart.
FSLR – only interested in a long IF it manages to hold the 25-day and pushes back above the 100-hour SMA.
I got quite a bit more, including some FX plays – please step into my lair:
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This entry was posted on Monday, January 7th, 2013 at 2:25 pm. Both comments and pings are currently closed.