We are out of most of our trading positions in Classic portfolio while waiting for a new round of trades, almost certainly on the SHORT side of the stock models. [BABA did flip SHORT on Friday causing the option portfoio to pick up some BABA Feb $170 Puts.] This weekend I want to focus on non-system based trades, the Special Situations Portfolio.
Special Situations Portfolio
In the coming weeks I expect to be adding to this portfolio to accommodate those subscribers who by choice or necessity do not trade the trend-signal option trading system. This portfolio will be limited to at most 5 positions at any one time and usually with intermediate to long term time horizons. We will be looking for outstanding returns with controlled risk wherever we can find suitable candidates.
1. UVXY - We added UVXY Thursday based upon what looks like the absolute exhaustion in the "institutional short volatility trade" of the past few weeks-months-years. This time the risk:reward profile is too opportunistic to let it pass by without taking a shot. We are risking about 10% and we are looking for 10X that in the next few weeks.
2. GBTC - This represents our participation in the hot cryptocurrency sector. GBTC is a bitcoin ETF that incredulously has actually outperformed bitcoin over the past year. Risk here is about 15% between current price and its stop, but reward has already passed 100% from a trade taken only one month ago. During the same month bitcoin itself is up "only" 62%. The risk:reward profile for GBTC is still very attractive. Taking only Long positions basis the trend-signal line since last Februray has resulted in substantial gains, based only upon four buy signals.
3. AVXL - Unfortunately, this biotechnology stock with a promising Alzheimer's drug development program was stopped out on Friday's close. We cannot let this become another NNVC. Exit the trade. If it ever begins to rise, we will let the trend algorithm get us back in.