Financial Letter - August 18th, 2019
237 Issue (since 01/24/2015)
CKL Inc. offers presently to his customers a portfolio based essentially on performance (0.9/10): the 0.9 indicates the annual administrative % cost of management; the 10 represents the 10% of management fees on the gains above the high-water mark. The portfolio is made by only one ETF US plus options strategies of the US market. This style of portfolio requires a capital of 250,000US$ or equivalent in CAD and the level 4 in options negotiation.
It is now available on Kindle and on other electronic reading platforms in French a short manual on the Day Trading. The title is: « Le ‘Day Trading’ ou La négociation sur séance (1) », written by Charles K. Langford and Audrey Parent Thibeault.
It is available on Kindle and on similar electronic reading platforms, in French, a short manual on the put/call ratio. The title is: « L’antagonisme entre les options put et call: l’analyse du put/call ratio », written by Charles K. Langford and Laurence P. Darveau.
The book “L’alchimie qui crée l’or – Le chasseur de tendances boursières II” is online (Amazon.ca and the title) on Kindle. It is in French. The book is a “bestseller” in the category business and finance. It's also available on all other readers platforms (Kobo, iBook, etc.).
A second book is available on the reading software like Kindle, Kobo, iBook, etc. Its title is “The Trend Hunter” and it is in English.
The website of Charles K. Langford Inc. is : www.charlesklangford.com
Market Risk (Systematic Risk)
The market ((S&P500 Index and its derivatives) ended the week lower at 2,888.68 points compared to the previous week at 2,918.65 points. In August the index is down 3.1% and, since the high of July 26, it is down 4.6%. However the index is up 15% since the beginning of the year.
The reasons are the commercial dispute USA-China and the inversion, for a short time, of the yield curve, the 10-year notes lower than the 2-year notes : a sign of potential trouble in the economy.
VIP Accounts (CKL0522 Portfolios) - 2019/08/16
Week of August the 12th, 2019
This week we implemented a condor strategy to take in consideration the volatile market. Our hypothesis was that the SPY would stay between 287 and 295 with :
These are the trades of the week :
5 Short Put 2019/08/16 (287) @ 1.42 August 8, 2019
5 Long Put 2019/08/16 (284) @ 0.91 August 8, 2019 (Parachute)
5 Short Call 2019/08/16 (295) @ 1.46 August 8, 2019
5 Short Call 2019/08/16 (298) @ 0.52 August 8, 2019 (Parachute)
Repurchase the Puts 2019/08/16 (287) @ 0.90 August 16, 2019
Close the Longs Puts 2019/08/16 (284) @ 0.23 August 16, 2019
Repurchase the Calls 2019/08/16 (295) @ 0.01 August 16, 2019
Close the Long Calls 2019/08/16 (298) @ 0.01 August 16, 2019
Profit of the week
Short Put: +1.42 – 0.90 = 0.52
Long Put: -0.91 + 0.23 = -0.68
Short Call: +1.46 – 0.01 = 1.45
Long Call: -0.52 + 0.01 = -0.51
Profit = (0.52-0.68+1.45-0.51) 0.78 * 5 * 100 = $390
Total profit of the week for each unit of five condors = USD$390
*The condor is established on credit: there is no dollars invested. The asset in the account covers the margin requirement.
The following chart shows the SPY (black line) and the BPSPX Index (colored line). The relationship is a negative divergence in the highs since April. This divergence anticipated the downtrend of SPY in August. It now seems that the negative effect of the divergence is exhausted.
The Langford Management
Presently our investments are in ETFs and ETN offering a high return, with a dividend yield between 5 to 10 % per year, at pro rata temporis, monthly. The market has a positive bias. We don’t think for the moment to change the allocation because also the products with higher returns are also bullish.
In the USD accounts, still we have cash in the form of FLOT, MINT, NEAR. In the CAD accounts, it is PSA or the equivalents. In the average, our portfolios are invested 60% in revenue and 40% in directivity.
In some, more aggressive accounts we have increased the capital synthetically with option strategies to profit of the upward momentum. In accounts that allow futures markets, we have futures contracts in long position on stock indexes.
Our portfolio management is always ad hoc, for each client. But also, we offer now five standardized mini-portfolios for clients interested:
- Bullish aggressive
- A contrarian as a hedge or profit
- Bullish and dividend oriented
- Against inflation
- Bullish, aggressive on non-traditional assets.
(The portfolio management fees of Charles K. Langford Inc. is 0.9% of assets, per year (equivalent to $900 per $100,000). The capital under management is invested exclusively in ETF, ETN and options)
Among a group of selected stocks and ETFs, this week we have middle- and long-term buy signals on the following stocks and ETFs.
TREND FOLLOWING
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Middle-term bullish |
Long-term bullish |
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Canadian Market |
IMR.V |
VIT.V |
About Options
Investors that believe the current Canadian market offers interesting bullish opportunities, they can buy the call TRI (stock closed Friday at $89.46) October18/84.00 @ $6.25 whose delta is 0.80 and gamma 0.04 (accelerator of delta). This call will offer a profit of 80% of the stock increase at a cost that is about 14 times lower than the present price. If the stock goes down, the maximum loss is the premium.