With ease of accessbility to markets, also known as overcoming barriers to entry, new problems arise. If you had been invested in the ETF mirroring the daily price fluctuations(with a given margin of error stated in the prospectus) of the Nymex crude oil contract (CL) you would have underperformed your underlying by about 35%! Here is am image to show the ratio of the two.
Whether it’s the expensive rolling over of the contract due to the contango or anything else there is an alternative: trade on the Nymex. This has become increasingly easier over time with the simple tools provided by brokers such as IB which is also IPOing soon. Due diligence on daily price fluctuations and probabilities and a “behavioral” analysis of crude is necessary to be sure your trading is not being affected by noise and normal fluctuations.
here’s an update of the Dow30 calls stated at the beginning of the year. We’ve been through some turmoil this year but there is much in store.
MMM: Short 78.35; Now at 76.83, +1.9% the maxdrawdown was not much, within range of -2% I believe and max unrealized profit at 7.3%. I will maintain a short rating on this but if it goes back to -2% (over the 79.4 region I would cover and go long)
AA: Long 29.24; Now 34.87, +19.3% , max drawdown was 4.4% which was quickly reversed soon after the pick. I will maintain a long position on this as it is one of the few long positions in this portfolio and it continues to be a strong performer. Alcoa releasing earnings today. Let’s see if they beat their 11% expectation earnings increase.
MO: Short 84.78. A crude calculation for adjusting for the spinoff of Kraft yields my short at nearly $65.19 which in comparison to today’s price of $69.90 is lower resulting in a loss. The market has blessed the spinoff with favorable share price increase I stand at a 4.71% loss on this trade. I will actually change calls on this to a long. at this point.
AXP: Short 60.85; Currently 56.36 for +7.37%. I maintain a short on this unless it goes over $58 at which point I will cover the short.
AIG: Short 71.67; Currently 67.23 for +6.2% on this trade. I maintain short.
T: Short 34.98; Bad call shorting into a solid trend. This yields -12.4%. I will reverse position to long here.
BA: Short 88.76; Currently 90.03 so I’m losing 1.4% on this trade. It’s been in a range between 85 and 91 so I’m not too concerned. A short call spread would probably yield a profit on this with time decays. Short.
CAT: Short 60.59; This was a rough trade as the trend was down and it seems to have reversed soon after the call was made. This trade is proving a 11.1% loss. I will actually go long here.
C: Long 54.55; Another loser at -5.4%. I maintain a long though.
KO: Long 48.38; Not too bad but took a while and a decent drawdown to get here. Currentl 49.63 decent run after a drop to 45. +2.6%. Keep long
DD: Short 48.57; Big drawdown but now only a smaller loss. I maintain short looks like a dome to be. -2.3%.
XOM: Short 75.41; Small loss now, had significantly higher profits immediately after the call and also in the beginning of March. I will maintain a short but if it goes over 78.75 I will go long. -1.8%
GE: Short 37.57; Keep on short; +7.4%
GM: Short 29.42; Losing trade; was much worse at its peak of 36.99. It’s still idling and the future is not so clear. Keep short I’d say. -8.7%
HPQ: Long 40.63; The crash wiped out a lot of the gain but it’s staging a comeback
much like the rest of the market. It seems to react fine, i maintain long. +1.7%
HD: Short 38.89; Keep short; +2.1%
HON: Long 44.63; Stay long; +5.6%
INTC: Short 20.08; now 20.10; Breakeven. Stay short, if it goes to 20.50 then go long.
IBM: Short 95.25; Had a nice profit but rallied; reminds me of HPQ. Staying short;-1.4% so far.
JNJ: Short 65.65; +6.1%. Will stay short.
JPM: Short 47.89; -2.39%; staying short.
MCD: Short 43.57; -1%, going long here.
MRK: Short 42.83; -6.6%; staying short.
MSFT: Short 29.64; +3.6%; staying short.
PFE: Short 25.97; now 26, breakeven.
PG: Short 63.80; -.8%; staying short.
UTX: Short 62.56; -4%; staying short.
VZ: Short 36.55; -4%; going long.
WMT :Short 45.54; -6.7%; staying short.
DIS: Short 34.16; -2.2%; staying short.
Total for first quarter 2007: -0.43% while the Dow30 Long is up 0.8%. Thus my picks are underperforming the
market by 1.23%.