Eoin's personal portfolio: precious metals loss taken September 23rd 2022
Comment of the Day

October 12 2022

Commentary by Eoin Treacy

Eoin's personal portfolio: precious metals loss taken September 23rd 2022

Eoin Treacy's view

One of the questions subscribers ask most often is how to find details of my open trades. To make it easier I will simply repost the latest summary daily until there is a change.

I closed by three long leveraged positions in platinum today at $855. Against my purchases over the last two years at an average price of $986. These positions have been in and out of the money but the impending global slowdown is likely to sap demand so I decided to take the loss and wait for a better entry opportunity.

I’ve been in and out of Nasdaq-100 shorts since late March. My most recent short was opened on August 11th 13,423 and I continue to hold this position. The short covering rally has now almost been fully unwound, so the big question is whether the 11,000 area will continue to offer support. With the Index now below the 1000-day MA we could be looking at the secular uptrend breaking.

I remain convinced we are on the cusp of a global recession. Monetary conditions are tightening everywhere, and the energy crisis is Europe is likely to get worse before it gets better. I don’t know how bad the Chinese housing crisis is going to get, but prices are very high and completely dependent on liquidity to be sustained.

The countervailing argument is much of this bad news has been priced in, inflationary pressures are close to a peak, and we are less than a year from interest rates coming back down. My concern is that even if this is correct, the market has to go down before it goes back up.

I did not buy the cheapest options but chose those that more or less equate with a full unwinding of the pandemic surge and went for maturities in 2024. In doing so, I chose large liquid companies. Most are Autonomies. That doesn’t mean I have given up on the Autonomies theme, but the champions of the last bull market are unlikely to be spared during its demise. I chose to play this potential outcome by buying puts because it limits my downside if I am incorrect but leaves open the potential to profit if I am correct. For that privilege I was willing to risk 5% of my available capital. With this hedge in place, I feel bolder in playing long positions as opportunities arise going forward.  

I purchased close to equal notional values of puts in Alphabet (GOOGL US 06/21/24 P60 for $2.10), Microsoft (MSFT US 06/21/24 P175 for $6.55), Apple (AAPL US 06/21/24 P100 for $4.55), Amazon (AMZN US 06/21/24 P100 for $8.70), Tesla (TSLA US 06/21/24 P200 for $7.65), Nvidia (NVDA US 06/21/24 P50 for $2.34), Berkshire Hathaway (BRKB US 01/19/24 P200 for $5.25), Exxon Mobil (XOM US 06/21/24 P50 for $2.76) and the Nasdaq-100 ETF (QQQ US 06/21/24 P195 for $7.58). The downside of buying long-dated options is the bid/offer spreads tend to be wide, so the relative cost of executing the trades is quite high. At least now I am in positive territory on all of these put options with the exception of Tesla.

I have introduced several leveraged and unleveraged purchase orders in gold futures and GLD below prevailing prices in an effort to enter both trading and investment positions at bargain prices. 

My original position in the VanEck Vectors Gold Miners ETF was purchased on March 25th 2020 at $20.12. I bought another unit at $35.79 on December 1st 2020. I continue to shop for opportunities in the gold sector.

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