The second trade in the £800 to £1 million challenge is a short on Vienna Exchange Stock Zumtobel. In my first post, i highlighted that during the challenge i will be using Put Options to go Short. There are 2 reasons for this. Firstly i love Options Trading and secondly i feel more comfortable with a maximum loss. Buying a Put Option allows me to firstly reduce my cost exposure and going into the trade i know i can only lose the cost of the option premium.
Why did i chose Zumtobel to short?
Trade Details
04/07/2018 11:21 04/07/2018 Buy 3 ZAG P4.80 21DEC18@0.3 EUR (DE000C2GV9J8) ZAG P4.80 21DEC18 EUR -90.00
In summary for a cost (premium) of 30c (EUR 90), i have exposure to 300 shares on the downside. I did buy out of the money puts at the time, however gave myself enough time (Dec expiry) for the stock to reach the target. I believe the stock will go to $3.50.
Why did i chose Zumtobel to short?
- Trading strategy 1 (Name: B52) highlighted that the stock was in the danger zone. This strategy effectively looks at where in the cycle a stock is at and calculates the percentage distance from either its 52 week high or low. In the case of Zumtobel, the system came back with screaming shorts.
- To confirm the trade i overlayed Trading Strategy 2 (Name: AlphaR). Based on linear regression, the strategy highlights break points and pressure zones. In the case of Zumtobel, the pressure zone highlighted further downside risk.
Trade Details
04/07/2018 11:21 04/07/2018 Buy 3 ZAG P4.80 21DEC18@0.3 EUR (DE000C2GV9J8) ZAG P4.80 21DEC18 EUR -90.00
In summary for a cost (premium) of 30c (EUR 90), i have exposure to 300 shares on the downside. I did buy out of the money puts at the time, however gave myself enough time (Dec expiry) for the stock to reach the target. I believe the stock will go to $3.50.