Review of Trade Ideas for 2014

My original thoughts from a year ago are at the bottom. Trades are marked from the close on Dec 13, 2013. In retrospect, my biggest misses this year were the moves in the Yen and in Oil, both of which occurred late in the year. The long DAX vs CAC idea was a small loser. I actually think that given what happened in Ukraine, and given the German dependence on Russian gas, the trade did pretty well.

Long S&P via SPY Dec 2015 175 strike calls: +111%

Open: 16.66

Last: 35.2

Long DAX vs CAC: -1.1%

Short TSX60 vs S&P 500, currency unhedged: +9.8%

Long EU 5y vs US 5y: +67bps

5y Swap Rate Spread, 1y Forward at Opening: 0.625%

5y Swap Rate Spread, Spot: 1.303%

Long 2y Italy (or Spain): +2.8%


7 thoughts on “Review of Trade Ideas for 2014

  1. Interesting recap.
    I’d like to ask a question re: trade management on these spread ideas with an annual outlook – would you “set and forget” or be much more active? In particular, on the TSX vs SPX trade it looks like it was underperforming most of this year and at worst down ~5% in July before coming back strongly in the last 2 months.

    1. That’s a good question, and unfortunately there is no right answer. No trade other than long option positions should be a set and forget, imo, but given the horizon, stops should certainly be wide, at least 5 %, assuming of course that the original thesis still applies. Sometimes stops are hit because the thesis is proved false, so it’s important to make that distinction.

  2. Good shooting! I also like the clean simplicity of the trades; no over-elaboration, no complexity for its own sake.

      1. Ha! I just chirp occasionally from the peanut gallery – you’re the one we need to thank for sharing your thoughts!

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