Bullish Cross Live


1. The Bullish Cross Alpha Model Portfolio
1. Long GLD @ $161.51 x 835 shares
2. Short IWM @ $102.14 x 4,500 shares
3. Short SPY @ $161.50 x 7,500 shares
4. Long AAPL @ $67.14 x 2450 shares
5. Long UNG @ $19.54 x 5,000 shares
6. Short GOOG @ $445.30 x 360 shares
7. Short QQQ @ $85.03 x 5,000 shares
Cash: $0.00
Enter Portfolio Here

2. The Bullish Cross Trading Portfolio
1. Apple January 2016 $130 - $140 Call Spread @ $3.68 x 2,750 Contracts
Cash: $3,391,740.00
Enter Portfolio Here

3. The Bullish Cross X-Portfolio
Cash: $10,000.00
Enter Portfolio Here

1. The Bullish Cross Ultra-LT SPY Model Portfolio
1. Short SPY @ $155.52 x 15,000 shares
Cash: $0.00
Enter Portfolio Here

About the Model Portfolios
The three portfolios listed above comprise of the BC Actively Traded model portfolios. The former SPY Model Portfolio is now an Ultra-LT model portfolio that will follow the business cycle with a multiyear time-horizon. The BC Alpha Model is our basic long-short model portfolio. The BC Trading Portfolio is our actively traded options portfolio. The Bullish Cross X-Portfolio seeks to make very selective high probability trades with the aim of returning at least a full 100% portfolio return on each trade. Given the speculative nature of the portfolio, it is meant to be traded with the highly speculative portion of one's portfolio.
THE LIVE BLOG 9:30 AM - 4:00 PM

12:50 PM -- the action on the SPY for the past few days indicates that we will probably see a resumption in the selling next week. We have two small ranged bars after the sharp sell-off we had on Wednesday. That's typically not a good sign. We've had very little recovery after that sharp sell-off. If we do see another leg down next week, it will likely lead to Apple breaking support at the $122 level. This will lead to a breach under the 50-day moving average. We would probably be interested in taking an initial position down near the $118 level. We could end up talking a larger position depending on the totality of the circumstances. We just need to see how the breakdown happens if it happens at all. The $118 level is a very plausible point for a low in Apple. Remember, what we plan to do is take a 10% portfolio position which is roughly 1/3 of the total trade we want to put on. That's assuming that Apple doesn't go oversold on the daily which would lead us to taking a much larger complex trade with a significant amount of cash we have on the sidelines.

We're assuming for now that Apple will not go oversold on this particular sell-off and we plan to put on a 30% portfolio trade in some July calls. If Apple does go oversold, we would initiate an entirely different trade in addition to the 30% July calls. That's the point here. We're going to layer our allocations all through the $120 down to the $110 level if Apple happens to go into a much larger correction than expected. Basically, we would probably put on our 30% July call position between $115 and $120. We would then sit on the sidelines and wait. If Apple goes oversold, we would use our 50% capital on the sidelines to put on a hedged trade. Meaning, we would buy a mix of calls and puts to capitalize more on volatility than on direction. We will assume Apple could either crash like its 2008 or rally like its early 2012. We will position for both possibilities.

Eventually, Apple is going to test the 200-day moving average and it's going to happen when we don't expect it. The only way we would be able to foresee it is if we see some extreme volatility next week. For example, if we see the Dow taking 400+ point hits, we would probably hold off. Because that usually tends to indicate that we're in some very heavy volatility and it would dramatically increase the probability that Apple is going to test the 200-day moving average. We saw that type of selling back in the summer of 2011. So that's the only time we're going to have some high confidence in a test of the 200-day. Short of that however, we have to take this sell-off like every other sell-off we've seen since early 2013 and that is to approach as if it's a normal 10-12% correction. If it's larger, then we have our 50% capital on the sidelines to capitalize.

That's precisely why we allocate the way we do. We don't know when the big correction is going to happen. It's going to happen at some point. When it does, we want to have a ton of capitalize on the sidelines. At the same time, we do also want to capitalize on these more minor corrections. The way to do that is to allocate in parts on the way down like we're doing now. Keep in mind that at the $118 level, Apple will have experienced an 11.4% correction from its peak. That's a pretty big sell-off from its peak. So we could be confident stepping in at those levels.

4 responses to “Bullish Cross Live

  1. TSLA taking a beating. Again.

  2. Yesterday you said that you were watching the July $130 calls. What are you watching for? The daily % change compared to other strikes, other dates . I have been watching Apple Calls, Aprils, Julys,Sept and Jan2016s To look for Trends and patterns, volumes. Ive learned a lot. But What are you looking for in the Julys ,Octs, Jan 2016 Thanks

    • Andy M. Zaky

      Here’s how I view the July $130 calls. If Apple gets down to say $118 or even $115, those calls will probably get down to $2-$3 a contract right? At $3.00 a contract, here’s what you get.

      If Apple rallies back to its all-time highs after reaching a low of some kind as we’ve seen over the past several years, most likely the next point of resistance is around $140 a share. That’s the target price I have in mind for Apple. At $140 a share or thereabouts, those July calls would probably be worth somewhere around $10-$12 a contract. It would be a very similar set-up to what we saw with the April calls.

      So when I consider a position, I’m thinking about the target price in mind. Where I think Apple is headed at peak and the type of return that we would get on that type of a rally.

      Our allocation size is based on the win-win type of scenario we envisioned for April. If Apple falls further and becomes oversold, it sets up an even stronger trade. If Apple rallies and we get new all-time highs, then we’ve produced a 200% return on a 30% allocation. We would double the entire portfolio yet again. Our total return would be somewhere in the neighborhood of 700% at that point.

      That’s why I think it pays to make two separate types of bets on Apple’s direction. First, we will bet that it’s a normal run of the mill correction. Then we will keep the majority of our capitalize on the sidelines which is a sort of bet on the larger correction. If the larger correction doesn’t happen, then we have a good investment in place. If the bigger correction does happen, the strategy would be to put on a large hedged play with a 50% allocation and then focus on selling the July calls at break-even or even for gains.

      I think it’s a good overall strategy.

  3. Thanks a lot. You are really making my day.the first part of your Anser I figured out on my own. Well only because Im a BC member. Something’s have sunk in.I belive also that.if apple has a good April results. The calls would respond like say. Julys up 40%. Sept up 25%
    Oct up 18% jan up 12% or in multiples of those %. So I wounder if the oct $130 will move at what % more than the oct $160. Then I wounder if Apple Was at say $155 on April 28,15 would the October$160 move up more than the oct $130s I have been working on a spreed sheet for me to learn this stuff,but may be someone has already figured it out?