Unum Capital: Protection Time - 3 Risk Off Trade Ideas

Unum Capital: Protection Time - 3 Risk Off Trade Ideas

Dear Trader

Over the last four weeks we have seen markets in mixed territory, with Asia down, EM still bleeding while the US has managed to hold up very well. The question on my mind is: “How long can the US remain resilient in the face of mounting global risks such as the continuous trade wars?”
With the Dow Jones, S&P500 and Nasdaq having had an overnight wobble, investors often seek safe havens in various asset classes. This morning, three ideas flash on my radar:
#1. Short-Sell British Pound /Japanese Yen
In a risk-off environment, JPY is one of the preferred safe-havens. Here traders could look to short/sell the pair which has had a strong move over the last four weeks and is currently nearing strong downward trend line resistance.
Short/Sell GBP/JPY above 147.40
Stop-loss: 148.05
Take Profit Target: 146.00
#2. Buy/Long SPDR Gold ETF

Another safe-haven is Gold which has been holding at the psychological $1200 level over the last three weeks. Technically we also see a bull flag which has broken to the upside and which is now consolidating while the Relative Strength Index (RSI) is regaining it’s bullish momentum as per the daily chart.

To take advantage, traders could look to buy call options on the SPDR GLD ETF, which provides geared upside performance on a move in Gold.

Buy GLD Shares

Last Close: $113.61
Strike Price: $117
Expiry: 26 October 2018
Premium: around US$52c at the last close
Gold Daily Chart
#3. Where is the volality you may ask? Since the massive spike at the end of January, it has been pretty much subdued with the VIX drifting lower. At current levels, the S&P500 VIX Futures is starting to show signs of life by breaking the downward trend going back to April. Here, traders could look to buy Call Options on the iPath S&P 500 VIX ST Futures ETN (VXX) which benefits from a rise in volatility. Time for protection if you ask me.
These are the trade levels
Last Close: $28.13
Strike Price: $32
Expiry: 19 October 2018
Premium: around $1.29 at the last closeS&P500 VIX Futures Daily Chart
Share Link: bit.ly/JoinUnum

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