Trade Plan [Noble] [15-Aug-2017]

Trade Pattern

Momentum

Trade Alpha

  • Real money convertible bond holders are short Noble shares
  • Convertible bond holders dictate how low the stock price goes
  • Once convertible bond hedges are set
    • Less ongoing selling, likely higher stock volatility
    • Any positive credit news could trigger short covering
  • Convertible bonds in existence > equity value of Noble
  • Play this effect with stop-limit orders, trend following

Absolute Worst Case Scenario And Worst Case Loss

Worst case scenario is Noble bankruptcy and loss of entire value of position.

Fair Value Profit

Likely to make at least 15c per share on a price run.

Tail Risks to Upside and Downside

Downside: Noble announces bankruptcy, shares in trading halt, value goes to zero.
Upside: bidder comes in to buy some of Noble’s assets, stock price leaps 100%+

Contingent Action Plan

Buy using buy-stop order if price touches previous day’s high. Hold while closing price is increasing each day.

Key Dates To Watch

20 October 2017 – Noble Americas Corp $2b borrowing base facility expires
Q3 2017 – bidders expected for sale of Global Oil Liquids

Review

TODO: Review of all aspects of the trade.

Trade Plan [EOS/USD] [04-Aug-17]

Trade Pattern

Growth/Momentum

Trade Alpha

  • Ethereum news has died and there is likely less fast money punting tokens (Bitcoin has stolen the show recently with its fork)
  • Crypto currency prices have somewhat stabilised on the whole
  • Tokens that were hot at ICO have started to go nuts again (take a look at OMG)
  • Theory is that price rallies now are majority real money
  • Buy breakouts in the best tokens

Absolute Worst Case Scenario And Worst Case Loss

Worst case loss is the entire value of the margined position (in the event of a liquidity crisis). This risk could be reduced by including more tokens in the trend following strategy, however this potentially dilutes possible alpha.

Fair Value Profit

To determine fair value during a price spike, we look to technical analysis. The 20d moving average was flat at approx 3.25 during the last spike. Current price is 1.81, so that would be an 80% gain. Approx 50k USD profit.

Tail Risks to Upside and Downside

An ongoing risk is the continuous supply of EOS tokens via the daily auction. Therefore this is not a long term trade, only short term. Tail risk to downside is a liquidity crisis if crypto assets in general become unpopular. Tail risk to upside is that the underlying product gains traction and a price spike isn’t just a spike but the start of something bigger

Contingent Action Plan

Long 50k worth of EOS now. Working a stop-limit order to buy another 15k if price breaks out above 1.85.

Key Dates To Watch

Every day check price action of all major crypto currencies. Watch for scheduled start of new EOS blockchain on Sep 30.
EOS.PNG

Review

Review of all aspects of the trade. Coming later!