Betting on an Emerging Rally

Published on
May 25th, 2018
Topic
Emerging markets, Derivatives, Trading
Duration
12 minutes
Asset class
Equities

Betting on an Emerging Rally

Trade Ideas ·
Featuring Michael Purves

Published on: May 25th, 2018 • Duration: 12 minutes • Asset Class: Equities • Topic: Emerging markets, Derivatives, Trading

Michael Purves, chief global strategist and head of derivatives strategy at Weeden & Co., says now is the time to invest in emerging market fund EEM. He explains how he’s using options to bet on the popular ETF in this interview with Justine Underhill. Filmed on May 21, 2018.

Comments

  • HO
    H2 O.
    29 May 2018 @ 02:11
    The causality seems to be going the other way, meaning EM tech is driving and FANG is following. But some great reference points in terms of USD desensitivity.
  • JL
    Jordan L.
    28 May 2018 @ 00:32
    Purvees is a fantastic trader. I heard him recently on Adam Johnson's podcast. I hope to see him as a regular on Real Vision. Brilliant guy. I'd like a section on "how to follow" whether it's a Twitter handle or otherwise.
    • JL
      Jordan L.
      28 May 2018 @ 00:33
      Purves.
  • fT
    forecast T.
    27 May 2018 @ 20:52
    I dont understand any of this. All I know, some prices people stop paying but still buy calls. Some prices people overreact and buy puts. You sell to those people you may earn a return.
  • MC
    Michael C.
    27 May 2018 @ 14:22
    As of this weekend these options are down over 50% trading at .45 bid, .48 ask so this has caused some pain for his clients that ok the trade for sure. Strong $ and the bloodbath in Itialian debt might be partial reasons. Nevertheless a much better trade would have been and still is to sell some put spreads by selling the 45’s and buying the 42’s for net credit of .39 cents. 45 level has held back in Feb and in Dec 2017 so if his call is correct you can be benefit with limited risk of using a spread. He didn’t want to spread the calls but this way even if no movement occurs the next 7-8 weeks you collect on the trade.
    • MT
      Mike T.
      27 May 2018 @ 17:46
      Michael absolutely correct. Your suggested short put spread is a superior trade in probability of profit terms. There are also various adjustments one could introduce but there's no one 'fit all' answer as an Option trader always has to ensure new Position Greeks align with the objectives for their Portfolio Greeks. For me the broader issue with this particular trade recommendation, is how is it possible for someone with "head of derivatives strategy" within their job title able to publish on a serious site like Real Vision a simple low probability 'lottery ticket' debit strategy without presenting a viable higher probability-of-profit short premium alternative?
  • CH
    Colin H.
    27 May 2018 @ 14:18
    Music is a bit loud
  • CC
    Chris C.
    27 May 2018 @ 06:58
    I'm bearish long term (true) emerging markets but my humble opinion Michael is spot on here! Tencent, Samsung and Baba are NOT "emerging market" type companies. I'm looking at shorts on emerging markets but I'm not shorting $EEM ETF.
    • CC
      Chris C.
      27 May 2018 @ 07:03
      Also, again my personal opinion, call options here on $EEM have a low PoP, especially short term, so I'm not in on this trade.
  • RO
    Robert O.
    27 May 2018 @ 03:37
    If he likes EEM because of the asian tech stocks why not just by BABA on a pull back to 180 and sell when it nears 200 again. The way the stock has been trading you might be able to pick up a 10% gain in 1 to 2 months.
  • AP
    Andy P.
    26 May 2018 @ 18:58
    Great content. Please turn down the music.
  • CL
    Chewy L.
    25 May 2018 @ 22:26
    To each his own but just write off the premium if one puts this on. I personally hate going long short dated options unless there is an asymmetric R/R like 10:1 and even then I usually just piss away the premiu
  • MT
    Mike T.
    25 May 2018 @ 18:48
    irrespective of the directional analysis being right or wrong, expressing a bullish bias through the purchase of options is not optimal. In this instance the Probability of Profit with the Long July 47 Call is 34% and has negative Theta decay of nearly $1 a day.

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