Morning Thoughts – Oldinvestor

Sometimes you just do something else while you wait for a something more obvious. Like sell covered calls against WMT and USL. Or maybe even research connectors for a wiring harness modification.

Just saw this article, it explains the DGAZF chaos. It sounds quite accurate.

https://www.marketwatch.com/story/a-financial-markets-whodunit-is-rocking-the-exchange-traded-world-2020-08-17?mod=mw_latestnews

Wow, that is worth reading. 130,000 shares were still being shorted in DGAZF at the time it was delisted. Mostly hedge funds, I’m sure. So the spike in price was low liquidity and the short squeeze of the century. I don’t believe this would have been possible had the ETN stayed listed on the exchange. The article states, “DGAZF’s issuer, Credit Suisse, decided in mid-July to pull several of its ETNs from the stock exchanges on which they traded.” I continue to question why. UGAZ/DGAZ had seen some of the most wild moves in the last 4 years. It has been since late 2018 the ETNs saw one of these wild moves. Credit Suisse had to of been making loads of money with little problem in the last 6 months. Why delist now?

Another article I read that was speaking of DGAZF and then went on to say it is costly to do a reverse split and sometimes low volume ETNs aren’t worth the trouble, bla bla bla. TVIX, UGAZ/DGAZ, and others issued by Credit Suisse were not low liquidity. They were all pulled from the exchange all at once. And someone at Credit Suisse finally grew a conscience? WHAT? NO! My money is on someone within a regulatory position advised Credit Suisse to get out of leveraged ETNs. Whether the SEC, the exchange, or even internal litigation control within Credit Suisse; I will never get to find out, but I want to know the real reason they delisted.

Anyway, the market is higher again today. Not much has changed fundamentally in natgas. It’s all trend trading and DGAZF theories at this point. I’m sitting tight to see how this week ends.

My positions

UNL – 50% of holding in with average of $7.4

BOIL Covered puts

BOIL covered puts as of market close 8/17/20
Covered puts Profit/Loss as of market close 8/17/20

Looks like my BOIL puts are about to take another step against me. This is what I wanted.

2hr chart for BOIL using Webull

So BOIL is near 90% up from the most recent low of $22.5. I’m feeling like I’m risking more by shorting BOIL during a time that leveraged ETNs are being delisted, than any pain I will incur from my position going backwards. In other words, I’m not worried about the positions themselves. My main concern is to continue to hold the puts to at least help protect against getting called in or surprise news of BOIL delisting.

UNL should be ok, they would be more at risk of delisting due to low liquidity. Since the market is on the up side and UNL hasn’t really seen decay, they should be fine for quite a while. It would be nice to see more traders switch to UNL. More options activity and better bid/ask spreads would be awesome.

Ok, I have real work calling my name. Good Luck

Oldinvestor