Thursday, May 17, 2012

A while ago I posted about my bearishness of the Brazilian stock market. Putting my money where my mouth is (was), I bought two securities in February and the other day somebody at work asked me how did it go.

I closed the trade almost two months ago (way before the current turmoil) and made money itself on the position, but after the transaction costs (wasn't investing a lot since I don't have much!) I just broke even.

Here are the details of the two securities and their current price (could have made LOTS of money if I had stayed put):

1) The first was an Ultra-short ETF on the Brazilian index (in US$)
Bought it @ 13.43 on 16-Feb 
Sold it     @ 15.15 on 13-Mar. (12% profit)
Since then it has gone up 70% if we take today's price.
2) The other was a put option on the MSCI Brazil ETF, with strike 50 and maturity in Jan/2013.
Bought it @ 3.15 on 16-Feb 
Sold it     @ 2.9 on 13-Mar. Total (8% loss)
Current price @ 5.8 17-May (100% increase) The underlying is now around 51.5.

Major lessons learned: if you trust your trade, stay put and let it develop. Be VERY careful with bid-ask spreads and commissions.

I think there has been some panic selling in the past few days. Maybe it's time to buy another lottery ticket again! :)

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