Big Losses Last Week

Last week was filled with drama about China’s Evergrande. Will it be able to pay interest on its debt obligation? Will China bail them out? Will other countries have to bail it out, as so much investment is foreign? How many Chinese jobs and monies are being lost over this? How long will this persist? Is this China’s Lehman Brothers? Whatever the reason, here’s what’s happened in the past week:

DXY is up from 92.6 to 93.3

TLT is up from 148 to 149, bouncing off 151 resistance. TLT has broken out of a channel — 148 could become new support, which would support my deflation theory.

/Cl is up from 69.8 to 71.8, after bouncing off 73. I rolled away Oct to Nov 69/70 short calls. This looks very bad as it’s broken through the downward channel and there’s massive support at 70 now. I did put a few short put spreads down to pay for the roll, but I’m afraid I’ll have to go massively long to get out of these Nov shorts.

/SI is down from 23.8 to 22.3, over 6%.

Silver futures is the biggest loser of what I’m tracking. There’s speculations that gold and silver were sold off to pay for Evergrande’s situation or because TLT is up, but the reason doesn’t really matter. I had an iron condor for September between 23.5 and 25. I took off the short side for a small profit and moved the short puts to 22.25/22.5, currently ITM. With only a week left until exp., I might have to roll away to Oct. I’m gambling that silver will be above 22.5 next week.

I’ve pushed my bets with an Oct. 23.75/24 OTM long call spread, and sold 22.5/22.75 ITM November puts. If silver doesn’t bounce hard soon… I’ll be in bigger trouble. Hopefully silver breaks this downward channel soon. I do see a downside of silver to $18, but don’t think that’s imminent. I did think that precious metal would go down as the bond goes up, but I didn’t think that would be happening for months.

Gold and gold miners are also down, to the same support levels as silver. I decided to try my hand at GDX LEAPs: $30 Jan 19, 2023… 853 days. The idea is as the price increases I can sell 30–60DTE shorts against these. This is also a small hedge against inflation, in case my deflation theory is wrong. Gold miners tend to be more volatile than the metals, but as long as I recover my cost in premiums I’ll be happy. I would have preferred to buy silver futures, but they only go out 160 DTE. If GDX falls to 23.5 I’ll probably load up.

I also put down a tiny 30/35 Sept 29 VIX call spread and I’m trying to pick up some Jan HSBC shorts.

My netliq is down 30% from last week. Maybe I’ll be zero’d out soon. I think I need to switch from short to long oil, as the inflation narrative is working against me. Energy costs are soaring.

If silver get over $24 by October maybe I’ll be saved, or else I’ll have to consider reloading my account.

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