First Half Trading Results

H1-2020-returns

We are pleased to announce our Private Company First Half Trading Results.

Our business generated a 39.91% return for the first half of 2020 on our capital base.

We started the year with a cross-asset net long volatility exposure. Our portfolio was positioned around Gold, US Shale Pipeline Equities and US Interest Rates. Despite the market making new highs in January, we had concerns with the continued melt-up in equities, as we were reaching and exceeding key valuation metrics, while volatility measures in these asset classes registered near all-time lows.

As the financial impact of the COVID-19 pandemic became apparent in early February we expanded our portfolio risk to incorporate S&P500, Nasdaq and Russell2000 and GBP/USD volatility structures. During April and until mid-May we opted for a cautious risk stance, in part due to unwinding into the high volatility levels and not encouraged by binary risk profile presented by Fiscal Support Measures & Monetary Stimulus relative to Economic shutdowns and the growing COVID19 Health Crisis.

Mid-May we acknowledged that the reaction function of the markets to the fiscal support and monetary stimulus was deeply positive. Adjusting our existing strategy to acquire short-dated volatility in assets that had multi-time zone liquidity allowed us to take advantage of several market factors trading across time-zones.

As we move forward risk factors we are watching carefully for signs of change are fiscal support measures, monetary stimulus, consumer spending and money flows in financial assets. Derivative markets have re-priced forward earnings and dividend distributions, however we are looking across the economy for the persistence of material bankruptcies and dislocations in parts of the credit markets to adjust consumer and corporate behaviour.

As always we’d like to thank our trading execution partners from Interactive Brokers and Saxo Bank. Thanks to Chatham House and Geopolitical Futures their perspectives.

Re-affirming our social commitment we continue with our 2020 donation programme to include Feeding Hong Kong and Hong Kong’s Save The Children Coronavirus Relief Fund.

First Quarter Trading Results

We are pleased to announce our Private Company First Quarter Trading Results.

Our business generated a 47.04% return for the quarter on our capital base, comprised of monthly returns in Jan (-0.35%), Feb (+13.26%) and Mar (+34.13%).

We started the year with a cross-asset net long volatility exposure. Our portfolio was positioned around Gold, US Shale Pipeline Equities and US Interest Rates. Despite the market making new highs in January, we had concerns with the continued melt-up in equities, as we were reaching and exceeding key valuation metrics, while volatility measures in these asset classes registered near all-time lows.

Our presence in Hong Kong allowed us to witness at first hand the depth, breadth and seriousness of this pandemic as it unfolded in real-time. As the financial impact of the COVID-19 pandemic became apparent in early February we expanded our portfolio risk to incorporate S&P500, Nasdaq and Russell2000 and GBP/USD volatility structures.

The coming quarter should be viewed with trepidation. The world faces the competing forces of looser Monetary Policy, combined with a Fiscal Stimulus, which seek to address GDP declines in the economy, while the health crisis continues to manifest itself. Derivative markets already point to a major re-pricing of forward earnings and dividend distributions.

We’d like to thank our trading execution partners from Interactive Brokers and Saxo Bank. Thanks to Chatham House, Geopolitical Futures and Stratfor for their unique perspectives.

Re-affirming our social commitment we expanded our 2020 donation programme to include Feeding Hong Kong, Operation Mask Lift and Hong Kong’s Save The Children Coronavirus Relief Fund. Finally, our thoughts are with the individuals and communities, including all the healthcare and essential workers, who have and are impacted by the COVID-19 pandemic.

Working From Home: Some Tips

howard-trading-working-from-home

We recently moved our business activity to a “Work From Home” model. We have a couple suggestions for how to make the transition easier and some tools that can help support your business.

For us defining a routine had the most significant impact, the who/what/when of the household meant that – save for the odd intrusion – we could find time to do some of what we needed to achieve. And yes, ear plugs do make a difference.

Ensuring clear and open lines of communication across the team is paramount. Slack is a great messaging tool to deploy and can be defined around functional themes or projects so the discussion can be shaped around a topic and not “getting people up-to speed”.

Real time communication is important and a regular daily call (or two calls) help maintain openness and transparency across the business. Google Duo has been excellent for group video calls of up-to 8 people. Noise cancelling headphones work a treat.

Information sharing can be made easier with Dropbox, the Fremium version is good as a starter, while the Dropbox Professional package is $25 per month, you can cancel anytime and provides you with sufficient storage and user access to manage how you transfer data across a small team when email files just won’t work.

In our case our Brokers, Data Providers, Research Providers, Business Service Providers and Vendors are all struggling with the same challenges so maybe take the time upfront to connect with them and ask them how you can streamline access, communication and the business activity upfront rather than when you have an issue.

Finally, look to use some alternative resources to help support your business. We’ve worked with a company of virtual assistants to support specific aspects of our business. If you choose to then consider what you want to deploy to your virtual assistant(s). Aim to be specific, make any objectives sufficiently detailed, documented and provided clear guidance on how to escalate issues.

Hope this helps.

Market Re-Pricing Risk?

VIX-futures-curve

With the current concerns surrounding the CoronaVirus global equity, fixed income, credit and commodity markets the question we have is how rapidly are markets re-pricing risk assets and will this be another opportunity to sell volatility?

In a two-part commentary, we will review the VIX Listed Options Market and the CBOE’s Put and Call Index.

So to the VIX Options. Taking a snapshot view of the VIX futures pricing over the last few days shows a sharp move in the front end of the curve supported by a parallel move up, with the curve now in backwardation we’d expect to see significant pressure on the front end in the coming days.

VIX-values

Our proprietary heat map of listed VIX Options shows there are significant concentrations are in the one-month maturity. Upside risk has pronounced concentrations at the 24 and 25 strike calls while it is the 13, 14 and 15 strike puts that appear to anchor the downside normalisation.

We hope you find this helpful.

Kung Hei Fat Choi!

Chinese Lunar New Year Card

The New Lunar Year is here bringing in new opportunities and challenges for all of us. Sending you our warmest wishes of prosperity and success this year of the Metal Rat. From all of us at Howard Trading, Kung Hei Fat Choi!

HFM Asia Hedge Fund Award Ceremony at the JW Marriott

Howard-Trading-HFM-Asia-Hedge-Fund-Award

Our CEO, Stephen Howard, attended the HFM Asia Hedge Fund Award Ceremony at the JW Marriott in Hong Kong on Tuesday 14th January.

“It was great to see a diverse range of established and emerging managers receiving awards for excellence in their specific fields of expertise. Congratulations to the team at Saxo Bank (Hong Kong & Singapore) for winning the HFM Best Boutique Prime Broker Award and thank-you to the teams at HFM and JW Marriott for an excellent evening.”