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Trade Details: Bought to open 15 Oct 22nd Yandex N.V. (NASDAQ:YNDX) 21/22 call spread for $0.65, $996.22 total cost (26.0% of account), 17 days to go. The trade executed at 10:36:09 when the stock was approximately $21.90.
Potential: 53.8% before commissions
Thesis: Yandex has been recovering from mid-September weakness following a failed ascending triangle breakout. The stock retested the resulting downward trend line Sep 24-25th and again pulled back (see chart below). Today, YNDX finally broke through a couple downward sloping trendlines warranting a new long position. The momentum indicators on the hourly chart are supportive, particularly the reaching momentum and RSI values. With implied volatility high and a moderately bullish bias, I decided to use a vertical call spread expiring before earnings on Oct 27th.
Historically, YNDX has shown correlation to both tech and the oil market. I view this trade as gaining exposure to oil with less volatility. WTI recently broke out of a symmetrical triangle in a bullish manner (see chart below). Between now and the next OPEC meeting in November, I think the price of oil will grind higher to the broad benefit the Russian markets (and Yandex).
Divergent USD/RUB and RSX trades have been bullish for YNDX in the past.
Finally, I think the M&A environment bodes well for the group.