[[The Trade Idea Thesis]]

[[Indicators]]

[[Axioms]]

[[Financial_Dictonary]]

[[The Business Cycle]]

[[Option Strategies]]

[[Technical_analysis]]

[[Greeks]]


# Defining Macro Environement
- Is Economy expanding / contracting
- Is GDP above or below zero
- What is GDP doing after stripping out inflation ? Above/Below zero ?
- What is the prevailling lvls of interest rates (nominal rate - inflation)
- what are credit spread doing ?
- what are private sector expectation for growth
- What is current monetary policy settings - Expension/Contraction
- What is current fical policy settings Expension/Contraction
- What are foward looking Equity market Valuation doing ?



# 11 Major Sector
 |----------------------------|-----------------|
 | Real Estate                | Cyclical        |
 | Health Care                | Value/Defensive |
 | Financials                 | Cyclical        |
 | Utilities                  | Value/Defensive |
 | Consumer Defensive/Staples | Value/Defensive |
 | Consumer Discretionary     | Cyclical        |
 | Communication Services     | Cyclical        |
 | Technology                 | Growth          |
 | Materials                  | Cyclical        |
 | Energy                     | Value/Cyclical  |

Notional exposure of calls/puts = # of options * 100 * strike price

Sharpe Ratio = annualised returns / annualised std dev of portfolio


declining yield make stock more attractive from a valuation perspective, debt easier to roll over ...


# Relative values trades exemple
Long  ratio at 2
10% stp loss on ratio = 0.2
so stp loss at 1.8 on ratio
soft target = 0.2 * 3 = .6 = 2.6
when soft target hit buy short stop A short more stock B
roll up stp loss

ATR for spreads: take data for 10month of stock in spread
work out montly ATR
set stop loss as avg of the 2

For spread both stock can go up or down does not matter

XLU - bond proxy business that do not do well when interest rate are expected to stay flat or go up
Utilities trade at 25-30% beta to the 2yr
if the 2 year goes up in terms of yield and falls in value then the Utilities sector as a whole loses value
and vice versa