Current:
Euronext Lisbon: 6359
Variation:
Yearly -2.26% Monthly -0.55%
Expected Return:
Q1 -0.13% Q4 -2.01%
The PSI 20, Portugal's primary stock market index, has seen a decline of 38 points, or 0.59%, since the start of 2024, as indicated by trading on a contract for difference (CFD) that closely follows this benchmark.
Looking ahead, analysts and global macro models predict the index will trade at approximately 6350.58 points by the end of this quarter. Projections extend further, estimating a potential drop to 6231.07 points within the next 12 months.
Investment Strategy:
Given the consistently negative historical and expected returns for the Euronext Lisbon index (PSI 20), along with the forecasted decline in the index value, a bearish strategy would be prudent. The data suggest the index may continue its downward trend, which provides opportunities for profit through short selling. Here's a recommended strategy:
1. Short Selling the Index: Take a short position on the PSI 20 Index by selling the index, anticipating it will decrease in line with the projected decline to around 6231.07 points over the next 12 months. The negative expected returns reinforce this approach.
2. Buy Put Options: Purchase put options on the PSI 20 with an expiration date beyond one year. This allows you to capitalize on further potential declines without the unlimited risk associated with short selling. Puts provide a defined risk strategy while profiting from the expected negative trajectory of the index.
3. Futures Contracts: Consider entering a short futures position on PSI 20. This positions you to benefit directly from the anticipated drop in index levels. Use a contract duration that aligns with the larger anticipated move over a 12-month period to approximately 6231.07 points.
4. Risk Management:
This strategy is highly leveraged and carries significant risk, so it is suitable for those willing to accept the possibility of large losses in exchange for potential high returns.