10U God of War talks about how I traded SK Hynix and Hynix ADR

In the past month, I have written a lot about Korean stocks, almost all discussing the current issues with Korean stocks. Since there are so many problems, shorting should be an option, but storage is still a very hot topic, and for a time, I was not sure about going long or short, so most of the time I was just watching.

Maybe I am a bit slow, and I discovered late that SK Hynix (referred to as SK) and Hynix ADR (referred to as ADR) have a strong correlation; even though the premium on ADR is higher, the direction is about the same, so I decided to give it a try.

Starting yesterday, SK was rising, so I went long on ADR, which is SKHYUSDT, and then I found out why ADR was falling. It was already past 11 PM Beijing time; SK had risen by 11%, but ADR was fluctuating and slightly down. The two actually reversed in the afternoon.

Furthermore, there was information that the South Korean government was preparing to "rescue the market," but SK actually changed from a rise of 11% to a rise of 8%, and ADR was also down, so I thought it was very likely that one was that the premium on ADR was too high, and the other was that the South Korean government admitted that leverage was too high, which could likely cause panic.

So I directly closed my long position, losing about 20%, and opened a short position on SK, which is SKHYUSDT, because by then, the Korean market was almost closing. My thinking was that if one was the premium on ADR was too high, and the other was that SK would retreat after a spike, then it was very likely that ADR would fall, and that SK would also drop the next day, which is today.

My original stop loss was to prepare to close my SKHYUSDT if ADR was up last night, and then decide after seeing how things go during the day today. As a result, last night ADR indeed fell, and the fluctuation was quite significant, so I directly increased my short position on SKHYUSDT, anticipating that SK would continue to drop when the market opened today.

The result was as I expected; when the Korean market opened during the day, SK directly fell by 11%. So overall, my plan was to use the Korean market as a reference to go long or short on SKHYUSDT, while the evening ADR only served as a reference for closing positions, not for opening positions.

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