195 W/E30 Oct Selling Puts, But Volatility Strikes

That Was The Week We Dropped Almost 5% While VIX Spiked Up

Our illusory calm before the storm was swept away as the market took on a new dynamic. Traders may take the view that it’s better to lose out on profits, than risk massive losses.  We know in times like these, when panic sets in, stops can simply get overwhelmed. So, Tuesday promises to answer the biggest question since Harry and Megan’s wedding guest list. The victor’s presidential duties will include staunching the flood of deaths, and importantly, stopping the pretence that all was well in the first place. We have said often that debt does not mean growth, it’s just a transfer of wealth to the rich. Probably.

Business owners know this is no way to carry on. Given the anaemic ‘growth’ and subsequent Covid lockdown, growth in developed markets is looking questionable. We believe the old model was not really viable. Modern Monetary Theory dismisses debt as a problem. Option traders will prevail and innovation will keep things interesting. Money is not going away but may become crypto as cash seems increasingly irrelevant. This tiny brain cannot comprehend the complexities of Bitcoin options. Plodding instruments like indexes are tricky enough, especially as volatility creeps into the 20s.

Distraction Trades

Chart courtesy of CMC who kindly provide excellent demo trading:  https://www.cmcmarkets.com/en-gb/

Big reveal here- the strategy is based on a simple EMA crossover, but the price has to come back to test the slower EMA. Should the line be respected ± a few points, the trade is a go. The chart shows a classic entry, but at 01:25 a.m.  So in quiet times it works well- this trade was worth 400 points+ but when volatility spikes up it missed those moves at key times. This journey of discovery is fun and as a demo costs nothing and may turn out to be useful.

NB This trader understands that trades may be held overnight and the market closes as described here:





Legacy Trades and Weekend Strangler

w/e strangler, remember we sold    6000 call 69   5600 put 71.5        now (monday)   54 and  91 moderate loser

The point is made- it’s not a reliable strategy given a very limited non-analytical approach. THIS WILL RESUME NEXT WEEK

Trade 193 That Skewed Ratio Straddle

Initially this options risk graph seemed to be a tad suspect. http://OptionCreator.com/stg60ei  Actually it’s not bad!  So, to reiterate our trade. We sold the NOV 6000 straddle (293.5)x3 and bought DEC6000 straddle(395)x2

Those prices 293.5(x3)and 395 (x2)  880.5 and 790 a credit of 90.5

Though I don’t like this as I don’t understand the nuances*, it is now 84 . However this is meant to run and ideally we’d like the Nov expiry at 6000              * It’s a volatility/theta play of sorts

Now?……. 16.5 and 441 x3 1372.5     46.5 483 x2  = 1059.  So this shows how in massive increases in volatility you take the prescribed trade and don’t try the opposite! LOSER What the heck? Let’s see where this goes- the US might go nuts, though 90% of me thinks it will not go well.

Trade194  4 Weeks to Expiry Sell A Put, Then Another Then Another. Oh, And Buy One Put

We  sold 3x 5600 puts  but….. we bought one 5950 put, those premiums 71.5 x3, -201=13.5 credit

We have no idea how crazy or flat things are about to get leading up to the US election. Risk at 5425  looks as if this is the calm before the storm.

Updated link showing increased vol……. https://vlab.stern.nyu.edu/analysis/VOL.UKX:IND-R.GARCH

Those prices now  397, 164.5 x3  = 493.5-397= loss 96.5 minus 13.5(big deal) = 83 LOSER  We run it for now

Trade195  -This will be posted on Wednesday as it’s just crazy ( as in the two previous trades) to play this total unknowable apocalyptic time.

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