198 W/E 04Dec. Brexit, Strangle agony.

That Was The Week

Flop-around FTSE got the hots- up 2.87% on vaccine hopes and some ‘optimism’ about Brexit. Sorry, but this trader does not see that going well. However this is the stock market- as divorced as Johnny Depp and Amber Heard, from the real economy. FT tells us the PER is 18.03 https://markets.ft.com/data/indices/tearsheet/summary?s=UKX.P:FSI

Honestly in 2020 who the heck know if this means anything whatsoever? Optimism is such a key theme, but that does not pay the rent. I do not share this fervour, but that’s on a personal level. We must accept that the market thinks it’s all going swimmingly.

An Esteemed Trader Proves His Point

The Master Investor Show 4th and 5th Dec  -a virtual event this year but generally worth a visit. One of the speakers, a certain Guy Cohen presented very well and he has a system of trading based on his magic ‘ OVI’. A secret sauce which I believe is based on options action- The initials OVI may give us a clue, but it’s smarter than that. One key point that was driven home- https://www.ovitraders.com The system has an EDGE. And that may be well worth the fees. However it seems the system only works on US stocks- like pretty much every system.

So quite why we doggedly stick to the UK market is something of an enigma! We should not be married to one market. Indian options are just as tradeable as any, though the US seems to have such a fantastic market. Information is free, research is widely available and there is some great tuition. This trader went through Optionetics almost 20 years ago, and the excellent and free https://21stcenturyinvestoreducation.com/page/tce/

What I would venture to say is Options give you WINS! 

Distraction Trades

Yet again horrible and looking back to the Biden bounce on 4th Nov the only trade was go long and sit tight. Intraday has just been ugly.  Which brings me to other distraction trades via the broker https://www.degiro.co.uk And trades in small caps-which when allocated a few hundred quid to each is viable given low trading costs- pennies in fact. A few tech stocks have done ok, one has done 1,500%+ and being an options trader, I closed out in part, in sufficient numbers to make it a free trade. These are mostly not optionable stocks but the one large cap…. options are a joke. No open interest for us retail players.

I also have another smaller trading platform- no fees and fractional shares

http://Do you want to get a free stock share worth up to £100? Create a Trading 212 Invest account using this link www.trading212.com/invite/GbtWkR3U and we both get a free share!

If you don’t want to use the link it’s Trading 212.com, I was drawn to it as an old broker friend suggested it. While I have made £8.47 on my £50 stake,(!) we have yet to get our free share. Hint!!!

 

 

Legacy Trades,196, 197, and 198

Trade196  We Abandoned the Weekend Strangle for a 2-3 week Time Horizon

We  sold the Dec FTSE  6600 Call for 25.5 and the 5850 Put for 25  Credit therefore of 50.5. Here’s the spin. We ‘cautiously’ looking at closing out at 25% of premium and 50%.

Now? 20.5 for the call  16 for the put   Win, by 28% of premium or around 5% of margin employed- simple isn’t it? Until it isn’t. The picture changed, but we didn’t. OK We got more than  the first target of 25%. Then we ran it:

6600 call now 74.5 the 5850 put 11 –ugly loss 35   

So- at last a chance to adjust. But how? 1. Do nothing, as we still have 2 weeks to expiry. (losing 35 currently)  2.  Shift our strikes up. 6700 call 40.5  6300 put 35.5.(Credit 76)  Here’s the maths: We started with a credit of 50.5  our adjustment costs us 85.5 to close out, minus 76=9.5 debit. Our credit however remains 50.5-9.5 =41  We do not wish to be that  forced buyer/seller

Trade 197 Spicy as we can handle

 

Our  ratio calendar : we  sold 2x the 19 delta 6100 Dec Puts and bought 1 Jan 6100 Put, for a debit of 77-(35.5×2)= 6

Now 18.5 for the Dec put and  51 for the Jan so 51-(18.5×2)= 14 Credit Some progress and it seems the markets are on fire again.

Trade198 Jade Lizard- Because We Do Not Believe this has much more juice.

 

The trade is simple- take in a credit of 50 and risk 50 to the upside. Ugly part…the naked put. We sell 6600 call and buy the 6650 creating the short spread for (74.5- 55.5)= 19. We then need to sell a put worth 31…. 6275 at 32. Risk therefore to the downside at 6224.(We took in 51)

It’s not original but maybe it applies well to our current opinion.

Options give you WINS! 

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