That Was The Week
Texas froze, the US rejoined the world, vaccines were rolled out, some cricket was played. While Covid has rightly occupied centre stage, we are starting to return to the really big problem. Climate change, or global warming as it was once called. Humanity finds various ways to destroy our different tribes/nations/creeds, but we all have to step up, and watch our emissions. Weather has again become weird, it’s not going to get better unless we take action. Thankfully dear old Joe Biden has put the US back in the frame.
Purely from an investment perspective you have to think that all and any green innovation is going to attract the big money. This idiot, by chance, found a Canadian company who have a niche product, which I cannot legally recommend. The price has increased 2,400% . However this is a long game and when their innovation is mass marketed I imagine this stock will go at least another 1,000% or tenfold. More than compensating for the FTSE250 rubbish I am drawn to!
Those Pesky Distraction Trades
More frustration from this strategy and maybe a 5 minute chart in these sleepy(what the press calls volatile!) markets is too fast. 30 minute charts may produce fewer trades but we are only seeing 3 good trades a week anyway. Review, revise, reconsider. Simple determination of direction works, but we need reasonable entry times and maybe running trades overnight. Work to be done
Blockchain, Crypto and Security
DOGE was recently in the media and this idiot fancied buying some as it now trades against GBP so may also serve as a hedge. However the process to trade requires an unparalleled level of security. Now this cuts both ways. Images of my ugly mug, my passport my bank details, phone number,name address and DOB. I doubt even the government has all that data in one place. I wanted to buy DOGE at 0.038 last week but to fund the account meant providing the aforementioned level of ID. Honestly, I am not comfortable with this. Binance gets good reviews but from reviewers I do not know. My options broker will of course not proffer any advice,so who can I trust?
Recall BTC was a buy for a few $? Again I looked at buying £500 worth back in 2015. Could not see a clear, simple way to invest, to be frank. I’d be on my own private beach by now! https://www.investopedia.com/articles/forex/121815/bitcoins-price-history.asp
Who would have just sat on it, having bought for say $8 a pop and seeing it go to $30? I doubt I’d have kept all my original investment even though it’s money I don’t mind speculating (losing) with. I tend to buy an investment and sell when it will be a ‘free trade’ . Example of another stock I bought for 3p. Sold half of it for 9p so it’s free(zero cost) now. The problem then becomes finding more gems, or buying more of that stock if it again hit 3p
Legacy Trades, Wins, Whinges, Wait a Bit.
Trade204 In a Stagnant Market
Let’s look at a low risk trade- the Iron Butterfly. This means we buy the wings and sell the body: wing 6800 call 61, body:( 6700call 108, 6700 put 128), lower wing:6600 put 90. Thus we have 108+128= 236- (90+61)= 151. Which gives 77. Risk therefore 100-77=23
Horrible- 2 weeks ago 87.5 to close- would we see 6700 again this cycle?
Wed 17th this was an awesome 55 to close, this made 22 when our risk was 23 – Not bad but risk/reward make one think.
Compare and contrast Strangle: 1 ∑( one standard deviation) typically 0.16 delta gives us Call: 6700 @21.5 Put: 6000@44 total premium 65.5 risk at 6765.5 and 5934.5. Now 9.5 for the call and 7.5 for the put HUGE WIN (65.5-17 )= 48.5 Close that puppy!
Ratio that: Puts 6200 and 6050×2 give us 78.5 and 51×2.= 23.5 Calls 6650 @ 32, 6700 @ 21.5×2 = 11 Total premium taken in 34.5. Risk at 5855 and 6795
16. 5 and 9×2 for the put ratio = debit 1.5 to close 16.5 9.5 x2 for the call ratio thus 2.5 debit to close. Total premium at entry 34.5- 4= 30.5 WIN
OK, I grudgingly admit the strangle did better for now…..
The strangle now 7 for the calls 1.5 for the put. Thus 65.5- 8.5= 57 profit
Ratio trade: puts = 0.5 Calls 16 -(7×2)= 2. Credit 1.5 + 34.5= 36 (best I could do)
This is SO over! Unable to beat that-the strangle took the full 65.5
Trade 206 A Recent Happy Butterfly Variation
We recently used the far month’s put option as the lower leg of the put butterfly to mitigate theta. Volatility has been smashed to bits for Feb, so we will buy a put spread for March 6350/6250 (111.5, 83.5). We also sell the Feb 6250 put for 21.5. Now our trade costs us 111.5-( 83.5+21.5=105 ). It’s a small debit of 6.5 It is a trade I cannot put a name to, other than a sort of calendar ratio.
Caveat -it would have been good to sell more of the Feb but as prices are grim, it’s a risk/reward not worth taking. We do now have risk at 6150, max profit 11-6.5= 93.5.
Now 4.5 for Feb 6250 put (71 -52.5)= 18 for the March put spread. Our debit was 6.5 was worth (18-3.5)=13. Doubled our money, but small change, so we ran it now 12.5 ……… it’s a WIN
However you could morph in many ways using this long spread.
207 Something Bold? Unseasonal Strategy For March Expiry
A debit trade….. hmm spending money is always a concern. So here’s a christmas tree
6450 put long 6300 short 5950 short 5800 long 5600 short. In effect a condor with an extra short
Those prices 97.5 61 24 17 11.5 Thus we have 2 longs 97.5 and 17 and 3 shorts 61 +24+ 11.5 A debit of 18 Max profit 150-18= 132. Risk at 5600, but bulletproof down to 5800
Longs worth 71+15.5= 86.5 shorts 45.5, 20.5, 11=77 Small loser However it’s early doors.
We seem to be going nowhere with possible downside risk. My assumptions are mostly wrong but aside from a strangle which annoyingly has done well recently, what else can we see?
I am drawn to this- a long straddle financed by a 2x strangle, Thus we BUY 6600 straddle, and sell– well you figure it out!
That straddle costs 123.5, and 118. So we have to sell 2x 6725 calls (63×2) and 6400 puts (60.5×2). This gives us a 5.5 credit. The point is our cost is negative, and now our risk is at 6850 and 6200. Reward? A whopping 200 or 125 to the upside.