212 W/e 19Mar Time Spread and Iron Butterfly pain.

That Was The Week W/e19th March- Topped Out?

So, a modest drop with the US possibly teetering as they persist with FED-fuelled ATHs. However this trader’s  personal view is often out of step with the market,and the market is often out of step with the rest of the world! Regulars here will have noted expiry this week was standard as the index was held up while short puts were closed out…allegedly.

One Minute Chart

Thus trading unto expiry is always akin to the wild west. We say PIN risk makes holding expensive positions just too risky for those of us with a  sub-six figure account. Curiously, expiry data was not available on TheICE.com as the March series was removed by this morning. This trader found the platform had, in the past 2 weeks, been a little  ‘variable’. Our access to the platform has been updated a little, though the delay still seems to be unnecessarily mean, and settlement prices a bit random. This fact alone makes you think, they have a lot to lose from us. This trader says 15 minute delays are just silly. Spreadbet platforms of course shower us with a plethora of ‘live’ data. Traders, of the winning kind, are rare here they warn us. My own enhanced sense of cynicism suggests that a profusion of data is, therefore, not helpful.

EU vaccine vacillation vindicates the UK’s position,and roll out, based on Covid stats. However the markets are still not showing even a glimmer of concern. Options traders may take note of the ‘relatively’ low VIX. Option prices, however, are not looking as peachy as they might. We are in that grey area.

Distraction Trades

So, Friday gave us at least a couple of entries a break even in the morning and a short for a good 100+ in the pm. Poor entries were not on the cards, as nothing remotely enticing stood out. However, rules is rules, and our method keeps us out of many possible trades, to good effect. Think: trout fishing

Calls Clarified- a Cynical Snipe at Long Calls

Robinhood traders’ favourite strategy owes more to massive manipulated sharp moves than any considered positioning. Here’s the big picture of vol/price.

Long naked Index calls can hurt your P&L, choose a spread -stay ahead! Though some say go deep ITM.

Just for fun: Check out CME’s poser: https://go.cmegroup.com/webmail/502091/935790232/1e95a3e1b806f62f4da1e70574f10b44790304255718cd6417ffd6d9268a66be

And take this with a pinch of salt: https://www.thetechnicaltraders.com/days-away-from-potential-gann-fibonacci-price-peak/

Legacy Trades and 212 -Losers and without management could have been very ugly

Trade 210 Time For a Time Spread

Our calendar spread we  sold 2x Mar and bought 1x Apr expiry. The 6200 strike is an ‘area on interest’.  Cost is 71-(23.5×2)= 24

Now……… 2×2 and 27.5  We are losing 0.5. Run to expiry, and beyond

LOSER!!!!!!!   It got ugly and closed for 20.5 on thursday -a small loss but in percentage terms it’s very very ugly  about 15%

Trade 211 Straddle strategy 150 strike width makes it an iron butterfly( short and caught!)

Say what??? OK, the straddle 6750– close enough for jazz, but expensive given our short time frame. We sell therefore a 6900 call and a 6600 put, limiting profits but lowering cost.

6750 60 – 9  for the  calls and 55.5- 16.5 for the puts 

Now it costs 90 with a max potential to hit 150.

Remember a straddle is a sale of a put and a call at the price of the underlying- known as ‘ at the money ‘.

LOSER!!!!!!  Best way we closed out for 85 -worst way- run to expiry it went to virtually nothing– but you would not run such a costly trade to expiry.

Maybe the regular iron butterfly is the smart trade here- the vol and theta crushed the prices this week and expiry would have made a very happy outcome.

212 New Expiry Month

2 successive losers- perfectly acceptable losses : ‘the rent on the shop’. We inform, that is our sole aim.

Nothing leaps off the page so we will now go with Liz and Jennys’ Jade Lizard. We sell a call spread and a put, but the premium taken in must equal the upside risk. Thus we sell the 6750/6800 call spread( 86-63.5) =22.5 and the 6300 put= 25.5 Total credit 48

OK we’re tuppence off the money, but we’ll keep an eye on this as it might need closing early. Risk at 6252

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