That Was The Week 17Sep saw expiry followed by a plummet.
VIX closed at 20.95 last week and so another week of volatility of the volatility. We could chase this to the nth derivative but VIX is a useful indicator reflecting the global markets by proxy. Us oldies recall the adage ‘America sneezes, the rest of the world catches a cold’ (other variations may be available). We know in simple language, that the US is not only the largest economy, it leads most other economies.
Meanwhile:
Our remaining trades went out ok, as expiry was ±7031. However is there yet another foreboding cloud on the near horizon?
https://mailchi.mp/optionstrategist/the-option-strategist-weekly-updater-2643069?e=5f15d5ff5d
Larry wrote many of the books,but market pundit? Then there’s this:
P/E is a really important metric for long term investing but can it point us to better returns on a monthly basis?
Distraction Trades
Should proof be required of the efficacy of options trading then surely the lamentable trading record here is that proof!
DAX 1 entry slightly more than break even so 4 days with nothing
XRPUSD currently 1.086 so no entry there- this trader would not be a buyer of this at >$1 this seems to be rangebound currently. Still buzzingfrom making 50% and no desire to give it back.
Legacy Trades and 235
Trade 232 Broken Wing Condor
In fact it’s a one winged condor! We are buying the 7150 call, selling the 7200 call AND selling the 7250 call.
Risk…… unlimited minus the long 7150/7200 call spread (not normally recommended, but of course you can roll up,down and along)
Logic of the trade, the market has double topped around 7220 and the bear/bull argument seems to be in balance. No downside risk and tiny credit 2.5 Just one quirk- look at the volatility -that’s not a smile, that’s a grimace. Now a CREDIT of 3.5 to close out…..rivetting
Last week credit of 7 to close out – now? ….2 –We ran to expiry for nothing! WIN!
Trade 233 Something Bonkers? No- A jade Lizard.
Jade Lizard sell 7150 call 64.5 buy 7200 call 39.5 gives us 25, then sell the 6900 put for 26 Our credit is 51.
We had no upside risk but downside risk at 6849
While this is a bit of a strangle it does optimise the call side. We could also do something like 7000/6950 put ratio spread- ie buy the 7000 sell 2 of the 6950s for credit of 23.5.
Both did the full WIN! Cannot take credit as it’s all down to Tasty Trade’s Liz and Jenny
Trade 234
Alright- expiry week and an old theme revisited- the open interest trade, whereby we sell where the largest OI is outside of the money. This week it’s 7200 calls at 4.5 and 6800 puts at 11. Will that elevated VIX have come too late in the day to make these prices agreeable?
WIN! So we had no need to close out with expiry at 7031. These can be crazy and you have to be prepared to have one side go ITM. We manage that risk when it happens.
Trade 235 October Expiry
Time to buckle up and play safe?
What could be safer* than an iron butterfly? We sell the straddle, buy the strangle and hope our strikes hit the sweet spot, as this may not do much in the meanwhile. We take in…… and our risk is 100 minus our credit Near expiry we may be able to have some fun with it too, morphing, rolling and maybe a ratio here or there. Here’s the graphic:
OK it’s 110+130 minus 60+95.5 I’m really not doing that for you!
* Is anything safe?
