252 W/e29Jan Pitchfork Time!

That Was The Week -Wobbles and Bubbles

A curious week -as January to date has shown a drop in the S&P 500 of 7.54%. FTSE? UP 0.61% . So are we no longer the tick on the tail of the dog? An unworldly disconnect with that drop- even more so given Apple’s staggering rise 7% yesterday and the associated results. We all know someone who did well with Apple but sold out long ago. Whole generations have dipped in and out and made money. What interesting times we have lived in. And there’s so much more to come.

With so much uncertainty with global affairs it’s heartening to learn our glorious leader is headed out to the troubled part of Eastern Europe-for his detractors there’s no bad outcome here! More troubling is letting Bojo speak to Putin on the phone. Clarity, is not, sadly, in his gift.

Treats galore this week with web seminars (can we refrain from the ugly epithet ‘webinar’, please?). Whilst we are isolated in our trading it’s good to know what’s out there. And to have our own views challenged by such luminaries as Larry Macmillan.


The first 2 speakers get my vote: I’m fond of Tasty Trade and their pioneering work for retail traders. The platform is spectacular, but hey we have 15 minute delayed prices. Interesting that the esteemed Mr Macmillan likes buying naked options as he says the risk is 100% so why limit profits with spreads? With his own strategies he may have a point. He does,however, only buy when these options are cheap. Buying a call in high volatility can kill your trade even if you’re right.  Watch digest and enjoy

Distraction Trades

DAX– oh memiserum ( nod to Jacob Rees Mogg) 4 huge misses and one stopped out for loss 30. 5 minute charts turn in a heartbeat and the system thus makes no account of overall momentum- which frankly is sinusoidal.

Crypto ADA Cordano $1.07 the crypto crush continues- add or sit on the sidelines?

XRPUSD $0.615

Both bumping along and maybe dependent on Bitcoin getting a new lease of life.

Legacy 251, new Expiry cycle and 252 The Fork of Destiny!

So, let’s trade with the market’s money and use the  Feb 7300 put that we own. Simple choice- the market may take a tumble on Monday based on the futures close, so we could wait, but lets do a put ratio spread at 7500(long) 7400 shortx2 

Thus we  now have the following prices: 137 and 100.5×2. We are now the proud owners of a butterfly. We are bulletproof. Our credit on this trade is 64. We could have sold the 7300 put for 74.(We still bank 64 and buy a pizza!) However this way we could make another 100 

NOW:  Currently the butterfly is worth only 10 but we run of course to expiry.

252 a departure of sorts- we use March expiry,and here’s the Greeks:

Hopefully you can see puts and calls at the 7150 strike for March expiry. What is going on? It’s another visit to the pitchfork, whereby we sell the call and 3xputs at the same strike roughly below the index minus the straddle- but with some wiggle room. Strictly we should be at 7050  but it looked more interesting to have roughly level premium either side 382 for the call and 122×3 (366) for the puts. Paint me green and call me Yoda! OK it’ll be fun to check back next week to compare the 2 strikes. 

If this looks crazy… it is, but do the Greeks and you’ll see it’s virtually delta-gamma neutral with a lot of theta. So, the market can do nothing again this week and we gain from the decay. Oh, we can use the premium to do something interesting too -we take in a whopping 748.