259 W/e 18Mar Naked Calls? Naked Puts?

That was The Week VIX Plummeted and ‘Magic’ Money Boosted the Market

So, against a tsunami of problems for the global economy, the US reversed its position and smashed up. FTSE trotted along, in sympathy. Cynic that I am, I assume it is ‘magic money’ as ‘people’ need to wash funds through legitimate markets. Cash in the bank is so easy to find. However this is pure speculation, but algo’s tend to pick up and amplify such moves.

Again, though this is no small beer, and the cynic in me says someone gave the green light for HK’ s Meltup(China’s capitalist outpost) Wed: 9.08% Thurs:7.04%  Magic money?  I imagine there is a lot of discomfort with such a huge move. Preceding this, however the Hang Seng  had dropped substantially. Logical, considering the catastrophe unfolding with Covid. China is also a lynch pin in the Ukraine conflict. Thus having to walk a fine line with loyalty to the US or Russia is no easy feat.

Politics and economics aside this is just musings and a little annoyance that doubtless a lot of traders have been hurt with such moves. Powerful money always defeats weak money, although Robin Hood had a brief spat of driving the market with naked call buyers. That ship may have sailed.

Education, Lack of It Gets Expensive

Firstly that old chestnut https://21stcenturyinvestoreducation.com/page/tce/courses/

This is the finest resource we have come across-accessible and totally FREE. A wake up is needed for those losing traders making angry comments on Twitter. Buying naked makes no sense, in our world. Yes, you might get lucky with direction. However you’re most likely to lose numerous times and start revenge trading. Spurred on to make bad trades.I have that T shirt

This popped into my inbox again:https://www.cmegroup.com/newsletters/infocus/2022/03/-a-closer-look-at-options-skew.html#key-takeaways

And for fun here we go with FTSE:

For comparison we looked at a random week- July 16th 2021, against last week using April expiry. And here’s where we are now:

I cannot comment on its worth as I have not looked at this for > a decade. For comparison yours truly would calculate the Ansbacher Index- Google it!  So, whilst of academic interest I didn’t find it particlarly helpful, though with US options data is was easy. FTSE options? Sadly, no help there from my sources. However it may be fun to monitor this.

11 Mar 1.49  18 Mar 1.54

Distraction Trades:

DAX Fri break even(+30) Tues 200+  no other trades. We’re doing well.

ADA Cardano down big up big- we’re still a miserly $0.86

XRPUSD  $0.811  Does not move in concert with ADA, curiously.

So, while DAX is doing OK, our crypto is underwater.

Legacy Trades and 259 a New Expiry Cycle.  2 Monster wins.

256 Same again

In such uncertain times we would prefer to stay on the sidelines, but if push comes to shove -we repeat 255 with that juicier premium. 450.5

Friday morning and the FTSE dropped below 7200 which meant that this trade had to be closed out at latest at that stage.

7200 Was the point at which this trade could no longer be profitable.  FTSE opened at 7193 Friday morning and already the trade at close of play the trade was 502.5   a loss of  68.5 x2 =137      aggregate trade entry:    (417.5+450.5)/2= 434

257  recouping a loss?

At this point it’s worth reiterating: Sometimes you make more by sitting on your hands.

Taking a loss is tough but we’ve had a fantastic run, sometimes pushing the envelope a little too far, with surprising results.

Trade 257 is precisely this : Sitting on our hands.

Now 502 – We would, as pointed out, have closed out as soon as the likelihood of profit had gone (FTSE<7200)

We said: Let’s see where we expire on Friday 18th

Thursday 17th we had  222.5+18.5 = 241 -that is the cost to close- CREDIT was aggregate 434. Minus our cost 241 to close.


258 Expiry week trade 

So, it’s a ratio (3×1) calendar spread. Thus, we sold 3x 7500 Mar calls at 17.5= 52.5, and we bought 1x Apr7500 call at 78 We paid 25.5.


259 Where did the Fear Go?

Thus,having mused on the longevity of 30+ VIX, it has now evaporated, so what’s to do?

6825 put 36   7600/7650 callspread 50.5 and 36 =14.5,plus 36=50.5 CREDIT

So, what is it you ask? Zero upside risk and downside risk at 6775? correct, it’s a……… Jade Lizard

And one more thing-don’t forget our pals across the pond: http://email.tastytrade.com/youre-in-luck-trade-ideas-and-strategies?ecid=ACsprvt_DtaLg68fdpntqeLm9QKPFeXunkbb_csSHJPp-UKWvncclfJ93ItV3NlSWRogZBQSn3yI&utm_campaign=tastytrade%3A%20Daily%20Recap&utm_medium=email&_hsmi=207187495&_hsenc=p2ANqtz-8x93WFOg8x6AVd9qNxqR6nughY5vUrXJ8upwf9wVXVRxF2ld8Fot0Z5dA_FkCwEJ4Grmixnh8ud2OLB7RcSMGnB501Vg&utm_content=207187495&utm_source=hs_email