262 W/e 08AprOptions Expiry Looms

Something’s out of wack

That Was The Week FTSE Up, Vix up

A bizarre huge rise on Friday-why? So soaring heat, record rainfalls, conflict, inflation,unsustainable debt, pandemic. Apparently these are to be ignored still? Meanwhile Russia has now pegged the rouble to gold. So apparently ₽5,000 buys 1 gramme of gold. Yours truly can remember when jewellers couldn’t give away 1 ounce ingots for £35! What a crazy time.

Meanwhile our bewildering world continues to bewilder with firstly the almost $7trillion daily trades of spot and OTC derivatives of forex https://www.bis.org/press/p220330.htm I personally take no comfort in these volumes and we know every year there are greater volumes traded in pretty much every kind of derivative. Which brings us to:

https://youtu.be/slAwLBanG2M  More VIX derivatives to ponder. This idiot is thankful not to be trading these things as pricing is surely going to be problematic with daily moves sometimes >1trillion%  Maybe that’s an exaggeration but the intra-day swings must make it the wild west of trading. Like weekly options -you’d think these were an obvious theta play. We’ll stick to FTSE.

Distraction Trades -Rubbish Week

ADA Cardano $1.037  dropping again 

XRPUSD         $0.763  dropping again

DAX   4 no entries 1 win +60.  It’s not fun is it?

Legacy Trades and 262 As Expiry Looms

259 Where did the Fear Go?

We chose something moderately conservative(with a small c)

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.

Was  19  for the put and 18 for the call spread.

Then it was  5.5 for the put, 18.5 for the call spread=24 -we could close out at 50% of max profit, but we will run it too.

That daft melt up now gives us 33.5+1 =34.5 Still ahead.

260 A Somewhat Saggy Bottom in Sight?

Let’s say we see the next few weeks of calm heads prevailing, but optimism sagging. We look at a wide call butterfly, with huge risk/reward.

We are buying the 7300 call (243) selling 2x 7450 calls (134 x2) 268 and buy the upper 7600 wing (54.5). And thus we have a debit of 29.5. Keen eyed followers will note the max profit is 150- 29.5=120.5 or 400%. (We can do without the hyperbole, we’d take 100% )

Now as expected 33.5 – some would declare this the trade of the century, making 13.5% in a week or >650% annualised!

It’s now 15.5  and frankly a bit ugly 

261 Cheap Puts. Should We Leg in? 

Though we are loathe to get directional in a big way, Vol has dropped so much maybe there are some cheap puts……

A fun trade we’re going to buy (spend money….I know I know…) buying a put spread, buying the  7450 put 51.5 and sell the 7350 put 32  so our debit is 19.5. We can sell something else to fund this in full or partially, and here we sell a 7100 put for 12

Lat week- risk at 7000 but a debit(max loss) of only 7.5 and max possible profit 100-7.5= 92.5 

It’s now worth

262 Expiry Looms (I just said that!) -Can We Get Riskier?

So, let’s have a radical departure and go with extreme risk. Thus we can get into a tricky position and show how we can adjust. So the problem is to find something crazy enough……………..as if!

We buy a 7700 May Call and 7600 May put. then, we sell 3x Apr 7700 Call and…. sell 3x Apr7600 puts

Here’s the crazy -we pay 113.5 and 142( 255.5)  for the May options and we get 3x 29.5 and 31.5. =183 for the Apr shorts. This trade is expensive and risky -what could go right? Here’s the risk graph https://optioncreator.com/stqv6t8

The point of this trade is: can we get options worth more than the debit, given the crazy risk?

We are paying for this garbage remember! 72.5

1 Comment

  1. 262- when you try to break something it somehow defies the odds and just works. So that trade would now be worth about 124 to close out -in one day. 56 profit, but it can’t really be run to expiry…..or can it?

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