That Was The 2nd EEEEk that was 09February

Here’s What Happened

7443 down to 7092– a drop of 4.7%. VFTSE effectively doubled. So,margin increased 3 to 5 fold. Nobody rejoices in this-even those who doubtless have made a fortune. Such huge moves, even greater in the US and reflected in Futures trades, are ugly events.

How Are We Doing?

Well our last 2 trades have to run to expiry, but it’s been ugly. We may, therefore, have to adjust and that is something we’ve always promised we’d show. And we will, next week.

The Bigger Picture

Scarey spikes in Vix -previously August 2015 it spiked at over 50. I got caught, didn’t panic(honest!-OK,maybe a little) and made the biggest winning profit of that year. Somehow 2008/9 was a great trading year for me. 2009 betted against the rapid rise-big mistake, to quote Mr. Schwarzenneger. This market thus brings to mind the old chestnut, of the broker phoning the investor. “I have some good news- the fundamental of your portfolio remain great, the bad news- the stock price just halved”. Funny if you’re not the butt of the joke. We are traders not investors thankfully, as a stock that drops 50% now has to rise 100% just to get back to break even.

The One That Got Away

A few weeks ago looked at a combo-selling the 7850 call and buying the 7600 put for a zero cost. So…..didn’t trade as I didn’t get the price for the call Which is a pity. The 7600 put at close was 546.5. This could have been a retirement trade and maybe  just shows poor execution. However I also think it goes to mindset whereby we have been bludgeoned into believing in the ever rising market, and the infinite wallet of QE.

Central Bankers

So, the key it seems, is down to interest rates and the ‘perception’ of employment and inflation-both numbers are  questionable. However,we no longer have the Greenspan put( Google it!)

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About the Author: First found out about options in 1995.From the arcane magazine Exchange and Mart! First trade- a covered call on VOD in 1999. Made 10%,VOD almost doubled. That's when I realised I was not a good trader,and I was forgiven thanks to the amazing world of exchange traded options

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