Look out Below!!!!!! Shiller Alert

This is Worrying……

So…. This(see graph below ) just popped into my Twitter feed. Also, through the letterbox,flopped  a tax demand that seemed somewhat baffling. As an options trader I think I’m fairly on the ball with my tax affairs. However I do not comprehend their version of my language. Which is why we are here-to demystify.  Anyway-the P/E ratio as most of you may know is the price to earnings ratio. We can only know the truth about the share price. Everything else is just fluff. When P/Es are high, buying the stockmarket is a bad idea. Shiller is possibly a more accurate and honest assessment. We are looking at nearly 28. It’s important to be aware if you think this might help with making a trading decision.

Long or Short, Stay Away?

Well there’s the thing. Should you believe the market is insanely high, you may wish to get short with some kind of long put strategy. Or a short call strategy, or a combination of both. As we trade FTSE, the recent high was about 7130, so if you think it will go no higher,then a 7150 call      strategy could be a sell, the 6700 level seems to be a recent low, possibly a long put strategy at that level. Personally I will not take a view until close of play today. I would NOT be doing a naked trade, always always have some protection unless you are comfortable with nakeds


Filed Under: Strategies

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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  1. Terrapin Trader says:

    Just my take on things- I’m not a good trader,and constantly overlook these sort of things,but today I had time to check Twitter and the chart just looked very worrying for me. The Santa rally/Trump pump is it for real? No way would I be going long-that’s just me,cynical and cautious.

  2. Terrapin Trader says:

    Pretty sure the dumb money is trying to get that dinosaur the DOW to hit 20,000 by end of year-does it affect the UK ?

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