Trade 107 Week Ending 23 November

Big Ups After Big Downs, Then Up….and Down

I was surprised by the down move on Tuesday- matched by Wednesday’s bonkers rise. GBPUSD has been up and down, quite predictably. Dismally missing out this week, failing to add to my positions. I took in a credit of 24 last week and for more of the same I could have got 33, but was too shellshocked on Tuesday to pile in. Good traders add to positions when the reasons for the trade stay the same. When there’s no change, the logic remains sound.

I spoke with another trader this week about trading during Brexit. He is sidelined for now, and feeling unable to get a handle on anything. Cannot fault that position, but politics is not the stockmarket. For this trader the market is in need of some juicing up. The options sellers got smashed to bits as reported last week. Premiums should resume normality, as other short sellers may now reconsider. They have not paid attention to the risk.

I note monday will be 25 days to expiry- a good time to take advantage of theta, hence the preceding trades 105,106.

Trade 106 is a Doubling of Trade 105- where is it now?

Trade 105 long put and call spreads ( 6900/6850 puts ) (7350/7400 calls)  and short one 6450 put.

Our prices: put spread=109, 95.5, = 13.5 call spread 41,31= 10. short 6450 put seems to be about 33, we are thus in a debit of 9.5. Annoying, but this needs time to run.

I added to the comments section on the other trades- of course you are all up to speed there. 106 another bite was another monster win. Yay! If only I understood how these work. I won’t keep up the pretence of being interested in the futures or stock trades.

Trading Information- Where To Find it- Another Reminder from the inbox

Where is the options stuff? Er, for UK traders there is almost nothing. I was emailed with some bargain book offers thus:

Fellow options traders,  how poorly are we served in the UK?  https://harriman-house.com/category/trading

I’m sure these titles all have something to offer, just nothing for us.

The US has led the field and possibly the gentlest source is from https://thomsettsguide.com/michael-thomsett/

I have had a fair few discussions with Mike and he takes a real down to earth view. He shows none of the elitism you may find elsewhere, and of course you can trade options from any intellectual standpoint. Would we want to get into second or even third order Greeks? https://en.wikipedia.org/wiki/Greeks_(finance)#Third-order_Greeks

I’m the kind of bloke who always wants to know a bit more. A recent example- I found a beer that amazed, and upon a litle research found https://www.chapeldown.com

This is not an infommercial, just a bit of levity and distraction-the beer was amazing because it’s made with champagne yeast-who’d have thought? So I would always encourage people to dig deeper and challenge their own and others’ views. We live in amazing times, and limitless choices.

Trade 107- Keeping You Waiting And…….. It’s An Iron Butterfly

Another link: http://optioncreator.com/stuskul

We  choose a different strategy each week only to demonstrate what is possible- I genuinely do not try hard to win- it just happens! Honestly.                  The nuts and bolts- or in this case the body: we are selling the 6950 call and put, we are buying the 7050 call and 6850 put. Prices:133.5 116.5= 250 for the body, prices for the wings: 81,82.5 =163.5, thus 86.5 Max loss 100(minus our credit 86.5) =13.5. The logic of the trade? We may well see a range bound market as each dip seems to meet a rise. I have no idea however-we may be ±300 points in a week’s time. The risk graph shows us that so long as we stay ± 86.5 or ±1.25% we stand to make a fair profit. And for the Geeks here’s the Greeks:

Trading options- nothing comes close. Enjoy, and have a great trading week.

Oh-here’s the link for the calculator: https://www.cmegroup.com/tools-information/quikstrike/options-calculator.html?utm_source=LINKEDIN_COMPANY

 

 

 

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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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  1. Terrapin Trader says:

    As expected not much movement with trades 105/6/7 but they show a small profit now.

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