Trade 151 Week Ending 04October

FTSE Warts an’ All 

 

And our German Counterparts Get This:

VDAX- Who Knew?

So, I understand this is new but it is sick making that the self proclaimed financial centre of the globe here, gives us a big fat zero. Traders may ponder quite what the VDAX means as an entity. This trader might presume there are derivatives to be traded on such an animal. VDAX may serve as a vague proxy for UK volatility but often the DAX moves bigger than FTSE. But we’d love VFTSE derivatives, wouldn’t we?

Traders this week saw a Titanic plummet 3.23%  on Wednesday. Why? Well who knows, data has been rubbish for ages, as the retail sector is decimated, and car sales were awful. Debtors owe more than ever and car loans now average a term of 70 months. We saw on Thursday a dribble lower, then Friday a strong up day. Buyers girded their loins.  However, this does not play into my up/down day count. My magic indicator is currently ‘owed’ quite a few up days we have 98 up, 93 down. So, does this presage a big Santa rally? Put that on the back burner. Up days are lurking on the sidelines.

Charting The Action, Predicting The Direction

Technical analysts among us may already understand the Andrews pitchfork https://www.sta-uk.org/sta-blog/pitchforks-at-the-ready-just-in-case-brexit-really-gets-going/

Readers, please take the time -(hope the hyper link works) as it is interesting reading. However, I start by looking at support and resistance and hope I am near the mark. I may have  been wide of the mark lately! Make your own way but be aware of the good stuff already available. Chartists are a rare breed but can make valid observations.

 Trade150

Oh dear!!!!!   I had suggested a ratio calendar with 7250 puts .

We  sold 2xOct expiry and bought 1xNov (88-(34.5×2) )= 19 Debit

Ouch!!!! Woe and thrice woe.  Traders, we are currently under water- but this is a calendar trade and should be allowed to run to expiry. So should things get worse we will take a view about adjustment. Wiggle room- there is not much to speak of.

Trade151

We think volatility is still fairly high we should sell premium but limit our risk. We have an iron condor, October expiry, as follows: sell 7300 call, buy 7350call (25-15) =10  Sell 7000put buy 6950 put (43-33)=10. Credit 20

Thus the logic of the trade- limited risk with break even at 7320 and 6980, max profit 20, max loss (50-20)=30 

The basis of this is that the market will calm down a bit as the FED and the ECB will support the market, as usual.

 

Filed Under: FeaturedInformativeLearnStrategiesWeekly Trade Idea

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:

    Ok a bit late but this week we could have closed out Trade 150 for a loss of around 50 on tuesday- but with 19 debit already paid this represents a 69 loss. Our heaviest ever. This could however be mitigated by adjustment/ rolling over. We can look at this in the weekend update

  2. Terrapin Trader says:

    Feel free to ignore my previous response! That trade is now a get out of jail for zero! You’d lose the 19 premium, but as I have repeatedly said a calendar trade should be given its room to perform and we have another 6 trading days to go.Bad trader, bad trader!( I may have mentioned that before ) Please remember this site is about options not about this idiot’s terrible views and opinions

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