Trade 160 Week Ending 06December

Whoa! Bit of Action This Week.

We saw dramatic moves this week, from  7400-7131 to 7240.  Options prices reflected this, as Tuesday saw a big tumble and volatility spiked up. Personally I was looking to close out all positions for the upcoming election week. This created a delay until Friday FTSE arrived at my ‘sweet spot’. Futures traders(ouch!) may have been a bit pained, but with our strategies we were relaxed. In fact the bigger stress comes from being on the sidelines. Pencils and finger nails are chewed with febrile energy! However having no positions is in itself a position. So, we await the election mayhem which may prove to be a big fat zero.

GBPUSD 1.2917- 1.3166. Some people seemed to think 2 cents is a big deal. Though we don’t know if this tanked the market, or even contributed to the drop. Are we doomed or in the Goldilocks Zone? Check out our esteemed Erik Norland:

https://www.cmegroup.com/education/featured-reports/which-yield-curve-foretells-growth-the-best.html?utm_source=pardot&utm_medium=email&utm_campaign=economic_research

Not sure what the takeaway is here but if you’d looked at VIX recently there was a clue. This had been the chatter in the last couple of weeks. My personal secret recipe shown here:

Note the doldrums and rise -seemingly forming a neat lower high.

Eagle eyed chartists may note that standard deviation has not peaked very high. Though you could draw a line linking the 3 recent peaks. I daresay this is a Fibonacci/Gann/ Elliot Wave/Cup and Handle type thing. Thus charts can tell you whatever you want to see, I’m just not any good at TA(or trading).

Here’s another take on things from more supersmart folk: https://www.ivolatility.com/roller/page/trader?entry=volume_19_issue_47_br

 

 Those Pesky Legacy Trades

Trade158

So, the obvious trade the long 7450 /7550 call spread (37.5-14)=23.5  financed by the sale of 6950 put(23). Tiny debit 0.5

Closed for credit 25– but see below

Safety traders: Call butterfly 7350/7450/7550 81.5 (37.5×2) 14= Debit 20.5. Would you sell a put to finance it?

Still only 22 -that is the nature of Butterflies, they need to run to expiry.

Now about 9– we were right to stick to the knitting

Trade 159 Beating The Xmas Rush

We have some strikes and some prices for December:

7450 call 46, 7500 call 29 7550 call 17 7600 call 9 7650 call 4.5

How if I said long,short,short, long, short short? What I mean is buy 7450, sell 7500, sell 7550, buy 7600 sell 2×7650.

Zero cost but now worth 2.……Lame! Run to expiry.

Trade 160 Aligned With My Personal Account

As stated, with election this week it would be foolhardy to take any position when you consider the posibilities. We therefore remain sidelined as a position and compare this with a crazy Dec short 7250 straddle call=74.5 + put= 84. Credit 158.5.

Seriously….would you?

 

 

By the way -you can contact us if you have specific query, options are hard to grasp conceptually. Or give us some feedback, perhaps there’s something you’d like to see on the site.

Keep winning and keeping those profits-the taxman loves us!

 

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. Gary says:

    Hi,

    I found myself on your website, (cant remember how i got here) but have found it interesting, but i need to learn a lot more, and reasonably quickly as im 58 now….

    Can i learn here, or a starting point/ book etc you’d suggest?

    As you say, charts can mean all sorts to all sorts of people, in all sorts of timeframes .

    Apologies, as i know you would have had same question a thousand times

    Regards Gary Simmons

  2. Terrapin Trader says:

    So…… you have to laugh- the most horrendous trade selection the 7250 straddle is now about 142, sold for 158.5
    I repeatedly say I am not a good trader and this is dumb luck. But….. it’s another example of being wrong and being profitable. Personally I thought the trade was bad as there could have been an exogenous event by a political extremist- or even some truth coming out about Boris’s children!
    The markets love Boris and really really hate the old chap, the nice one with his allotment

  3. Terrapin Trader says:

    You couldn’t make it up. Remember for fun we kept an alternative Trade 158- that butterfly is now 32.5. Winner! Up 50%
    Trade 159
    7450 call 46, 7500 call 29 7550 call 17 7600 call 9 7650 call 4.5
    Now 23 (-11+5) + (5-(2.5×2))= 7. Bit of a fiddle around but it made 7 for zero cost
    Trade160- that was already a modest win despite trying to find the worst trade! (Had we held on it would be a loss of 18). Exit is everything-but had we held it…… we’ll see what Monday brings but my own conviction was to saty on the sidelines. The exuberance may fade quickly.

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