Trade 165 Week Ending 17th January

more of the same- am I surprised?

Another Dreary Week For a Volatility Hungry Trader

Up again- another 1%+.Quelle surprise mes amis (just using up the last quota before Brexit means no French words allowed).  So Brexit looms nobody gives a monkey’s, to coin a phrase. Our esteemed chancellor casually mentioned that businesses may find the ground a ‘tad shaky’. However,nobody cares. The complacency is staggering, given the radical predictions we heard in 2016. Thus, fellow traders we may need to pay attention to the downside, hitherto irrelevant. Volatility is stupid low -either that or Brexit is a total non-event and the EU will continue to buy our engineering, live cattle and popular entertainment. Gut says tread super carefully, while the numbers say ‘nothing to see here’. Feels like Pompeii to me!

Pump But Don’t Dump

So the money press continues to spit out $ to bolster the US economy and the world trots along for fear of missing out (FOMO). See how this affects things globally https://www.zerohedge.com/personal-finance/all-worlds-wealth-one-visualization

And this https://usdebtclock.org

US debt total $75 trillion, US nett worth $106 trillion.  US GDP is about $22trillion- not sure how those numbers stack up. But hey, with modern monetary theory, you can just print away your problems. Markets move on sentiment. Even the Trump impeachment is not going to derail the market -especially in an election year. We can thus wait for volatility, prepare for it or ignore the prospect.

Those Legacy Trades- The Decks are Cleared With 2 More Winners

Trade 162  Jade Lizard

Short 7700/7750 call spread 36.5 and 20= 16.5, short 7550 put for 33. Giving us a total credit of 49.5. Thus our max risk to the upside only 0.5.

Trade 162 looking AMAZING!!!! Who expected that? Cost of 6 to close giving a mahoosive 43.5.(Jan 15th- this went full bore at expiry but why risk it?)

WINNER

Trade164 Rinse and Repeat…. almost

We are looking at a short iron butterfly. Say whaaaaat? Iron butterfly- you sell the straddle* buy the strangle**. Thus normally you’d sell the 7600 straddle and buy the 7500 put and 7700 call. We are doing the reverse. Prices- straddle 30.5+39=69.5 Strangle 4.5 and 10.5.= 15.  But you know what? 15 is rubbish- let’s sell 2 of those strangles. Now our cost is 69.5-30= 39.5.

Trade 164 now 52 – a tiny profit on 39.5 but hey 30% -the stuff of dreams for stock traders( posted Jan 15th)

WINNER

 

Trade165 -now we can only choose February expiry- let’s be Devil’s Avocado and get short this runaway train.

We will sell a call spread-so we sell the 7700 (62) and buy the 7750 (41.5).  Risk above 7770 as we take in a chunky credit of: (62-41.5)=20.5. The most we can lose is 29.5 (50, the width of the strikes minus credit taken in).

comments welcome -perhaps given these prices you could find a smarter trade? Shouldn’t be difficult to outsmart the Terrapin.

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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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