Trade 176 Week Ending 19th June Triple Witching

That Was The Week Ending 19th June- Options and Futures Expiry

Expiry managed to sidestep all my potential profit making positions! A good week for buy and hope, though S&P Futures took a dive at the end of play. Disparaging as my view may be, the ongoing disconnect with the real economy and the markets continues. Tax take in the UK was down 30% in May, if Gov UK was a business they would not be borrowing at negative rates. So, is debt/gdp relevant? MMT seems to suggest it does not matter, we can just print money. So, every teenager still abed at lunchtime must be thinking ‘why do we work when we can just print money?’ Chancellor Rishi certainly gets my vote- pity he wasn’t around when I was that teenager who had no plans to do any kind of work!

Many traders are rightly angry that QE ends up in the stockmarket. QE does not go to the low paid, the homeless and vulnerable. Trickle down- once hailed by Thatcherites has yet to, er, trickle down. Though we have seen some generous assistance to workers short term, a great many jobs are lost. Futures are looking bleak for a few million workers. Optimism in the financial world may thus be misplaced. However we may see a new working model that saves companies a great deal in payroll.

We’re All About The Basics

Readers here, along with this author, seek answers to trading riddles. We’ve narrowed the field massively to near month equity index options. Reasons for this choice are manifold but stocks require so much more research- unless you just BTFD! Rules apply to traders who, like us, plan to be around in a decade or two. While it is not our aim to sell anyone’s products, this trader confesses to having been taught by the excellent Tom Gentile, who is, after several decades, still around. https://moneymorning.com/2020/06/17/two-simple-trading-rules-you-should-never-break/?utm_content=20200620_usmoneym&bsft_clkid=52510a87-938d-4254-892c-da840f02e2b0&bsft_uid=65fde638-34ed-454e-a184-220bfa3ed1dc&bsft_mid=c80277a8-3a59-4e82-a3c5-5c2904d10c52&bsft_eid=f40199bb-ac6e-4327-9226-6e74ae30668f&bsft_utid=65fde638-34ed-454e-a184-220bfa3ed1dc-USMONEYM&bsft_link_id=3205&bsft_mime_type=html&bsft_ek=2020-06-20T10%3A01%3A35Z

Apologies for the link!

Mulling over trade strategies, performance and risk management this week with another trader, a few points came again to mind. Forecasting is not a part of the process, it’s more of an ‘anti-forecast’ that we need- looking primarily at risk. Recommendation(not!) 2 https://www.bigtrends.com My favourite quote from the esteemed Mr. H- ‘sometimes we make more money sitting on our hands’. This trader again got itchy about margin and paid hugely for some short calls that went out at expiry for 0. Clearly my judgement is awry after recent crazy moves-hence the link.

Let us know if you have any particular stumbling blocks -we might feature your question here with a possible reward in more than just words

Legacy Trades- Wins -Small loss with 171

Trade 171

We sold the 5800 straddle(putcall) and BOUGHT the outer wings, the 5650put and 5950call. Horrible -now 144 on the call side and 3 on the puts -sold for total 134. Was a loser but don’t think we need worry about the puts, so we’d take a hit of 10. However, last week 136.5 to close, loss of 2.5…….. and we ran to expiry for fun. Max loss 16

Trade 172

We sold near month June 5600 put, buying July 5600 put but… we  also sold the July 5100 put. Debit 113.5-(49+58.5)= 6.    -Run to expiry 22-6 =16 modest win

Trade 173

We went deeper with 5800 jun/july put calendar, and again selling 500 points below: the 5300 July put. The numbers thus: 139-56.5 for July spread= 82.5, minus the short Jun put at 71. This was a cheeky 11.5 debit. We liked 38. -run to expiry 35.5 good winner

Trade174 Closed- win

Prices last Monday 75.5(call) and 80.5 (put) = a profit of 167-156= 11 

Trade 175

Let’s do the ‘theta weekend ‘ trade again with a strangle 5950 put 77.5 6200 call 74.5. This will not run for more than a day or two. Rewards… big. 56 and 40= 96. Original credit 152-96=56 profit Win.

I hate that this works! It’s just random -but we will continue, without numbering them in our running trades total.

This will now be known as: Weekend Strangler5950 put 77 6500 call 73.5=150.5

Trade 176 Butterfly Minus a Wing

The great British Leg-in.   Our aim is to have a near- free trade, a call butterfly. We buy the 6200 call for 225.5  SELL 2 6400 calls 113.5 x2=227, we await a juicy price(currently 43) for the 6600 call. Legging in is notoriously tricky but we will see how this pans out. Margin will be big on this, but it’s not a comfortable position as a big move up will be painful. Comfort does not, however, boost our bank balance.

 

1 Comment

  1. Well, I’ll eat my shorts! That wretched strangle?… 150.5 to sell to open, 125 to buy to close. 25.5 profit. Annoying? Probably only for me but it comes from high to low vol period

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