Trade 177 Week Ending 26June Hitting The Beaches Adversely

That Was The Week -Looking ‘Positive'( Buying Stocks) Until Covid Reality Hit

So this week I became an ‘almost’ trader. I cannot trade with any conviction as the virus is such an unknown. Stockmarket bulls think they are genius, as QE continues to underpin a market that may soon get a sharp dose of reality. Hence this trader’s hesitation. How can we get any kind of handle on the future even for the next few weeks? Politicians don’t know, the public are really not co-operating, so we could see a catastrophic second wave-having avoided the first. All we have is a system awash with money, and that can change in a heartbeat with profit taking, or change of sentiment.

Trillions of dollars have been unleashed to big business. But, if people don’t buy stuff it’s only a matter of time before many more businesses that have over-leveraged debt, will go to the wall. Then as a counter, we have the unstoppable FAANGs. FTSE has,however, shown poor returns relative to the US since 2000. This trader understands the return on US stocks is seven fold that of FTSE.

Stuck Record -Something A Little Different

Cynicism is not an aid to trading and this trader has always been way too bearish, having more modest returns in those ‘up’ years. So how about finding something that does not rely on market forces, but is subject to different forces? In a word ‘forex’

Who can have any kind of empathy for this?

This is a 5 minute chart of EURUSD -who can pick the bones out of that? As a diversion from FTSE this may be a challenge in trading something 100% pragmatically and trying to create a strategy. Options at this stage are not and option- it’ll be spreadbets initially. I aim to keep a proper trading records and in a few weeks will reveal results.

Meanwhile the site that provides the chart, also has this piece of wisdom:

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 78% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.

Legacy Trades – A win and a ‘Who Knows, but also a win’

Weekend Strangler5950 put 77 6500 call73.5=150.5 Win profit 25.5

Trade 176 Butterfly Minus a Wing

The great British Leg-in. Our aim was 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 to leg in (currently 43) for the 6600 call. This was a buy at 14, making this a debit of 12.5  We are now bulletproof and can only lose 12.5 but could make 187.5. Currently worth 44

Weekend Strangler put 5800 61.5   call 6400 57    total credit 118.5

Trade 177 The Madness of the Crowd, We Buy into That

Ratio short iron butterfly- we buy the body(6150 call and put) sell the wingsx2-all clear? Here’s the Greeks:

So, this is lopsided but it’s an interesting proposition.Risk at 5650 and 6450. Credit of 22

Here’s our overall Deltas 1.22-1.06= -0.16. Almost, but not Delta neutral.

Gamma……. overall 14 against us but Theta 14.9 in our favour  Monster profit potential but we might look to close early, as the max 250 or 150 maybe unlikely. Margin will be big on this as we are effectively semi-naked stranglers.

We hope you will take a look at the maths because a) it’s valuable and important to understand an overall position and b)Not sure if we got it right! Let us know if there’s an error.

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:

    About 48 to close Trade 176 paid 12.5 -FTSE seems a little unsteady now.300% profit -I’d be boasting about this and selling a trading system for millions if that was the aim.

  2. Terrapin Trader says:

    Trade 177 could close out for small credit 6.5, added to credit in trade entry 22. Win 28.5 but we run for fun

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