Trade 179 Week Ending 10July

That Was The Week A Big Up Some Big Downs -Vix still high

This doom-monger got interested when the 6000 level was broken, but some buying came in on Friday morning. ( No clue here- just typical of too much money chasing too few things). Inflation mythology continues as the stockmarket seems to be the only inflationary asset, gold and silver aside. CPI is 0.5% and like in 2009 inflation did not show up, but who knows? Supermarkets are still offering a lot of goodies* at £1. Skittles, Toffee Crisp 4 for £19 for £2! Other confections are available, many consumer goods remain at pre-Covid prices, with petrol even cheaper. Nothing to see here, inflation in absentia.

Elon Musk, we understand, now has greater nett wealth than Warren Buffett. Personally this idiot thinks this is how things should be- a man who makes things happen as opposed to a passive investor. Warren Buffett’s wealth has come mostly from Apple stock too, so while he is a philanthropist of sorts, his wealth has not helped anyone very much. Meanwhile, Mars(the planet!) calls to Elon, and I’m sure I’m not alone in wanting to see humans on the red planet, for no particular reason. Technologists will be inventing the goods to make colonisation tolerable and feasible, no doubt.

*Unless we have sweets we are simply not proper.

Where Are We? High or Low, Cheap or Expensive?

We see FTSE trading on PER of >14% in an era of impending economic depression https://markets.ft.com/data/indices/tearsheet/summary?s=UKX.P:FSI

Traders may argue that trouble is being stored up, but what of the world’s largest economy? https://www.wsj.com/market-data/stocks/peyields

Stocks are not the real economy clearly,but earnings come from real economic activity. Anyone else think PER of 28 is a tad rich?

Beware this trader’s continued bias to the dark side!

Legacy Trades and a New One- We Try To Break The Winning Streak, now 3 Years old

Weekend Strangler

last week –6400 call 74 and 5600 put 72 total 146   -At last! Loss of 10 on monday -ok a tiny win on Tuesday

this week C 6350 62.5 P 5600 67 total 129.5 

Trade 178 Playing Safe

We bought a PUT butterfly. We bought 6000 put, sold 5800 x2 and bought the 5600. Cost 17 max profit 183, max loss 17

While we may not see the index at 5800, we just need the 6000 put to be worth >17 at expiry or the whole strategy worth >40. ( a meaningful profit). should this look unlikely we may be able to pull in some credit using the 6000 as the lower leg of another butterfly.  WIN– hit 37 on Friday morning -we run,for fun, to expiry.

Trade 179 No Guts No Glory

Guts -that’s actually the name of an in-the-money strangle and for us it’s going to be selling the 6200 put and the 6000 call. Why? You ask- well here’s the ‘thing’ we are selling a spread that is a liability of 200 at expiry but it gives us 268 currently. Risk is if the index goes beyond (6200-268) 5932, and to the call side( 6000+ 268.) 6268 However the value of the short spread is always 200 against us,so max profit is 68 Now you don’t have to wonder why it’s called a guts! Failure is not an option but this is really not a preferred trade.

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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