Trade 187 Week Ending 04 September

That Was The Week – A Bigger Drop- More To Come?

The mantra BTFD STILL holds good as mysterious buying in US stock indices kicked in at 3.40 UK time on Friday. I refer of course to ‘buy the f****** dip’. A continual and relentless daily procedure seemingly serving the Robin Hood call buyers. We cannot tell if this is an unseen hand, but it seems to have been ‘rinse and repeat’ on caffeine. Central banks we know have a hand in the EU and US markets,and this may continue for far longer than is rational. We traders in FTSE do not seem to have been granted such largesse.

We saw another week of conflicting data and the notoriously odd  ‘non-farm payrolls’. The US is seeing 1 million+  weekly unemployment claims, and then suggests unemployment has dropped by staggering amounts. While GDP has dropped 37% -forgive my cynicism.

Thoughts On ‘Reading The Tape’

This popped up in one of my gazillion emails this week:

All clear now?

So while there may be a rationale in staying with a trend it is always a problemcatching up with the new paradigm. Nasdaq here has strayed very far above trend, so what does that mean? And now we have this

Looks like some support at that line, so probably that’s all we need to know. Or maybe not- here’s our team:

Do these lines connecting points of interest amount to much? History suggests yes but only in hindsight.

Distraction Trades

EURUSD saw a bit of crazy as it hit 1.2000 and promptly took a dump. To me it’s a slow burner but may be profitable with small moves, and then we have DAX. Truly the Kool-aid index, at one point dropping over 300 points from a clear entry. The problem(nice one to have) is when to exit. It’s also not a bad distraction from options trading and watching our ‘drying paint’ trades. Another facet that makes sense is time of day. 7 or 8 am, 1.30, 2.30 pm seem key times but trying to find moves after 10-ish in the morning or 3 in the afternoon seem to be producing those fake-outs.

While chart watching is deadly dull, there are also opportunities overnight and sometimes the US AND UK closes produce moves that are eminently tradeable. I think there are suitable instruments and taking a 3-4 point haircut with a spreadbet seems very fair on such trend trades.

Charts against Numbers

This again seems to be a good time to mention our ‘edge’ – the Greeks. Both legacy trades have held their own -at least mitigating the big drop. We trade both sides of the market, we trade volatility and we trade time decay. So with so much on our side should be simple-right?

Legacy Trades

Weekend Strangler

Last week 6125 call 42   5700 put 42.5 = 84.5   Monday-  16.5 and 60 =76.5 small WIN 

This week Oct expiry 6100 call  53  5200put  55 = 108 

 

Trade 185 Semi-calendar butterfly The Terrapin Butterfly- or Terrafly, in short!

( Wrongly got this pegged as Trade 186 last week )

So here are the opening prices- Sep 6100put 189. 6000put 132(x2) Oct 5900 put 156.5

Prices last week     345.5 -264= 81.5   This week about 85, but this DID hit 97 during the week -close out comfortably for 93 but we’re running it.

Risk is max 71.5 remember

Trade186 Are We Seeing Cracks in The Market?

Has support at 6000 broken and become new resistance?

Sold  Call spread 6200/6250  23.5 15.5=8   Sold put spread 5750/5700  51.5,42.5 =9   Dreary old Iron Condor for credit of 17– risk is max 50-17=33. September expiry was only 21 days to expiry

Now call spread = 5.5-3.5=2   put spread  101.5-86.5= 15 =….17 total

Trade 187 Trying to Find something Left Field

Hope you can see the  text clearly enough- here’s the trade. It’s BIIIG it’s ballsy…it’s a 3 x 1. We are buying 1 x 5500 put and selling 3x 5350 puts .Thus we take in premium 23×3-39 = 30

Those  Greeks ….. Delta 11×3-19= 14. Gamma 15-7= 8 Theta 8.296- 3.5084 = 4.7842 Vega? 312( literally no idea what these numbers are these days ) Vega used to be quoted as a number like  8.3 for example from 18 months ago. However all those metrics are against us except theta. To quote from the film ‘Marathon Man’  ” Is it safe?”  Risk at 5300 -you decide how ugly it might get. The US has Labor Day on Monday so effectively it’s only 8 trading days.

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