Trade 65 Sell The Farm!

Technical Analysis- Does It Work-and Trade 65

I  annotated the above chart,to show the signals that for my set up, indicated a drop. Of course I ignored the chart, signals that clear don’t work, do they?

And now? Clear as mud, and overbought conditions did remain for months. I believe we have a new market character,though we are still up at high levels.

Trade65 Going Into New Territory

Only one thing can help us here- VOLATILITY. It rarely spends much time in the upper levels. But how high is high?. VFTSE hit 14+ but that is no great move compared to what FTSE has just done. Options prices may have a way to go yet in terms of an increase in IV. How can we capitalise on this? We may need to define our risk with a March expiry Iron Condor, in this scenario.  Put spread 7250/7200( 63 minus 53) credit of 10, Call spread 7650/7700 (24 minus 15) credit of 9, giving us a total credit of 19. Not a sexy trade but we have defined  risk- the most we can lose is (50-19)=31. Simply selling the 7200 put and the 7700 call for a credit of 68 looks pretty juicy though.

Name Your Poison

I nominate the iron condor as the market may have a bigger sell off and a naked put can quickly become your worst enemy. We must remember the market can go against you a lot longer than you can fight it. The Iron Condor is healthy all the way down to 7231 and up to 7669. FTSE may never see 7200 again of course. Many put sellers thrive, and I’m sure quite a few have been caught this time around. CME reports record options activity in January averaging 950,000 contracts a day. You have to think that can only increase when the market gets feisty. There will be losses and opportunities. Optimise those opportunities. Boldly go!

  • There was an issue with getting FTSE chart on Stockcharts so big thanks to for their chart.









Filed Under: InformativeWeekly 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:

    the nakeds didn’t go well- the Iron condor not great but not a disaster- plenty of time for that still!

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