Trade Zero 0.5 Week Ending 10 April

That Was The Week of XXX Largesse- The US up 12%

Well, the stockmarkets are loving the trillions borrowed from the future. Outside of this bubble the real world knows that when 16.5 millions lose their jobs, they do not buy stocks. Not next month, not next year. The unemployed have debt and little access to credit. And these are just the last 3 weeks. Key drivers of the stockmarkets, certainly in the US have been buybacks. Corporations borrow for peanuts, buy their own stock, sell at 15%  profit, rinse and repeat. British workers have numbered around a million new claims for Universal Credit.( A means tested benefit for people in or out of work).

Thanks to John Mauldin for this graphic.

While it’s hideous to think that so much cash has been allocated to enriching the rich, the trickle down is to pensions. This, it appears is marginal given the chart. Poorer folk, the ‘just managing’  know the financial prudence of a pension is barely available to them, however.  UK government has tried with workplace pensions, and kudos to them. However, older folk should be able to prepare for a comfortable retirement.

Trading options is not championing the less well off however- but it can grant us the freedom to give something back.

Bearish? Bullish?BS?

Critics argue over the tsunami of money and the overall effect long term. The UK has argued that we have stagnation and wages have been left behind. Asset classes such as property have seen increases and who can forget the FTSE‘s March 2009 ascendancy?

So, the mystery is, how did asset prices increase while wages remained flat? Did nobody think this would stall* at some point? This trader has always tended towards the downside, and often proffers the expression ‘ markets rise on lies and fall on truth’. Truth is a perspective however, and of course whole swathes of the global economy have done well. People… not so much.

*This trader was convinced it was due, but of course changed gear too late- and in hindsight naked long puts went exponential with sixtyfold increases and more. Simply, about £1,000 worth of long puts would have bought a high end Tesla. No time for regrets or sour grapes- Nassim Taleb traded well though, we believe. Few others claim bragging rights.

As humble retail traders we can be nimble enough to keep out of harm’s way, and have no pressure on bottom line week to week. Which brings us to:

Legacy Trades

Zero.02

Paid 14 for the 5000/4800/4600 PUT butterfly – now 131/89.5×2/59.5= 11.5

Last week  9.5 Now 1.5- Loser

Zero.03

 PUT butterfly 5250 203  5000 131(x2) 4750 81. Debit 284-262=22

Last week  27 Now 3 Loser

A look at the call side too…… 5600 242 5800 156(x2)  6000 92.5  334.5- 312= 22.5

Last week 29  Now 51 Looks like this winner is paying for the 2 losers so far

Our iron butterfly at 5500   5600 call 242, 5500 call 293  5500 put 303, 5400 put 259.5.   94.5 credit 

Last week 88 Now 95.5 –This may get lucky!

Zero. 0.4

So,…….   a time(calendar) spread

 

April 4900/4750 calendar put spread 37.5-24=13.5 May 4900/4750 put spread  129-100=29

Sell April buy May costs us  29-13.5=15.5 Currently 11

Zero 0.5

So, what’s the VIX saying? It has halved from the peak, and approaches the secret sauce EMA, and lower B Band. Is it headed higher?

Spicey yet safe- not me…this. 5650/5500/5350 APRIL put butterfly -yes 4 (four) trading days to go. Prices: 63,38(x2) 23.5.= Debit 10.5

Max loss 10.5, max profit 139.5. 

Logic of the trade? See below:

Bollinger Bands- gift or hazard? Remember these are just for fun and not a part of our series.

Filed Under: FeaturedInformativeLearnStrategiesWeekly Trade Idea

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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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