Trade110 Week ending 14December2018

Up For The Week- Didn’t Feel Like It

Despite a rock solid time tested number of strategies and managed risk, I still get bouts of ‘uncomfortable concern’. I have to remind myself how many times I’ve been in trades and made  ££££££££, when things looked ugly. February and September this year were big drops, but most welcome. Somehow those seemed to be ‘fluffier’. Trading is largely a matter of keeping emotions in check. I suspect parachuting is similar – you know it works, but cannot help feeling a little skeptical.

Caveat- I do not take many of the trades posted here and every week I regret the fact!

Tasty Trade

Some really interesting research here and another reason to question why anyone would try to guess the direction of a wiggly line. Are currency moves predictable? Here’s the link: https://www.tastytrade.com/tt/shows/closing-the-gap-futures-edition/episodes/currency-pairs-12-14-2018

While our inestimably quirky Tom and Bat are great fun, they also present excellent opinuons and research. The shows are balanced with some intense options stuff and some downright fun things,and ‘discussions’ twixt the pair. It’s my afternoon viewing at least once a week.

How Did Our Trades Do?

Trade109– that strangle- 7050 call and 6400 put. Sold for 60.5. So…. how much to close out?  5.5.                                     That is a huge win: £550 for one lot of each ± 30% ROCE (amount for margin- £1500 approx). That is what happens when volatility drops from 24 to 17. I wonder if there is a fund somewhere that waits for such opportunities? 2017 Would have been a very lean year.

Trade 108 Another juicy win- debit of 18 to open, now a credit  (60.5-5) 55.5 to close. 200%+ profit

Anyone see a pattern here?

105 and 106– a debit of 1.5 to open now worth a credit of 18 ( the long 6900/6850 put spread) minus short 6450 put at 3.5= 14.5. We paid 1.5 to average in, remember? So our account needed some margin to cover the short put but that trade made 14.5. 

Trade110

Before cutting to the chase, I may now urge caution. Politically we are really in a new paradigm. It is possible the FTSE could see really wild swings as the £ takes a battering or surprises to the upside. I also wish to share a stock trade. I am not recommending this but I liked it enough to buy a small quantity. Why such a departure? I have a tiny knowledge of physics and mechanics and there is a company that can dramatically improve the efficiency of electric motors. The technology in electric motors is 2 centuries old-think about that. This may become part of a side project and if anyone wants to know more- email: surreyhantstraders@gmail.com

OK, OK I have a duty to stick to the knitting. Shares…..whatever next?

Trade110 Feisty? Moi?

A feisty 3×1.

We have been here before and I know of a fund that was blown up doing call 3×1s. What is a three by one? We sell three, and buy one. This is for expiry week, so we use the December series. We buy one 6750 put for 31  we sell three 6600 puts at 9.5×3=28.5. So our cost is 31-28.5= 2.5. Risk is at 6525 -we own the 6750, which is worth 225 at that level. The 3 x 6600 puts are worth 75×3=225. All clear?   This trade makes a profit if the 6750 put is worth more than 2.5 next Friday-or sooner. No upside risk, limited to a max 2.5.

Yes, there is a possibility of the market dropping below 6525,and we will show how to adjust.

Meanwhile it’s been a tough time here’s something political:

Brexit. In or out? Or just park off and ignore the noise

 

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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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  1. Terrapin Trader says:

    Trade110 made a whopping 60 at expiry -rounding off a very solid year while so many funds failed to make money (only 22% in profit). If people still don’t want to trade options they may wish to park their money in premium bonds-because that is the only othergame in town. Crypto’s are dead, gold and oil, nowhere and bonds are just too big for most of us.
    Again I do NOT claim to be a great or clever trader- clearly I am not-it is solely due to the power of options that these trades continue to make excellent returns based on the simplest analysis

  2. Terrapin Trader says:

    Trades 105 and 106 again would have made the full 50 if held to expiry

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