Trade131 Week Ending 10May


That crazy week

Tweets And Chinese Takeaways

Obvious headline really. Yet again someone let the iPad loose and the world’s premier tweeter tanked the markets. From 7380 down to 7189 on Friday. Curious market action solely on the Trump/Xi challenge. Tariff or not tariff, that is the question. More vexing than a Shakespeare quote. We are told the Chinese government has been the principal buyer of stocks, I’m not sure if this is legit, or whether it equates to the old ‘Greenspan put‘. Or the ‘plunge protection team’.

While it’s amusing to ponder conspiracies, it’s not helpful to our trading. We can only take the trade and watch the market go in our favour or not. Of course with options we can use all market conditions. The key is figuring out what kind of expectation we have, and the rationale of the trading decision. Volatility is our chief ally.

200/62/13 moving averages

The chart above is not much help despite using my favourite moving averages. I do like the retest after a moving average cross, however. This latest move may also be a retest, as the 62 ema crosses up through the 200, We note the 13 crossed up through the 62 a while back. Does it mean anything? Apparently more than those volume spikes!

Analysts of all persuasions will tell you the market is not random. It’s certainly not reliably predictable, otherwise a certain trading house would have cleaned us all up long ago. What pleasure, knowing it’s as hard for them as it is for the rest of us. We just lack the kind of firepower that moves markets.

Those Running Trades

Despite the madness, Trades 129 (Calendar Frankenstein)  and 130 (Call butterfly) are almost exactly as they were last week. No horrors, nor pleasant surprises.These can now run to expiry.

Have to dig deep for Trade131, so with some trepidation I am resurrecting a previous trade, closed out for handsome profit. So is there an issue revisiting old trades? Superstition maybe, but if it makes sense, take the trade.That trade is this:           May 7350/7450 call ratio spread. We are buying the 7350,selling 2 of the 7450s. Risk is limited to premium paid, to the down side, to the upside, we have risk at 7550. So, what’s the cost? 7 minus (1.5×2)= 4. We’d be happy to get 20,though the upside possible max is 100. We have 4 days and 2 hours to see some action, and also the outcomes for trades 129 and 130.

Sporting Week

On a high note- didn’t we do well in football? England cricket team looking ok, Lewis Hamilton etc. And we have rugby Saracens v  Leinster. Exhausted just thinking about it!


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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  1. Terrapin Trader says:

    Trade 131 closd out for a very creditable 14 today. The Friday expiry is a lottery and I’d hate to se it go to zero. I closed out a put trade for 23 on Tuesday when the market looked bleak, and that has gone to zero. So all in, some good exits. Onwards and upwards with June expiry

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