Trade184 Week Ending 14th August

That Was The Week, Big Ups Big Downs

Recession was greeted with 2 big up days,then a modicum of reason seemed to kick in! The rise for the week is about 1%. Here’s a bit of fun re: US https://uk.investing.com/news/economy/weekly-comic-covid19-vaccine-hopes-fed-stimulus-lift-sp-500-towards-new-record-2190227

Hard to ignore the appalling state of American political shenanigans, dignity plays no role there. The S&P has rallied over 50% FTSE had a 33% rise but off some 8% from there. Whither goest thou? The two schools- doom and gloom,second wave, depression. Or, a vaccine proves successful, is made available freely in early 2021, by which time the US may have a new president and another rally(or maybe a coup)

Here’s more from Marketwatch https://www.marketwatch.com/story/the-stock-market-would-love-a-democratic-sweep-in-november-2020-08-14?mod=home-page

So, what could possibly go wrong to quote the old adage? Point is, what can we do to continue to profit from this strange reality gap? That’s right- trade options, and let the others do the butt clenching stuff.

Inflation You Could Argue It’s Mostly Au, Ag and NASDAQ

Chemistry, Tech and Voodoo. So, gold and silver had a big run too. Current normal inflation is a squeak above 1% However economists argue for the 2% Goldilocks zone.

Homeworkers are now  working 2-3 hours a day longer, according to some sources. Commuting may be coming back but you have to think that companies have got the better end of the deal. Expenses claims, we know, have plummeted. So maybe those big stock rises could be ‘commuted’ to increased wages. Buying gold doesn’t really help anyone,and it’s gauche!

Personally Speaking

Education is our aim here, but the bar is set high for entry to trading options. Thus taking the first steps may be daunting. Margin is not risk however and ‘managing’ a pot of money should not give you stomach cramps. My own confidence and events this year have taken their toll on my own trading. Sometimes we forget first principles- don’t lose money, exit is everything. Trade entry will always be slightly emotional but we are trading the relationship between numbers.

Probability is our friend, the Greeks are our friend. Thus we have a massive advantage over pure direction.

Distraction Trades

Dax continues to give good entry signals. With erratic monitoring three wins 100+, missed a 200+ win and had 1 loss. 1 break even. Looks too good to be true? The trick is to get up at dawn and wait! And……. get direction right.

This is all a bit dry so here’s a picture of a house in Lithuania:

 

Those Legacy Trades +

Weekend Strangler

Last week -we used Sept prices  6200 Call 63 and 5650 put 65.5= 128.5 now 124 Break Even

This Week  Sept 6300 Call 53.5 and  5700 put 52.5 = 106

Trade 180 A Revisit to a Curious Trade

Our calendar(time spread) selling near month 6000 put, buying far month 6000, but…….selling a very far OTM 5500 put(Sept) Our cost is zero(margin req’d) and theta is onside bigly. Prices (short 106 and 66)   171.5 = -0.5  Unchanged.

Last  week 177.5 (Aug)   Sept  239.5 and 82, so a loss of 20,  this swung back to 22 credit Now 51 BIIIIIG WIN!

Trade 181 Far OTM

So, another theta play with a put ratio spread and zero cost. Selling 2×5550 put 59.5 and buying 5800put 31. Credit 2.5(Margin req’d) Logic of the trade? We are safe down to 5300 . Winner! Credit 14   Hit 23 last Monday. We run it some more, but not looking likely to win more than 23.

Trade 182 Trading the Noise

3:2 ratio straddle. We BUY near month straddles x3 and sell far month x2. 5900 straddle gives us the following Aug prices: (115.5+125.5) x3= 723  Sept( 179 +192.5)x2= 743  Thus, we have to pay up, a debit of  20 now 48, loss of 28 Loser CLOSED

Trade 183 It’s Getting Hard To Find Something Good

The trade: buy one 6000 put, sell 2×5850 puts for Aug expiry. Cost was  94-(46×2)=2 . Now about 10 Win, but not enough!

Trade 184 Next,and Near  Expiry Cycle

Here’s a mad thing -and not highly recommended but may be a bit of fun. Softies step aside, this is not for the faint hearted because it is ‘expensive’. It’s a bonkers calendar straddle,and assumes the market goes nowhere this week

We sell the August 6100 straddle  call and put( 57 and 74) and buy the Sept 139.5 and 159. We pay (whilst wincing) therefore 167.5                  Thoughts and prayers please!  

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