TradeZero 0.9 Week Ending 08May

That Was The Week- VIX dropped 25% Game Over for Panic Drop?

Of course we had a shortened trading week to celebrate

 

So what happened? FTSE had a couple of up days, oil seemed to bounce back somewhat and gold just grinds higher most weeks. The economy we are told will shrink some 14% and US  non- farm payrolls took another massive hit. Mr. Market does not care about this however as the amount of money going into stocks is not based on people who do, or do not, work on a farm. And in any case job losses used to mean interest rate cuts. Bad news has been good news for decades.

In my quest for actual news, this idiot sometimes finds useful stuff on RT-not news but a worthy guest.https://simonsinek.com

This is not a commercial but I liked a couple of his ideas. One was the infinite game- this is like life really. Relationships, our business ventures, caring for our health. Finite games, are like football or chess where there is a definitive ending, a winner and a loser. What we do in life mostly is the infinite game-and we have up and down days. Like the stockmarket, there’s no win or lose it just carries on. We should not feel bad as the game continues and there will be brighter days. He also talks about our upper and lower self. Simply, our upper self plans to fix the shelf, mow the lawn, clean the car, read a book. Our lower self says ” Chill, have a beer, and park off in front of the tv”. Which half do we allow to dominate? That is our choice, seemingly.

Quick Look- You Decide- Cheap or Not?

Is This Good Value with Terrible Earnings Yet To Come?

 

Trading and The Tricky Bits…. As If It’s So Simple

This trader was dipping toes this week and thinking there has yet to be a correction based on actual finances. What do I know? Thus it seems a good time to reiterate that Van Tharpism…. We trade our beliefs about the market. However some have unshakeable faith in Bollinger Bands, MACD, Stochastics and so on. The list goes on. Compound those with options maths- the Greeks. Now we’re looking at a mountain of information. Factor in that our option prices are based on the future-itself a derivative.

Twitter this week, an ‘options pro’ posted a Tweet about a trade that was long gamma and flat vanna. Sadly the Tweet is lost to the mists of time, but it led me here: https://www.thebalance.com/vanna-explanation-of-the-options-greek-1031331

I’ve never found Vega a reliable metric so vanna may be out of my field of vision for the foreseeable, but dig in- interesting stuff, and learning beats ignorance.

Legacy Trades and 0.9

Trade 0.7  

5750 straddle for credit 349 -Closed for credit  60– but then….. Best price to close 220  credit 129 on Wed -Still a week to go.

Trade 0.8

Calendar ratio selling 3 May 5000 puts and buying 1 June 5000 put 71.5-(17.5×3). Remember those May puts can only go to zero, but could come back to bite us.   Debit 19  Best ? 30 posted in the comments. Credit 11

Trade 0.9

One strategy favoured by the co-founder here. We buy a spead and finance it by selling a much further OTM option. The aim is not to lose money, like a free lottery ticket.

Thus we buy the FTSE May put 5850– pay 55, sell the 5750 for 33.5. We now need 22 credit to pay for this- the 5650 strike is trading for 21. That’ll do.

Debit 0.5  Risk at  5550 Max profit 99.5.

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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