That Was The Week Ending 01June

A Real Nothing Despite The Euro Crazy

Italy’s shenanigans saw a big drop on Tuesday  – but of course the money soon piled back in. Trump tariffs also threatened to destabilise markets. FTSE reacted little in the end as we saw a drop of about 30 points. Intra day moves made trading possible but the rabid rise almost after market on Wednesday was bizarre. When the market makes such low volume up moves, I think it just makes the herd follow, buying in on the basis of ‘fear of missing out’.

The Old Metrics

Non farm payrolls are now a dinosaur- years ago we waited with bated breath until 1.30 our time in the Greenspan days and then the markets would go nuts. Trump took the wind out of the BLS’s sails this time too. Unemployment, more importantly, is back at 2000 levels. Wages are on the rise, blue skies ahead, it seems. Can we trade this? The market often moves in unexpected ways but being a bear in a bull market is a lonely pastime. We therefore need to keep an open mind and  adjust when the market moves. Options allow us that luxury, with shares you are ‘one the bus’ or ‘off the bus’.

Testing Testing One Two

I receive a cornucopia of emails, like most of us, and recently there was yet another trading system from the US of A. The purveyor had a system involving buying call spreads in stocks that are expected to stay within a set range.  He makes the  premise that a 50 point wide spread could be bought for say $300 or so. Example stock XYZ trades at $70   you buy a 55/60 call spread for less than the $500 (5 point) difference. Ideally for about $350. The stock staying above $60 means that the spread will be worth 5,making $150 0n the $350 cost. Nice. But there in no way in hell this will work on any UK shares. So another one with great intentions proves worthless to us poor souls in the UK. It’s why we trade the index.

Filed Under: InformativeStrategies

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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