That Was the Week Ending 14th July

Tiny Range. Low Volatility

FTSE cash index-      7350 open  close 7378  high 7439 low 7305  (last week 7312 open, close 7350 high 7386,low 7303 )

FTSE volatility-      open 11.77 close 9.64  (last week  open 13.03-11.77 close)

What Trades Would Have Done well?

Anything utilising theta (Time decay) Selling high(?) volatility. We had a brief period of 4 down days followed by an up. Wednesday’s big up was an easy short.

Market Volatility

from     8.58 to 11.95  (last week 10.10 – 12.46 )   again-  a suitable environment to buy cheap, and small. There may be losses, so keep them minimal. Try a vega play-something that will benefit from a low to high volatility environment.

News

The FED’s Janet Yellen, like her predecessors Bernanke and Greenspan, is a market mover. The £ is in a different range to the greenback these days. I see a disconnect with the US compared to the previous 2 decades. Yellen’s words soothed the market. That IS her role.

 

Summary

Last week’s trade- a cheap put ratio spread-running to expiry. It was a debit trade at 1.5,and it did trade briefly for 4 during the week. It’s a nothing trade really, so if it’s a loss we don’t mind. Very many money managers are complaining they cannot make money, as funds pile into index tracking ETPs. (Exchange traded products) These have tiny fees and are attractive as the ‘dumb money’ knows only one trick. Buy. Market gets more expensive. Buy.

http://www.multpl.com/shiller-pe/

Make up your own minds-is the market cheap? Did share buybacks,based on cheap/free debt, skew earnings?

Filed Under: FeaturedInformative

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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