FTSE This Week – UP ! : Monday- Friday a rise of 29 . A tiny, odds beating variation of 1% or, 110 point range- very hard to trade intra day, unles you are an algo. Just buy the dips and keep on buying. With a big enough wallet you will win.
Daily Volatility: 8.4-11.7 from about 9.67-11.89
FTSE cash index – open 7381 high 7461 low 7350 close 7410
FTSE volatility-10.7-9.8 (last week: 10.8 close 10.71)
What Trades Would Have Done well, this week?
This was a slow grind of theta and all you can do is sell premium. But, you need to have something in the background to protect. You could buy a call or put spread and then sell further out options. You need to be very aware of where your risk is. Nothing seems to be able to derail this market, however. What does this mean? Will there be a return to normal volatility? You have to hope so.
SUMMARY
The Chart shows the variation in VIX versus VFTSE. And while VIX is based on the S&P 500 you would logically expect it to be less volatile. In the same way as things always smooth out when there are more data points. (FTSE 100 v S&P500)
So what is going on here? We have such factors as currency, interest rates, inflation, economic ‘growth’, debt and savings. All of this though pales in comparison to QE. We are never sure what is going on with central banks.
Unusually the underlying market is the problem. Options prices are reactive and when there is so little movement pricing gets hammered. Many are scratching around for an opportunity.
The Rich Get richer
What a peachy trade! Borrow at almost 0% and buy your own stock. Boost your stock by 10-20% and the world is a wonderful place. Some companies are also awash with cash. Tax avoidance, smarter trading.Win,Win. Buy Buy.
