That Was The Week Ending 27th April

Back Up To The Ceiling

Well the eagerly awaited drop and subsequent hike in volatility didn’t happen. Our graphic shows how the FTSE reacted to the suddenly cheap £. So bad news makes the UK pound lose value but makes the market go up? Yup. FTSE is comprised of companies that make money all over the world. Business thrives with a cheaper pound against the dollar . We export stuff for less in forex.

So, How Did Trades Do?

We had previously and often expressd our disdain for naked options. Our trade 76 was a loser, and frankly it would have been closed out for a small loss by Wednesday(loss of 1). Traders can find it difficult to morph, but you could have paid 16 for a 7450/7500 call spread. You then have  a call ratio spread with risk at 7550, for a further cost of 0. How? We keep the long 7000 put and sell 2 of the 6900 puts for 8×2=16. I don’t mind this trade. The calls can get ugly but we can still morph with plenty of legroom with another put strategy. All will continue to be revealed.

Are We Headed For A New High?

Well, what is moving the market? I think we seem to have separated from the US for a while now. Our take on Inflation, interest rates, unemployment- they always seem to work counter to one’s intuition. Maybe a Royal baby gave the FTSE a shot in the arm!

I Will Never Make Predictions

OK we need to have some sort of a belief or view about the market. Thus it might look high low or somewhere in the middle of its previous range. So, I think it has a way to go, but I’ll be looking to trade the downside. That’s just me and my bias. My best friends are all puts!

 

 

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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