That Was The Week ending 30March

 FTSE Madness

A curious week with Thursday’s action seeing the ‘F’ drop 50 points at the end of the day. Cold feet ahead of the long break?

Overall up just under 2% and volatility doing a few twists and turns. Again this does not seem reflected in options prices that we look at. The index has for the quarter lost a dramatic 8.2%-from an open in January of 7688. Where did the time go?

Ups and Downs Make a Market

Unless we can buy high and sell low-oh wait….. What I mean is that market action makes trading easier. 2017 was ludicrous for volatility, and made trading really hard. When I look back at my last losing year of 2010 I have to ponder how I lost money when there were tradeable moves. 2017 had about 3 such moves and I think I got 1 out of 3, missing trades due to lack of foresight-ie forgetting to leave a limit order with the broker.

How are The Trades doing?

70 and 71 did very little but if we’d sat with 71 we’d be nursing losses, though unlikely to get into trouble as the short puts at 6900 may be ok. Trade 72? Short strangle,looking a little cranky,so what can we do? Check out Trade 73 and we’ll tell ya.

What Can We Bring to the Party This week?

Double digit volatility-so nice to see. Back in the early noughties I was trading puts with 28% vol and calls with a stunning 18%. Those are not the sort of numbers we see today but well we might. It is paying attention to volatility that means everything in options trading . The dumb money bought stock on low VIX-that’s like building a brick wall expecting bad weather.When you are a nomad. You need mobility, not the gut wrench of a 10% drop and ‘unsellable’ stock. When we are wrong vol can still work in our favour.

 

 

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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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  1. Terrapin Trader says:

    this is a shocker- on P/E metric FTSE is hugely undervalued -extraordinary
    see:https://markets.ft.com/data/indices/tearsheet/summary?s=UKX.P:FSI

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