That Was The Week US and EU Covid Cases Rise, something Odd Happens to Smash The Market Up
A Sleepy Friday afternoon, FTSE drifting off from the opening gap high. Funny how everyone decided to buy at precisely the same time. My own naivety and lack of inside knowledge makes this inexplicable in my world. Though I think I’d make a good pit boss at a Casino, spotting these curious bouts of ‘co-ordinated optimism’. However it does not matter why, it matters what, and the markets decided to rally. So, presumably there’s just the one big ‘buy‘ button in an oak pannelled office in an investment bank. Cynicism,sure, but I feel no need to apologise!
Education for Free? Whatever Next?
An inspiring webinar from https://www.cboe.com/education
The strategy was simply selling a .48 delta put each month, 30 days from expiry, run to expiry. Rinse and repeat. Scary? Yup. Does it make a profit? Yup. Of course it’s not that simple….. It’s that simple! https://www.investing.com/analysis/the-cboe-s-p-500-putwrite-index-(put):-an-explanation-and-evaluation-200118943
The explanation and the fact that this even has its own index(symbol PUT) means it must surely have merit. We all know that a short put mirrors a covered call and curiously losses are lessened with this strategy. Would you do it? Margin might get a little crazy(they use T bills) and of course 2020 was such a roller coaster, it’s not a good idea for us retail players it seems. Without due consideration of volatility it could take years just to get your money back, though you could get lucky as in the last 6 months. I believe CBOE may have links to the slide show of this fun presentation. Register, enjoy. If you invest in the stock market, you probably already know that its’ yielded some pretty grim statistics over the past year, but in this link you can learn all what you need to know about this topic.
Distraction Trades
Ugh! A short on DAX on Tuesday, the rest of the week gave us no entries. So, crypto? How we doing with the mythical DOGEGBP trade-based on going long at 38? https://www.binance.com/en/trade/DOGE_GBP?layout=basic
So -pretty much what you’d expect for such a bonkers idea!
212 April Expiry -Movin’ On
2 successive losers- perfectly acceptable losses : ‘the rent on the shop’. We inform, that is our sole aim.
Nothing leaps off the page so we will now go with Liz and Jennys’ Jade Lizard. We sell a call spread and a put, but the premium taken in must equal the upside risk. Thus we sell the 6750/6800 call spread( 86-63.5) =22.5 and the 6300 put= 25.5 Total credit 48
This week 6750/6800 call spread 74.5-51= 23.5 6300 put 13.5 = 37 total. 11 in credit
Remember- Risk at 6252
Trade 213 Call of The Wild- Terrible Pun!
20 days to go to April expiry, we look at selling 2x April 6900 calls and buying 1xMay 6950 call for a debit 5 (46- (20.5×2) )
It’s a big theta play we are thus short gamma and delta, more or less neutral with vega but huge theta. This would get ugly at 7000
