That Was The Week VIX Plummets FTSE Goes Mental Covid Has a New Wave in the US and EU
So, you just have to love the financial press and the drivel trotted out frothing about growth yadda yadda. The staggering damage done to the economy, to the national and corporate debt is clearly not in their purview. Of course they don’t get the ‘free lunches’ by being realistic. Stock markets are hoovering up the free money of course but that is not reflected in the real economy. The good news is …we don’t trade the real economy, the bad news- the punchbowl is not inexhaustible. Someone sees trouble ahead https://www.bloomberg.com/news/articles/2021-04-08/giant-vix-options-trades-bet-that-stock-market-calm-won-t-last
Hard to understand why anyone would buy naked calls…. except on VIX. Should the trade work out, the vol will explode for calls and puts, unlike a conventional underlying, when it rises. However I’d be inclined to look at theta and maybe there are some sold calls in other expiries,to mitigate decay.
Distraction Trades
DOGEGBP is on the rise, currently 0.046 this idiot meant to buy in at 0.038 just to confirm my incompetence. See the link: https://www.binance.com/en/trade/DOGE_GBP?layout=basic
This adds more integrity to the weekly options trades. Proof that even an idiot can make money with options strategies. That is not an invitation to copy solely on the basis of your own silliness!
DAX – again lean times as entries proved elusive -but we know in the long haul it does ok with small losses, and good gains. A couple of break evens, minor gains.
Webinars -a Cornucopia This Week
Three days of presentations and while it is folly to dismiss out of hand some of the methods, and concepts, this trader was massively disappointed.
The above was not helpful along with various offerings from other chartists. What is really sad is that NONE of the presentations I saw ( I may have missed a fair few) actually stepped up to give a trade for the next day or week. Cojones…… there were none!
One presenter showed a chart that used the 200 day ema. Anyone who uses charts knows that this can be a once in a decade event as BP shows, staying under the 200 ema from Feb 2019-Jan 2021. That’s the broken clock trade, and the charts used were very very far from current. It is also disappointing that they always tell you about ‘Chuck’ a retired dentist whose account has trebled in the last year, along with a handful of other traders. Nobody admits they had 1,000 people sign up and 980 failed. High time these sort of stats were made mandatory.(IG Index says 71% of retail accounts lose money). I do not wish to discredit anyone and some may well be doing great things for their subscribers. Trading is about having an edge. Options can give you that edge, you can win even when you’re wrong.
Legacy Trades and The New Expiry Month
Trade 213 Call of The Wild- Terrible Pun!
This was 26th March- April expiry, we look at selling 2x April 6900 calls and buying 1xMay 6950 call for a debit 5 (46- (20.5×2) )
This would get ugly at 7000
So, last week those prices, 12.5×2 37.5 = 12.5 credit (paid 5)
This week- 45.5×2 and 82.5 So…. now debit 8.5 but we await expiry 16th april
Trade 214 Iron Condor Credibility
Hope you recall the graphic (6500/6450 put spread and 6950/7000 call spread) -both sides give us a credit of 10– but would you risk 30 to get 20 with 49 days to go?
Now 30, 26 = 4 for puts and 82.5 and 61.5 =21 for calls
We will monitor that but let’s go crazy with a variant of the ratio calendar: We will sell 3, yes three 6750 April calls and buy 2 May 6750 calls. Nuts in May? Probably but we like to put things out there sometimes. Here are the numbers 108.5 x2 =217 minus 58×3 = 174, debit 43.
204.5 x2 169.5 x3 =508.5 against 409. We paid 43 to get into this puppy and now it is biting us. Well FTSE did melt up 3% -that happens maybe 2-3 times a year.In normal years, not 2020. Unlucky.
This is now very ugly but we could simply sell calls against our long May 6750 calls
No promises, it’s a fun trade. ( So…. that’s no excuse! )
Trade215 Low Vix -how to deal with it- April options
How about a very dicey theta play? This is a debit trade and comprises 6900/6950 call ratio spread( 45.5, 21.5×2 = 2.5) and 6900/6800 put ratio spread (33.5, 11.5×2 =10.5) Risk is at 7000 and 6700. Our time horizon is thus limited to <5 trading days. Nimble is the word for any action needed.
