That Was The Week- an Oddity
Four, yes count them, 4,consecutive down days. So, this makes my running count for 2021 to be 75 up days against 63 down days. Eagle eyed readers will know there is always a skew to the number of up days. However in ± 250 trading days each year the skew used to be 51% to the upside. So if anyone would like to comment or provide updated stats, that’d be welcomed. Then we always recommend using a quality and independent financial advisor, there is a financial advisor from Kent who we have used a lot and they are superb so well worth contacting if you need the best quality financial advice.
We saw some curious market action and the FTSE not moving so much in lock step with the US. Frankly it’s getting hard to know where we are going regarding Covid and the much touted freedom day just as the Health Secreatry gets infected. You could make it up but you’d be hard pressed to find a more incompetent yet oddly popular bunch than Bojo’s bumbling boobies!
A Little Gold Mine
This was overlooked by yours truly but the expression may be a little out of step with reality. An interesting little series but given the investment required, what do you think we’d be doing with that cash? Check out the last 3 trades for example. Or any of the last 226. While such ventures are noble and, of course it’s a real contribution to the wider economy, we’d be trading options. Anyway, it’s worth a look. https://www.bbc.co.uk/programmes/m000t3lq
This popped into my inbox- https://chartexperts.com/three-key-indicators-for-trading-credit-spreads/
Indicators…… each to their own but as always, it’s good to see what’s out there. Of course all these emails document how brilliant they are but then you have to think they’s have all the world’s money by now, surely?
Distractions Trades and Crypto Angst
DAX– One trade, a short on Thursday rest of the week a wash.
Crypto and our XRP now $0.58
Legacy Trades ALL Wins! 227 A new expiry cycle
Trade 224 Expiry :July, a 4 by 1
This is NOT, repeat NOT for the faint-hearted. We are selling 4(four) 6500 puts and buying only 1 solitary 7000 put. Those prices: 29×4, 120.5. Debit 4.5 .
The max we could have got 2 weeks ago was 12.5, 4.5 cost, so we’d have made 8.
I’d then said: we will keep it going up to expiry in case there is a big plummet, but common sense says take the 18, when it was opened for a debit of 4.5.
Common sense? Nah! that Thursday’s big drop gave us 53.5 and (3.5 x4) =39.5 We paid 4.5,remember so we made 35. WIN!
Trade 225 And That Friday Vol Crush
The forlorn hope this, but it’s an iron butterfly- selling the body, buying the wings. However this was new ground using the ’25’ strikes our centre is 7125 with wings at 7225(calls) and 7025(puts) Risk is 100 minus Premium taken in. (58+68=126) – (17.5+35=52.5). Thus we took in 73.5. We know that our risk is 26.5. Max profit 73.5…….
Last week: it’s 64.5 to close out and frankly unless expiry lands precisely on 7125, it’s anyone’s guess. We’d possibly close out for tiny profit 9 (Running to expiry for fun)
However on Wednesday 14th, we saw these prices: 7125 call=13.5, put=39.5. Our wings had a value of 0.5 for the 7225 call and 7.5 for the 7075 put. This gives us 53-8= 45. We initially collected 73.5. so our win is 28.5. Margin was 100 remember, so a great return*, and of course a WIN!
*better than 50 years of returns in a cash ISA!
Trade226
We went big potatoes with a very spicy calendar.
We sold 3x 7175 July calls (20×3)=60 and we bought one Aug 7175 call for 68.5 A debit of 8.5 Thus we were taking a fair risk on not having a big rise. Time and again we’ve seen FTSE wiffle around at these levels. However we said wecould do some interesting adjustments so it’s racy, it’s fun and it may be a big winner.
What IS it about Wednesday? Our July calls 7175 were 2.5(x3) and our Aug 7175 call was 48.5. Minus what we paid 8.5
Niiiiiice! Big WIN 40
Trade 227
The Thursday(Aug) strangle 7100 call 6700 put -opened for 51+53 and on Friday…… 47.5+56. I think we can call it a draw!
227 What is it with Calls?
We have done so well with big ratio spreads with puts, and latterly calls. However the difference in skew is interesting. We are going for a bonkers 4×1 with calls and puts Selling 4 further out options as we buy nearer the money, but as can be seen the put strategy gives us much more wiggle room. There’s a lot of call open interest at 7200 and 7300 -we have big risk at around 7200, but we have the put side to tinker with.
Thus we are buying the 6950 call and 7000 put, and selling 4×7150 calls and 4×6500 puts. Have fun with the numbers- what’s the overall delta position?
Please note there was a famous fund that crashed doing precisley this sort of trade but you have to question their exit methods-some people have none!
