That Was The Week FTSE Up,VIX Dooooown
Another week and more ‘all time highs’ for US markets. Our own capricious little fickle madame has now risen for the last 3 weeks. HSBC makes $5.1billion, hikes junior bankers wages and offers Brits £140 to open an account. Weirdly they have stopped their customers sending money to Binance, over regulators concerns. I’m oft reminded-there’s no bull market without the banks. Tough to bet against HSBC but the market is largely unimpressed. China remains the quasi pariah state.
Covid- Some Stats About the Vax
The esteemed John Mauldin’s weekly missive is well worth a look for the stats alone about vaccinations and real world risks, not all doom and gloom.
https://www.mauldineconomics.com/frontlinethoughts/covid-consumer-headache
Where Are We Now With Booming Markets and Record GDP?
An interesting graphic from CME and another informative web seminar this week, which suggests the panic is over, the Covid news is no longer news. This is a follow on from J Mauldin’s analogy of the fire engines that remain at the scene of a disaster, when the damage is over. Burgeoning debts and consumer protections remain and still need to be addressed. We know what happens when the music stops. This week the music’s not stopping and non farm payrolls give no cause for alarm( or even dissent)
Distraction Trades -Are We underwater?
DAX one loser one break even, two unclear non-entries, one small win. Horrible week
XRP now $.7840 edging towards my break even price- Yay!
Legacy Trades 229 Looking for a Magical Entry and 230
228 We Might Get Conservative – oh wait. We’re not Political
Chart watchers may differ but the FTSE, to this idiot looks weak. Covid seems to be finding new ways to make mischief and the market is still toppy. FT quotes PER19.9%
Here’s a dabble with a pitchfork-sell a deep ITM call and 3xputs at the same strike
We haven’t tried this in a while and frankly the put vol is pathetic at 16%. Theta is massive but our overall deltas are curiously 0.20. Margin will be brutal but this might give us a quick reward, while risk is modest though it looks a little crazy.
Best we could do? On Wednesday 21st July the trade made 7!
A miserable loser but only losing 7 as of this week – it runs
Trade 229 The Open Interest Gambit
Open interest-we all know what it is, right? As it implies it is the place where the most options are currently live. So for us this will be the Aug 7200 call weighing in at OI = 15,225 price 8.5 and the Aug 6700 put OI=9,619 and price 31. Purely under the rationale that the most options sold are at these strikes, we will concoct a ratio strangle. We sell 3xcalls and 1xput as the premiums are so out of whack. So our credit is 3×8.5 plus 31 = 56.5
STOP! Had we placed this on Thursday 29th we would have received 14 for calls and 24 for puts on the basis that Vol shrinks on a Friday,80% of the time. However, this was not the case this week does it still augur well for a nice profit? We’ll watch both scenarios but: this is not a well thought out trade, it’s food for thought. (We’d sell 2 calls for each put.)
Now 8 and 10.5(x3) A comfortable WIN but not the big bucks, and our first version made more.
This is definitely worthy of more research but the nature of the data to hand is not helpful. A simple random sample gives us a few wins
Trade 230 Calendar Time?
Well it’s not a happy time and if one expected a Vol explosion we’d do a reverse calendar. However we ‘seem’ to be in a tight range, so we are selling:
Aug 6850 puts x3,(13.5) Aug7150 calls(24) x3 and BUYING Sep 6850 put for 61, Sep 7150 call for 71.
Even with this brutal ratio play we are still placing a debit trade- a cost of 19.5. Hmmm not happy
Theta is our friend -everything else is against us. Do the maths!
