281 W/e 26Aug Jackson Hole, S&P Plunges

That Was The Week The FED Pivot Dream Died

In case our gentle readers are unaware, this is happening:  https://www.kansascityfed.org/research/jackson-hole-economic-symposium/  though I think it might be an idea to change the name as the implications are many and possibly quite inappropriate. It’s a get together of bankers and wise people and the views expressed are market movers. While stockmarkets claim to be based on long term views, the reactions to such events are often dramatic and immediate. A quick flick through charts looking at end Aug may in fact, show such moves, and it’s worth being aware. About that- do your own research! With regard to the underlying,https://www.thetechnicaltraders.com/are-the-us-markets-in-stage-4-of-the-excess-phase-peak-pattern/  I admire people who pore over charts and indicators and sometimes their diligence is really helpful.

Does history repeat itself? Comparisons are being drawn with the 70s when the UK was in a slump, though it seems everyone was poor back then. ’78/79 there was rampant inflation and strikes were seemingly everywhere. In other news it’s reckoned inflation is actually quite good for stockmarkets. A quick Google shows 1978 the market was up 2.65% 1979 up 4.35% 1980 27.07%  While we can only hope things are not too awful for others and do what we can to help out, we cannot change the economy. Feel bad about making profits? Donate to charities. Get a lttile revenge on the taxman!

Distraction Trades

ADA  $0.4398  The march lower seems to have resumed as the recent blip up and enthusiams for Crypto’s seems to have waned. Remember DOGE? How flippant and jolly it all was.

XRP $0.3349

DAX   2 wins +280  3 no entries

Legacy Trade 280 a piece of plagiarism and 281 getting directional

Following on from another of the manifold American options sites- the best ever options strategy this is a DEBIT diagonal. We are selling the near month 7300 put and buying the far(Oct) month 7250 put. So, if they were both in the same month, we’d had a simple long put spread. What could go wrong? We are paying up for this 50-wide spread 109 minus 51= 58. Time decay(Theta) works for us, and as you will see it is Vega sensitive but Deltas don’t make sense due to the timeframes. We monitor this as it needs to run, but it might be rubbish if the FTSE carries on like the ‘drunken sailor’ it has been of late. Here’s the skinny( haven’t heard that for decades)

Now 67 and 127.5  As we said a slow burner given the Sept expiry is still 3 weeks hence.

Trade 281 Down Time?

We may need to get some potential  downside trades, so what’s to do?

Interesting action between the US and UK markets but you get the idea. So, is the drop overdone? There’s a big up bar at end of day, and we know of a strategy that buys at the close and sells at the open, profitably long term. The reverse of that loses money-who knew? More to the point who even does that?

Here’s our trade, a large butterfly buying the Sept 7350 put, selling 2 7150 puts and buying one 6950 put.  Those prices: 81.5,38,19  gives us 100.5- (38×2) =76 thus: 24.5  Risk is limited to premium paid. However we will do this with a twist, and do some adjustments on the way so it’s not totally boring. These may be mid-week and we’ll try to keep you posted.