That Was The Week FTSE Ground Higher, Vix Was Murdered!
While the drop in VIX seems dramatic it has had bigger drops, but also this year it had one rise of 50%. Have a look: https://uk.investing.com/indices/volatility-s-p-500-historical-data
This is why options can be so powerful, so long as we have some semblance of control and risk awareness. I would agree that such powerful moves may also be seen in the crypto world, but then people have no control there. So, we would expect the VIX after a period of successive lows, to make a bit of a rise. In other news, yours truly attended the London IX Investor show on Friday. So, while there is a sales motive behind these, you can always learn something.
There were some interesting guest speakers including one Tom Hougaard https://tradertom.com . It is as rare as hens’ teeth to see a trader show his losing trades. And recent ones too. And…… with FTSE. So if you fancy some warts and all trading tips, he’s your guy. Also, he has a new book out. He’s been around for many years and has some little gems to impart. So please take a look at the free stuff. You could even buy something!
Some Clarity About Our Index
Newbies will often be aware of FTSE but do not understand the nuts and bolts as a trading vehicle. They just know it’s rammed with overpaid CEOs. Allegedly. Anyway our friends at the ice.com do have an informative site not just for delayed options prices, and it’s worth a look:
https://www.ice.com/products/38716770/FTSE-100-Index-Options
While us older traders know, and price options in pennies, the mulitplier actually means that it’s £10 a point of course. So like any subject-music for example, you have to learn the language. You then become part of a weird cult and will talk in such terms as the Greeks, IV, spreads, verticals, ratios open and closed positions etc.
Distraction Trades
ADA $0.3167
XRP $0.40139
DAX 3 no entries 2 wins total 180. All in all this simple entry method keeps on the profitable side but it’s painful and joyless. Entry criteria are strict but with some leeway as the perfect set up only happens once in a while- like on Tuesday: 
As you can see the signal is a death cross- so, go short
Trade 293 Dec Expiry, 294 something especially dumb- a 3 by 1
Pity we could not find a nice calendar trade to give us some long options but we have a clean sheet.
We can be long and short here with a call ratio spread for a ha’penny. We buy the Dec 7500 call for 58.5 and sell 2 of the 7600 calls for 29(x2)= 58
In anticipation of the Santa rally -we could make the max 100 with FTSE at 7600, we have risk at 7700. We have NO downside risk
Now 88 and 42.5 x2, gives us a credit of 3 – let’s not get carried away.
Trade 294 These Animals Keep Buying the FTSE!
OK so it seems there’s a battle at the top around 7500 and while our call position makes ££££ around there, if it drops, it’d be nice to cover that event too. We need to own some puts. Let’s buy a 7500 put and find a way to pay for it. Let’s go high risk and sell 3 puts to buy one. We will sell the 7250 strike put x3. So we have to pay 88 for the 7500 put and we collect 25.5×3. Our debit therefore is 11.5 with max profit 250. Where’s our risk?
Can you see at 7250 we make 250, but at 7150 the short puts are worth 300 against our now, 350. So we need to ‘get out of Dodge’ if this market gets bearish big time. Break even then is at 7125 So in combination we have these risks: for trade 293 at 7700, and 7125 from trade 294 with potentially big gains in between.
Remember: If you have any questions about the trades here, please email us at: [email protected]
