That Was The Week Somebody Got Money For Xmas
Ugh! Yours truly has been wrongfooted again as the FTSE melted up. We are concerned this marks a total disconnect with the real economy. FTSE is of course, not the real economy and is global in nature but UK based companies are enduring strikes, wage demands, energy price hikes, and a national crisis. Workers have for so long subsidised their employers, and the stockmarket is testament to this. Companies have been shovelling cash into buying their own shares. Board rooms have enjoyed the gravy train of zero wage growth for decades. Politics aside, this is ugly! Why?
History shows that buying when the P/E ratio is at a high far above its median before it went nuts after Liz Truss was ousted, is a bad idea. So, we’d love to know what it means. Buyers seem to be happy to pay top dollar, but maybe expectations are irrelevant. Funds that are long only have no choice, it’s buy and hope, rinse and repeat. FTSE navigated the turbulent 2022 robustly, and it has been good for us. 2023 is hideous so far!
Short Week and Apologies
So, hopefully there will be better things to report on next week (A 3% drop would be nice!)
Distraction Trades
Honestly, nothing doing. Dax was a nothing week 3 no entries 1 break even(+30). The search for ‘better’ instruments is ongoing.
Trade 297 The Widest Butterfly in The Village
So as above we now have banked 4.5 and we will chart the progress of the butterfly. A 400 point wide spread butterfly (7400/7000/6600) we own for free has to make ££££more. Anyone NOT noticing the power of options yet?
Those prices were: 67.5 13.5 and 6 So our butterfly is worth 67.5+6 minus 13.5×2= 46.5
Was: 54.5 8.5 and 3.5 =41
Now? Almost zero. However we run it as there is nothing to lose.
Trade 298 Is This a New Bull or simply BS?
Calls -our least favourite options! So- let’s try a ratio spread 7600/7700 132.5 and 66.5 x2=133 We are buying one 7600 call and selling two 7700 calls which would benefit from a drop as well as theta working for us, and it ‘only’ costs margin. risk at 7800. What could go wrong?
