That Was The Final Week
As expected nothing much happened and we avoid entering new trades when volumes are light. We don’t like VIX here and volatility still seems unrelated to the state of the markets. Doubtless our precious Footsie caught people’s eyes as it came through 2022 more or less flat. Risks for 2023 are self evident. Conflict, inflation,recession, division and the climate emergency. We think of those who are struggling to make ends meet and being quietly charitable is our way. Our economy cannot be fixed by a few well meaning outsiders, like us. Hats off to those who take up the mantle of political life. Except the despots and self proclaimed ‘superheroes’.
Our hopes for the new year. Simply that more people become financially literate and if they have no interest in options, at least they have a basic understanding. Options move markets. So, we’d like to see options more easily traded perhaps online, like our jaunty chums in the US. The ultimate fantasy is free live options data, but they are not going to step off the gravy train. That’s why we are known as Treasure Island, hapless consumers that we are, we pay top dollar plus 10%!
Vol as a Forecaster
We always kick off with VIX and FTSE as on a weekly basis there is a reasonable correlation. Trading with a weather eye on volatility is what helps to make us profitable. So, make your own mind up about the annual correlation here:
Nothing Doing with Distraction Trades.
Reflections on a Great Year’s Trading
So, for this trader some more boundaries pushed and thanks to this site, some more innovation in my own trading. Yes, some of the trades have real cash money behind them. A perennial nuisance has become rather a bore, the taxman. In the spirit of legally avoiding tax, yours truly has made a gentle foray into buying whisky casks. As this is considered a ‘wasting asset’ it is not liable to capital gains tax. Options, for us, remain the one true way to consistent manageable risk and reward, however. We leave you with this thought:
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
Now: 54.5 8.5 and 3.5 =41 Not much going on yet, but it can run to expiry and surprise us, with zero risk
