That Was The Week- Quelle Surprise, They Pumped it up to 8000.
Short rant: Year to date we have seen 23 UP days 11 down days. In a normal year we expect to see 51% up days, though that is getting more skewed each year. I was not surprised as much as appalled by this continued upside, which seems to be affecting so many markets, despite all the media nonsense. FTSE has risen 16% in less than 4 months. Against rising interest rates, against raging inflation. Against a shrinking economy. Wise heads are deeply concerned, for example https://youtu.be/5m75wFQiQ4c Frankly I have no trust in the UK finance sector, but that is just me. I am not the market, or indeed qualified to do anything other than rant!
This new level means retail will be ploughing in, though they are only 5% of the participants. Corporations have been buying their own stock,and when you get free money, why not? To quote Bagehot: John Bull can stand a great deal but he cannot stand 2%. It has skewed things to such extremes, especially property prices, some commodity inflation but now it has filtered through to every facet of life. China’s return to productivity at the cost of so many lives is being heralded as such great news.
Conspiracy?
Having scoured the internet I can find no other source for FTSE100 P/E Ratio. FTSE has risen ergo the p/e should increase, as earnings cannot magically change, however: https://markets.ft.com/data/indices/tearsheet/summary?s=UKX.P:FSI It now seems that bereft of any other data all we have is something that makes absolutely no sense. Then there’s this about FTSE from Investing.com 
We have seen only one down day marginally more than 1% . I am missing something as I cannot accept this is the sunlit uplands of Brexit Britain! Any thoughts, please let us know at [email protected]
Distraction Trades
ADA $0.4075
XRP $0.39687 So, Cardano once again assumes the higher price or is this just trivia?
DAX 3 no entries one b/e +30 and one win +60 This has become tedious! Inspiration for new instrument needed.
Legacy Trades and 304
301 That Calendar Theme
In almost oppostion to trade 300 we have calendar ratio strangles -so we sell 2x Feb options and buy the same strikes in March, once. How much trouble can we get into? We are selling the Feb 7500 put 18 x2, and the 7800 call for 58×2. We are buying the Mar 7500 put for 56 and the 7800 call for 91. So the numbers: 36+116= 152 minus our cost 56+91= 147, giving us a credit of 5.
Here’s a link to the options creator which shows risk <7400 and >7600 max profit 200 https://optioncreator.com/st2h4dn
Those prices for March 20 and 215= 235. However the 7800 Feb calls expired at 200 x2= 400. We are 165(-5 credit) =160 underwater. Big Loss!
Should we take this lying down or adjust and try to get some balance back in the Force? So, what could we do?
We need to get back 160 and we have a clean sheet and new expiry. This now becomes Trade 304
302 Dealing with A New Paradigm
It’s 100% certain that the market will be 5% below the all time high. Trouble is we don’t know when. It’s also possible it goes up each week and we don’t know if that trend will end any time soon. There’s not enough premium in the Feb options, so what to do? A cheap trade that most likely will do very little. We will try a put ratio spread buying a Feb 7850,(39.5) and selling 2x7750s (19.5). Gives us a debit of 0.5 and max profit therefore of 99.5. Risk at 7650.
Hard to get inspired in this insipid volatility, but if there’s a big move down, this thing will explode against us, so we need to be nimble.
Those prices now: 37 and 14 x2 = 9 in profit We’d take this meagre WIN
That was the best we could do. Tiny WIN
303 A Whole New Expiry, An Old Strategy
The regulars will spot this right away, and it’s maybe a cheap shot. Yes, it’s a strangle. We are selling Σ1 put and call. Tasty Traders will know this as a 1 standard deviation 16 delta strangle. Risk is unlimited on both sides, sort of. But the risk is at 8159 and 7416. We run these to 50% profit and if it still looks ok we run to expiry. Theta is ok but while vol is ok for the put that makes the call a very low vol item.
Those prices now: 37 for the call and 19 for the 7475 put.
Trade 304 Starting with a Debit of 160
We are told there’s no downside hourly daily or monthly. Let’s put that to the test. We will sell for 173 the March 8100 put. As a little insurance we will also, have a call ratio spread 7800/7950 for cost of 215- 107.5×2 = 0
This is breaking some new ground and we will be in a bit of a pickle if the FTSE takes off upside again, but we have taken in the big premium from the 8100 put. This may need some adjustment but if we don’t break stuff, to quote Mr Musk, we’re not trying hard enough
