That was the Week the FTSE Finally Got Real!
I have seen the market do every dumb thing imaginable, while my own performance came a close second. However the stockmarket rise with the US in a bear market runs counter to most reasoning. However it may be that QT* is actually a thing in the US, and interest rates are better matched to the current inflation. BofE is yet to wake up and smell the skinny Latte. In my humble opinion.
So, quite possibly the UK is not the shambles we all think of it and maybe FTSE100 companies can justify the prices. We need to see proper interest rates first, which brings us to:
Your intrepid trader picked this up recently via the……… public library. So, libraries, yes, they do still exist for those books you’d rather not buy. This was a ‘skim read’ due to circumstances and utter failure to learn to speed read. (I have that book too but it took ages…). However the messages seemed to come through loud and clear. Low, unnatural interest rates do real damage. Banks should not have been bailed out, according to some, for the 2008 debacle, and economists have profound views half of which are wrong! Incidentally if you have not seen my favourite trading film ‘The Big Short’ it is highly educational. Like the ‘Wolf of Wall Street’ with some subtlety. With the ‘Price of Time’ again I was left with the old Bagehot adage: John Bull can stand many things but he cannot stand 2%.
*QT quantative tightening- we have no real insights, and it’s unclear how much of that potent narcotic is still in the system.
Bloomberg -Increasingly Entering my World, with Thanks
This popped into the inbox:
“Turns out, taking leveraged flyers on meme stocks mentioned on Reddit’s WallStreetBets trading forum is harder than it looks. New research from economists at the London Business School found that mom-and-pop day traders managed to lose more than $1 billion during the bull market. The bill climbs to $5 billion when the cost of doing business with market-makers is factored in.
The study, “Retail Trading in Options and the Rise of the Big Three Wholesalers,” shines considerable light on the fate of individual investors who became obsessed with side bets on the stock market in the era of zero-commission trading. Spurred by Reddit posts and urged on by Twitter and TikTok influencers, daily volume in bullish contracts set record after record as stuck-at-home tinkerers flocked to the contracts in an effort to juice up returns.”
With 0DTE options and long-lend (yes really-lending against stock positions) We are at the casino where the only winner is the exchange. Any chance low interest rates drew in these folk?
Distraction Trades
ADA $0.365
XRP $0.378 Cryptos looking unfavoured again as our two swap price order again.
DAX Incredibly 4 wins one loser(-30). Those wins 610. Friday never looked back, 300 points all the way.
I have yet to dedicate time and energy to other instruments, but this popped into my emails http://Do you want to get free shares worth up to £100? Join Trading 212 Invest with my link, and we will both get free shares.
https://www.trading212.com/invite/GbtWkR3U
This is not a scam I have had an account for several years, but it’s for shares,(fractional and whole) CFDs,ETFs etc. It is not a recommendation, however you can use a demo account which is a huge help for newbies. I cannot be responsible for anyone else’s trading, but you can even trade real money with a few £.
Legacy Trades and 305
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.
This week: the 8100 call now 14.5 and the 7475 put now 23 =37.5 our 59 credit now reduced by 36%
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
This week: Remember this? (Above)
Where are we now? 
So, no change- they say it’s a buy on a monthly basis,on a TA basis.
How are we doing? 8100put is 242 ouch! However some mitigation from our call ratio spread which is now 144.5- (57.5×2)= 29.5 in credit. Of course a few weeks’ life in this yet, though it looks ugly. No obvious adjustments yet.
Trade 305 30 days to Expiry When Theta is our Ally
We are again in the sweet spot of theta, the edge that makes this idiot look moderately impressive! We therefore need to sell more options than we buy. Let’s get spicy with an iron condor. We BUY the body and sell the wings. Here, our body is the 7900 straddle, the wings: the 8000 call and 7750 put. BUT we do a ratio, by selling twice as many wings. This means we pay 82 and 110 for the body, and we receive(x2) 38 and 59.5 for the wings= 195. This gives us a tiny credit of 3. Risk is at 7600 and 8100
