314 W/e 28Apr Some Down Days, plus VIX & VIX9D

That Was The Week We Saw Down Days!

We reeled in disbelief as the FTSE recorded 4 consecutive, albeit tiny, down days. Annually we expect to see 53% up days, but until this week the skew was +23. It is now running at 51 up days 31 down days. Regular readers know we love those down days, and we thrive on volatility. So, while March saw a little spike in vol it soon drained away and we’ve had a bit of a vol drought. Oil companies are making monster profits while Facebook’s parent company Meta saw a major turn around. In November it was $88, whilst on Friday it closed at $240. MSFT up 28% YTD and so on. These are huge stocks that move the indexes. Recently it was brought to light that only about 8 stocks in the US accounted for all the major indexes upside.

In a week that saw a bizarre protest at the World Snooker championships for Stop Oil, Spain baked in 36º heat. One has to wonder while we take global warming as fact, is there a better way to do things? Assuming nuclear fusion is cracked and becomes viable, is that the answer? We will still be generating staggering amounts of heat by human activity. Yours truly suggests there is hope that the global population will supposedly peak by 2050 and decline thereafter. However the decline may not be by choice! Options may cease trading before that as AI makes clowns of us all, too! I’ll stick with the knitting.

Education- It Never Ends

Among the plethora of helpful emails -Traders Corner invited me( and probably some others) to a webinar and thankfully the options section was from one of our great educators, Larry McMillan. You can watch it here: https://youtu.be/d3EdNTm9BrY

On another note, people are apparently taking more note of the VIX9D. VIX index is based on 30 days while this is based on…….. you guessed it. 9. So yes it moves a little more, but is it any more notable than our trusty old Vix? You decide

Distraction Trades

ADA $0.403 zzzzzzzzzzzz

XRP$0.4803 Also zzzzzzzzzzzzz

DAX 2 break evens +30 3 no entries. Second most inactive week? More Zs?

Trade314 and a Tiny Win so Far with 313.

313 We Try to Break That Losing Streak( We did Warn Those Trades Might Get Ugly)

As you’re aware, this is not about bragging rights, it’s about learning.We have extensive runs of wins and statistically we were due a run of losers. It’s a ‘cheap’ market, with no expectation of a big drop. However, we can maybe find a trade that is not a horrible loser! We find a long put spread 7850/7750 and a way to pay for it with a 7600 put. This gave us 70-46= 24 the cost of the spread, and we sell the 7600 put for 27, giving us a credit of 3. Thus, the trade can make a max 100+3, and is safe all the way down to 7500. There is of course, no risk to the upside(makes a change!)

This week: 7850 put– 74 7750 put 44. the 7600 put 22.5. Gives us a little profit 30-22.5=7.5+ our 3 credit.Gives us 10.5 so far

Trade 314 -When There’s no Vol

This is one of those times when trade selection is limited by volatility. What we can do with options, is take advantage of time decay(Theta). We can sell options but vol means risk is heightened,and the upside may again be a problem. Unusual but practical, let’s go with a rare foray: naked. We can place a strangle with May options and 21 days to expiry. Frankly I just like the round numbers, so this may not go well! We sell both of these as it seems that they are at strong support and resistance. 8000 call 15.5 and 7500 put 15.5 . Credit 31 means we break even at 8031 and 7469