That Was The Week Big data did a Big Nothing
US jobless rate is 3.7% which in the scheme of things is extraordinary, but as mentioned last week, we need to have confidence in the stats. Well, if it’s all a fudge, the numbers do get adjusted in due course. Generally this adjustment is the ‘quiet’ number that rarely says anything too awful. Our own holy stat, VIX is once again wallowing in the murky depths <13%. We are told UK property rose again, and mortgage rates dropped below 6%. Hilariously they dropped to 5.99%. That’s as ‘below’ the 6 mark as 99.9ºC is below boiling point!
Gold and Crypto have surged, and we note a massive rise in one of our selected coins, ADA up 21% as of today. Such ‘alternative assets’ may be seen as a hedge or an outright foray into non stock market products. Weirdly the DAX hit an all time high, German inflation slipped to‘2.3%’ so it’s all peachy. I suggest you ignore my cynicism, but having never bought anything at an all time high, I don’t believe I have missed much.
I await the return to break even of my ISA, bought in the heady days of December 2021. Time horizons of 3-5 years are key. The good old stopped clock strategy. I am very happy I don’t manage other people’s money. But, if I did, I’d stick to the knitting and use time tested methods, solely trading index options. I wonder if anyone offers such a thing, and NO I’m not offering!
Film Review
In light of the dearth of trading opportunities, Tuesday seemed a good day to visit the cinema. We are so lucky to have such a facility and at £5.99 surely cinema tickets are inflation busters? I’m thinking or maybe misremembering prices were much higher even in the 80s. Napoleon, the Ridley Scott film in my humble opinion, fell short of expectations. However one aspect of history leapt off the screen. France was an utter shambles having beheaded 11,000 aristocrats. Like a 19th century Brexit but with violence, there was no plan, just a big ” let’s get rid of the bad people”. Happily Brexit was not as tumultuous as the French Revolution. Napoleon’s disastrous Russian campaign, curiously killed as many people as Trump’s alleged Covid debacle. History brutally rhyming?
Cinemas are still special and we need to keep them alive. I would not wish to see an end to sitting in a large darkened room with complete strangers, while larger than life action thrills us.
Distraction Trades
ADA was $0.3894 now $0.6214
XRP was $0.61242 now $0.68194 Some big rises here
DAX 2 break evens +30, 2 no entries, one loser, so +30 on the week. Note: since 27 Oct Dax had 24 up days and 6 very small down days.
UK Gilts were £16.55 now £16.76 little acorns?
Legacy Trades and 345, Something For the Season
Trade 343, December, The New Expiry Month
As we inherit the long put spread Dec 7450/7350, from trade 342 we could close out or do something more interesting. So, we can sell another 7350 put for 31.5 on its own or as a short spread 7350/7250, as we can buy the 7250 put for 19. So we’d have either a put ratio spread, or the latter, a butterfly with zero risk.
How did that pan out? Our prices 7450- 41 7350- 20 7250- 11 So, our choices, close out the put ratio spread for 1 giving us 32.5 – trade 342 only gave us a tiny profit of 12.5 so we can make a quick 20 or carry on. The butterfly gave us a credit of another 12.5, but we run it as it’s currently worth only 12 and it has zero risk.
Last week: The butterfly is 9.5 the ratio spread gave use an additional 31.5 if it goes to zero we’ve still made £££
Those prices. 7450,7350,7250- 10, 3.5 and 2 it’s all gone a bit lame but we’d taken some juicy premiums.
Trade 344 Magnetic Strikes ( That’s my idea of Sticky!)
So in lean times we need to find something that is cheap and will hopefully keep us out of mischief. It’s a long Dec put spread 7450/7350 41-20= 21 and there are many ways to help pay for it, but we know things are out of wack with puts trading at volatility in single digits. Let’s sell a strangle, yes it’s naked but with mitigation always from the side not under threat. We sell 7250 put for 11 and 7700 call for 11.5. Credit 1.5 overall
So our downside risk is at 7150 but on the upside it’s still 7700 unless we get creative with our long put
Last week: 27-12 for the put spread=15 and the strangle is now 6.5 and 14= 20.5 It’s not looking great.
The 7700 call is 6, the 7250 put is 2 but our spread 7450/7350 is 6.5. All a bit feeble.
Trade 345 Do We Buy the BS?
Is a Santa rally on the cards? Let’s say (like those Ancient Alien Theorists)………. yes. We can create a ‘synthetic future’, but we don’t want a brutal delta of 1. So, we sell a 7350 put for 12 and buy a 7700 for 14. We thus have a small debit of 2 and a sold put has positive delta but what do the Greeks tell us? Add those deltas AND that theta! It’s NUTS!
This week – the 7700 call that we own is 6, the 7350 put we sold is 3.5 The waffling FTSE has done us no favours, but we have to do something each week.
Trade 346 In the Dire Volatility What Can We Do?
We often overlook calls as puts are the go to trade when Vol is in our favour, but now we are faced with the sole weapon in our armoury-theta. So, it’s a calendar trade whereby we sell near month and buy far month. Here we sell the Jan 7800 call for 29.5 but here’s a twist, we will do a level 7800 call in Feb, and also see how we perform with a 7700/7800 long call spread in Feb.
Those prices: Feb 7700 call 92.5, and Feb 7800 call is 57.5. So the spread costs 35, we sell the Jan 7700 call for 29.5 so our trade costs 5.5. (Risk around 7900)
The standard calendar trade- sell Jan buy Feb costs 57.5-29.5= 28
For those new to options:
https://optionsinvesting.co.uk/special-edition-how-options-work-1/
https://optionsinvesting.co.uk/special-edition-how-options-work-2/
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Contact: [email protected] If there is anything you’d like help with, we all started somewhere and yes, it can be baffling.
