That Was The Week of….. Non Farm Payrolls
So, we saw a spanking jobs number in the US courtesy of https://www.forexfactory.com/calendar
Bank of England governor Andrew Bailey said something or other. And, interest rates stayed the same and the promises of lower interest rates, stayed the same. The IMF warned the UK about the folly of tax cuts. However it should be pointed out that IMF are not an 80s electronic band who burned a million quid. But, the IMF have burned cash though without the music and charisma.
Meanwhile, from the BBC : Tech billionaire Elon Musk has claimed his Neuralink company has successfully implanted one of its wireless brain chips in a human. In a post on X, formerly Twitter, he said “promising” brain activity had been detected after the procedure and the patient was “recovering well”. At some point the ethical debates about AI will have to draw a line between the acceptable and the downright dangerous. We’re not prepared for the advances in tech that will become a reality and the concerns we have today may be a thousandfold in the near future.
In other news, we spoke again about debt last week, and here’s what one of our heroes had to say about it:https://www.bloomberg.com/news/https://www.bloomberg.com/news/newsletters/2024-01-30/bloomberg-evening-briefing-a-white-swan-may-be-coming-for-the-us-economy?cmpid=BBD013024_BIZ&utm_medium=email&utm_source=newsletter&utm_term=240130&utm_campaign=bloombergdaily/2024-01-30/bloomberg-evening-briefing-a-white-swan-may-be-coming-for-the-us-economy?cmpid=BBD013024_BIZ&utm_medium=email&utm_source=newsletter&utm_term=240130&utm_campaign=bloombergdaily
Apologies for the huge link -it was not possible to shrink it with my limited abilities.
Options Geeks -Here’s a Take on The Greek ‘Vega’ ( It’s also NOT a Greek)
This is long and in depth but talks about the effect of comparative Vega, when trading calendar spreads. It’s called weighted Vega. It’s actually intuitive that the far month has far higher Vega value but it moves a lot less in %age terms relative to near month. Same as Gamma goes parabolic in the last few days of trading as you’d also expect. However it’s a good watch, and like me, the author is not some slick salesman. It’s here: https://youtu.be/r0Sky6ER4_w?si=98NeY9ZR1qomllGF
Freebie Alert:
Here’s a fun day out that yours truly generally enjoys ( I even got 20 minutes one to one with Nigel Farage once) Have a look, there’s always something new.
https://www.offers4investors.com/2024/master-investor-show?s=EMAIL&s2=ADVFN290124
Distraction Trades
ADA was $0.4831. now $0.5207. Going in the right direction.
XRP was $0.52994 now $0.52149 Crypto fraud though….. The post Ripple lost $112million in XRP
DAX 2 break evens (+30 each) 2 no entries, one loser -30 We are really not seeing those clear signals in our 5 minute time frame
UK Gilts were £16.75 now £16.81 And, another nothing week, though we saw £17+ during the week.
Legacy trades 349, 350, 351,352
Trade 349 Another Calendar Variation
Here we go again and yes, we consider calls overpriced. We sell February 7750 call and buy the March 7650/7750 call spread. We have a small credit of 6
Overall Delta is 0.20 so we may have to manage this, but note it was too late, in our own experience, to place a Jan expiry trade. Extrinsic premium is woeful. Thus, we may look at closing out before Feb expiry.
A fun trade the spread is now 21 and the Feb 7750 call is 11 This is our kind of trade and now the choice is a) close out for profit 16 b) Buy back the short call for 11 c) Run it.
Last week : The spread is 42 the short Feb 7750 call is 33.5 However, we had an opportunity to buy back the Feb call for 11 and sell it again for 29, giving us …..more!
Now: The spread is 75-40.5= 34.5, the short Feb 7750 call is 14.
Trade 350 A Numerical Milestone
Well, we threatened! YES we’re going to trade a FTSE covered call. Here’s what we have, using Friday’s FTSE cash close 7461. We buy a future at £10 a point and sell a 7600 Feb call for 37.5. We really don’t like this, it’s for fun, and of course if the call expires worthless we keep the £375 credit And the future? That’s the fun part. Expiry, 16th February at 7600 is the ideal. Logic of the trade? We can wait!
Oh no! It’s 103.5 for the Call but what did the future do? bought at 7461, close out at end of play 7635, which gives us 174.(174-103.4= £705)+ the credit from the call £375=£1,080.00. This is bizarre -bit of a fluke?
Let’s try a new trade: We buy a long Future 7635 The Feb 7750 call 33.5 – a Credit £335.
Future last week at best 7670 the call 29 -giving 35 for the future and the call made 4.5 =£395 (Remember this needs to be monitored intra day, but it’s fun)
Now: Future long at 7615, sell the 7650 call for 43.5
Trade351 Ugly Trade for Ugly Vol
Vol is still rubbish!
We buy 7550 Feb put for 31 and sell two 7400 puts at 11.5, so our trade is a non-classic put ratio spread. However, these should be opened for a good credit. Thus, we are paying away 31-23= 8.
Logic of the trade? 8 is cheap for a bit of insurance if we get a nice drop. However, that’s a big IF. Options have never looked so ugly. 2017 was the last flatlining year. 2023 was not awful. We hope 2024 brings us some juicy premiums at some point. We have to stay solvent longer than the market can stay rubbish.
Now: those prices 32.5 and 10×2 gives us 12.5
Trade 352
If you’re going to trade naked, go with a strangle: sell the February 7750 call for 14, 7450 put for 14.5 As there are only 9 trading days and there seems to be no direction what could go wrong? Risk at 7778 and 7422 Bring it!
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/
https://optionsinvesting.co.uk/how-options-work-page-3/
Contact: [email protected] If there is anything you’d like help with, we all started somewhere and yes, it can be baffling.
