358 W/e 15Mar Big Rocket Man Elon Gets Orbital

That Was The Week, Space-X Done Good, and Normal for Norfolk Triumphed!

Yes, in what can only be described as worthy of a pantomime, Norfolk Council took Apple to court and WON! https://www.bbc.co.uk/news/technology-68580235

Tim Cook, Apple’s English boss cooked the books and it cost £385million. While I love Apple products and expect better from them,  justice prevailed and the poor pension fund was restored to its previous position. You have to think that another company being so devious might have got away with it. I’m very happy to trade and not be a passive investor.

A rare foray into equity territory for our esteemed chums at iVolatility https://www.ivolatility.com/landing/news/2986  Thought provoking and an interesting exercise, as options give us, as it says on the tin… ‘options’. Of course one needs to be wary when expecting high volatility as there are no free lunches and what may appear high, may historically be average or below. The unseen hand of  AI seems to have smoothed out, even flattened volatility. Implied vol is lower than the vol of the underlying in many cases.

Oh and a massive rocket made it into space: https://www.spacex.com/launches/

Meanwhile in sleepy Olde Englande

we learn there are more than 9 million people not in work. Not economically active, seemingly no income. Does this mark a return to the traditional role of a home maker/domestic engineer/ housewife? While not making any connection we also learn there are 11 million people in food poverty. It’s no surprise the pubs are struggling, at £6-7 a pint there’s surely 9 million people who couldn’t stand a round with their friends. Our economy is not growing, though our population is while expectations are lowered. Not a recipe for a harmonious society one might think. Having lived through the ‘Winter of Discontent’ my rose tinted specs tell me life was better even then. We seemed to be all in it together, even siding with striking bin men.

This was the Leicester Square I remember well. Rats had a great time while pay demands for 17% increases were rampant. Inflation, in part, did this.

Distraction Trades

ADA  was   $0.7268.  now $0.7230

XRP  was    $0.62122 now $0.63379  still lagging Cardano 

DAX   3 no entries, one loser -30, one win +100  Some interesting moves, more work needed

UK Gilts were  £16.95 now £16.74     Yawn! Briefly hitting £17

Legacy trades from  354  and new Trade 357

Trade 354 Rinse and Repeat, Ratio w Calendar

Remember this?

[ Trade 349: We sell February 7750 call and buy the March 7650/7750 call spread. We have a small credit of 6 ]

It was a handsome win but here’s the twist…. We sell the Mar 7650 call for 94  leaving the short 7750 March call and we BUY the Apr 7650/7750 call spread for 51. So we have a nice profit and a new trade.

So 2 weeks ago:  Trade 354 is:  38 for the March 7750 call. April 7750  87    April 7650  139.5  Which gives us 14.5  Not bad for a week’ s juiced up theta. The sky is not the limit, that would be 100. 

Last week: March 7750 call is 24.5 and the April long spread 122-73.5= 48.5(-24.5)=  24

This week: March 7750 call  now 11.5, the April 7650/7750 spread 109.5, 63.5= 46  = 34.5

WIN!  61.5   

Trade 355 SIC Short Iron Condor.

In a nod to another options website/blog, this is a curious trade as it should not work. The presenter claimed it had made more than a strangle or a calendar trade in a week. This is a short iron condor, so we are buying the ATM options and selling the outer wings. We choose April expiry which gives 55 days to be wrong. The trade shown was 49 days from expiry, and the strikes were a little different, but let’s give it a whirl. We buy the April 7700  call and put and sell the 7850 call and 7550 put. Those prices: 111.5+110= 221.5 minus 50+57=107, gives us a debit (ouch!) of 141.5.

 The prospects of this trade winning are not zero, but flippin’ close. We have a duty to stick our necks out with the occasional howler, and this will probably be a dreadful trade, based mostly on a volatility explosion. That seems unlikely, but then life is full of surprises! 


Caveat:  people make a living trading normal iron condors.

 APOLOGY! Typo- the cost was NOT 141.5 it was 114.5. .

The 7700 straddle 84.5, 115.5 = 200   7850 call is 33.5  7550 put 55.5 =89. Our trade is now 200-89= 111. 

So, not the worst situation. However, with any trade you really don’t want to see that premium melting away. Thus we run, for fun and the unexpected.

Now- 112.5 -it’s never going to be profitable but wee did not choose entry using any particular criteria.

Trade 356 another battle with no Volatility to Work with

Volatility is not your friend with calls, if you’re a grubby premium seller, as Vol does not increase the further out-of-the-money you go. However with such a highly rangebound limp FTSE let’s buy a 50 point wide call spread, and pay for it in part, by selling a further out call. Here’s the trade, we buy the 7600 call, for 99.5, we sell the 7650 call for 66.5, and we sell the 7750 call for 24.5.

The maths: 99.5-66.5=33, minus 24.5 =8.5  (Keen eyed party poopers will notice the similarity with trade 354  along spread with an extra short)

Logic of the trade? If we get a drop we have no more risk than 8.5, we could make the max 50 for the low cost of 8.5, our risk is at 7800. We have a decent chance of making coin, and risk that we can manage.Risk of ruin? Almost zero. Let’s get ready to rumble !

NB These are March options and now……  82.5, 49 and 11.5 =22. ( we paid 8.5 remember) So we run it some more, and do not boast about making 250%  That would be as naff as those painful sites that want you to pay $50 a month. For trades you could easily spot and manage.

At expiry the 7750 call  has no value so our spread makes the full 50 WIN!

Trade 357 The April Expiry Cycle Beckons

Despite the many winners we also like to show other trades in all their splendour. However nothing works as well as real prices in real time. So instead of cherry picking another winner we go with an old chestnut, the Butterfly. What’s the problem with the ‘fly? You have to be right in a narrow range, but there is of course a huge choice in risk/reward. We like quite a wide ‘fly and the strikes we choose for our Put butterfly 7800/7650/7500.  Remember we sell the body and buy the wings. Our prices 7800 177.5, the 7650 is 91 (x2)and the 7500 is 43.5.  182- 177.5=4.5, deducted from the 43.5= 39.  Max profit at 7650  is 150 -39= 111. However our risk is no more than the 39 premium paid.

We could reduce this and buy a lower wing as the 7450 put is 34. That would give us a broken wing butterfly with lower cost but risk increased by 50.

Max reward, ( the difference between 7800 and 7650) 150- 29.5 =120.5, max risk 84.

This week it’s worth 32.5  – Don’t hold your breath!

Trade 358

We’re going to do something totally wrong. This is the trade that destroyed a hedge fund. It’s a 3x 1. ( a three by one) not a recognised* trade. We sell 3 further OTM calls and buy one call OTM but nearer the money. Here’s what we have:  We buy the 7800 call for 78 and sell 3 of the 7950 calls for 22.5 x3= 67.5. Thus our cost is  10.5 and we expect the theta to help us out in a big way.

In the event of FTSE hitting >7950(heaven forbid!) we have a lot of juice in the tank from our long 7800 call but it could get scary. (Calculator uses the Future price, note.)

* I have an out of date, but still valid list of recognised strategies from the old LIFFE, but there are 57 strategies. Email us if you’d like the pdf.



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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.