That Was The Week Everything Going Up Everywhere
The onslaught continues apace while the news gets darker. Readers know that I do not share the apparent ‘enthusiasm’ for the market and the latest to hitch his wagon to the cause is the mighty Jim Rogers. https://en.wikipedia.org/wiki/Jim_Rogers He’s an interesting man and a fascinating speaker though sometimes he’s early with his predictions. He has sold his US stocks but sees the $US as a safe haven. Presumably on the basis that the US has industrial might and more importantly, commodities. There does not seem to be good news for anyone’s finances and now we face this: https://www.bbc.co.uk/news/articles/cvg18pvz7kko Everything is going up -this seems to be a theme.
So, what can we make of it all ? The only reasonable metric of price to earnings ratio tells us the market is expensive. Expensive is a relative term and we may be in a new paradigm where the other expensive markets need us to match their valuations. As always DYOR: https://worldperatio.com/area/united-kingdom/
In The Inbox
Another webinar series that proved a disappointment and another London investor show that I forgot about. There’s analysis paralysis and then there’s information exhaustion. All the bells and whistles and latest must-have indicators may have merit, but most traders end up with few or no indicators. However the mountains of available data for backtesting make life a lot easier for those who conduct academic research as part of their trading. We just try and make sense of each market move on a month by month basis. Meanwhile check out these freebies:
https://mailchi.mp/masterinvestor/masterinvestorshow-104812?e=d8dfffc5d3
https://www.eventbrite.co.uk/e/how-to-build-your-passive-income-playbook-tickets-1232225352199?aff=oddtdtcreator
Distraction Trades
ADA was $0.7706 now $0.6325
XRP was $2.5878 now$2.1565 These are not insignificant moves, but hey….it’s crypto.
DAX : N/A Site Down APOLOGIES for last week -this week : 2 days no trades, 1 break even, 2 wins nett: 390 (Monday and Friday were bonkers)
UK Gilts were £16.05 now £16.20 This is based on the Vanguard ETF (not a recommendation)
Legacy Trades and All New Trade 404
Trade 396 Calendar/Time Spreads( Running Having Rolled )
Expiry at 8685 gave us 485, and 385×2= 285 LOSS
Dare we roll? We are here to educate by doing so here we go: Rolling to March 8200/ 8300 would give us 273.5, so we have a rather ugly cost of 11.5.
Now –Yikes! 596 and 498.5×2= 401. This is purely for academic purpose and we would not suggest/recommend or in any way approve of such action/inaction. However to see how this pans out we will run it.
Trade 401
We went with the esteemed Professor’s straddle, and February worked well, remember .Now we have:
Last week : March: 8700 call 71, 8700 put 124.5 Our initial credit was 239 thus we have 239-(71+124.5), gives us 44.5 WIN
This Week: 8700 call 142 8700 put 51.5 =193.5 (initial; credit 239) 45.5 still winning
Trade 402 We Use March Prices
An old chestnut and a safe trade with fair chance of doing ok. It’s the iron condor. We sell both side of the market but with short spreads. So the prices nearer the money are the options we sold. And here we choose 50 point spreads. Calls: short 8850, 47, long 8900, 34.5. Puts: short 8550, 59, long 8500 47.5. So as a credit trade we take in 12.5 for the calls and 11.5 for the puts. We take in 24 and our risk is 50-the 24 credit It is a dull trade with limited potential as it ideally needs to see both sides at expiry got to zero, avoiding costly commissions.
However there is an ex-Harvard man, Jared somebody, who made his first $million in his early 20s with these. He may still be in the same business, but these went pear shaped for a while as risk/reward no longer stacked up.
Calls: 8850 25, 8900 17 = 8, Puts 8550 62 8500 49= 13. Rather uninspiring, but ok.
Now: calls 57, 39.5= 17.5 puts 23,18=5 Gives us 22.5 (initial credit 24)
Trade 403 How to be Bulletproof For Next to Nothing(March Expiry)
Futures point to a very likely drop on Monday but we have Friday’s prices as always. So, swings and roundabouts, we place the trade which is a ladder/condor/Xmas tree. It’s a combination of 2 ratio spreads as follows: Long 8600 put 78.5, short x2 8450 put 39.5, long 8300 put 22, short x2 8000 put 9.5. Here’s the arithmetic: 78.5+ 22, minus (39.5+9.5 x2)= 2.5.
So for a cost of 2.5 we get nice downside exposure at 8600 and risk is very far away at 8000. These kind of trades have a very wide profit range no upside risk but possibly only a moderate chance of profit.
Those prices now 29.5, 14.5×2 and 9, 5×2. This gives us overall minus 0.5 Early doors
Trade 404
Fuelling the bear position, remember? https://worldperatio.com/area/united-kingdom/
What if we decide to get short with a short call and a long put spread? 8900 call 39.5 long the 8800 put and short the 8700 put 89.5, 51.5 =38. We have 1.5 Credit and a massive dose of ‘Hopium’. I doubt this is a good trade given the epic run of the Western stock markets, but let’s view it as a bit of downside protection, with maximum reward 101.5.
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.
