That Was The Week They Claimed GDP up 0.7%
We call it out, and say, NO Rachel from accounts. No! https://youtu.be/bZaGhzYLsO4?si=9sfsG8cZjJ39qNEU
So, this has been spotted by a regular mathematician and simply put, it’s a big fat lie. Seasonally adjusting that which is not seasonally adjusted is, to put it bluntly, a scam. I have often mentioned my bias to the downside. However I do not go looking to bolster my own agenda, it’s just that truth is the most valuable commodity. We live in an era where truth no longer resides centrally. Truth seekers have become surplus to requirements. However we expect better from our dreary little government. Working people deserve a decent government as much as the rest of us! Rant over.
Expiry this week https://finance.yahoo.com/quote/UKXSP.L/ We saw FTSE gap up at the open and expiry was at 8687. Observant folk will note the crazy candle wick up to 10,371 at the start of the auction at 10.10. Given the auction process is a calculation based on actual trades it looks pretty ‘quirky’ to anyone looking at a one minute chart. PIN risk these days is really not worth taking. You may have another view, and good luck to you.
In The Inbox
With thanks to Colin Twiggs Incrediblecharts.com
https://thepatientinvestor.com/index.php/2025/05/17/us-weekly-leading-indicators/
Following Warren Buffett’s stern warning that the stock market relative to GDP is a sign of a bubble, we see more of the same, and without looking for opinion, the data tells us all is very far from rosey. While disparaging the antics of the naked put sellers who gleefully pocket fat premiums most of the time, there is genuine reason to be cautious. Perhaps the recent ‘Trump Dump’ was the warm up act. Curiously the US is crazy over priced with FTSE is, allegedly, fair value here: https://www.gurufocus.com/global-market-valuation.php?country=GBR We all know, America sneezes, the rest of the world……… Stay cautious.
Distraction Trades
ADA was $0.8035 now $0.7613
XRP was $2.4170 $2.3491
DAX : No entry Mon and Fri 2 losers, 1 win nett 170
UK Gilts Were £16.05 now £15.95 This is based on the Vanguard ETF, not sure how the prospect of lower interest rates might affect them.(Negatively,it seems!)
Legacy Trades 412,413,414 and Newbie 415
Trade412 In A Dilemma Stay Safe (Or don’t Trade)
Ok so the best way to stay safe is not to trade. However: The quote often attributed to Chrysler, and sometimes to Rear Admiral Grace Hopper, is: “A ship in harbour is safe, but that’s not what ships are built for.” Money should be put to work, in other words.
So let’s go with a cheeky iron butterfly, We buy the 8300 put, 71.5, we sell the 8400 put, 106.5, and 8400 call 113.5, and buy the 8500 call, 65. 220- 136.5 = 83.5. We take in 83.5 and our risk is at 100, ie a potential loss of 16.5, max profit 83.5.
Sorry the CME calculator is not available currently but the trade’s logic is that the 8400 level may be key support and resistance, so if we see May expiry at this level, we’ll be very happy. Although we’d take a profit of 20.
Well that got blown up quickly 25,15.5= 9.5 for puts, 2019.5, 128 for calls= 91.5 +9.5= 101. 83.5-101= minus =17.5 LOSER We run it to expiry, however knowing it can only go to 100 against us.
8300 put 10.5 8400 put 19, the 8400 call 155, the 8500 call 77.5 Gives us negative 19-10.5= 8.5, 155-77.5 =77.5= negative 86 against our 83.5 credit A small loss
LOSER! Not the end of the world, but annoying as of course the market took off like a spooked goose.
Trade413 Downside Protection
So, the most obvious way to protect your portfolio is to buy puts, but even now they are expensive. Another way is to use ITM(in the money ) call butterflies. Zero risk to the upside and good profit potential and risk/reward. OK, so while not wanting to predict anything, we centre on the 8400 level* on FTSE. Here’s a call butterfly with strikes at 8500/8400/8300 and those prices: 128,209.5(x2) and 300. Remember we buy the ‘wings’ the outer options, and we sell the body x2. Thus 419- 428, gives us a debit of 9. At expiry we’d love the index at 8400, as we’d make 1,100%. On that journey to expiry we won’t see much action but if we could make x3 our money, we’d be happy.
Caveat: Trading conservatively is a personal choice based on the possible market turmoil or potentially even worse. We can stand to lose this sort of premium every month but that is not the plan, staying solvent is the plan.
*| No prediction, just seemed to be the middle ground but who knows?
8500 call 77.5, 8400 call 155 8300 call 246 gives us 155×2,=310, minus our long calls 246+77.5= 323.5 A tiny profit
LOSER! Again we keep losses small and live to fight another day. Apologies for breaking our excellent track record with losing trades as rare as hen’s teeth.
Trade 414 Crazy Risk Time?
NOT recommended unless you have a plan B*. We use May options: sell 3 x 8350 puts at 14 apiece= 42. We BUY 8500 put for 41.5. Zero cost a lot of risk, and if it goes awry, we’ll show how to deal with that too. There is a potential for catastrophic loss
* I have a plan B
ZERO COST ZERO PROFIT!
Trade415 Is The Optimism Justified?
We don’t mind being wrong, in fact many of the trade here are based on the premise of ‘not being right’. So here we take advantage of theta with a juiced up ration calendar spread. We sell the June 8650 call for 132, and we buy the July 8500 call for 294.5, and sell the 8650 for 187.5 call giving us risk at 8800. Thus we have 132+187.5= 319.5, minus 294.5 =25 Credit Logic of the trade -we can be right up to 8775 and below. We are selling 2 options and buying one, so a lot of time decay working for us. There is of course the strong possibility of FTSE going ‘postal’ again and hitting new highs. We will have opportunities along the way to close out.
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: surreyhantstraders@gmail.com If there is anything you’d like help with, we all started somewhere and yes, it can be baffling. There are no stupid questions
