That Was The Week US Economy Proved Robust
So, US GDP came in at 3.8% which may be about as reliable as a stopped clock, given the recent job number debacle. However inflation is still an issue, debt is off the charts. Valuations of stock markets continue to look even crazier than 1999. But, evidently people are prepared to pay ever higher prices for just about everything. As they say the cure for high prices is even higher prices. Using the analogy of dropping sand onto a sandpile. Eventually instability causes collapse, yet we have seen markets bounce back with alarming speed. Not just bouncing but hurtling upward repeatedly. Does momentum ever slow? What’s everyone else doing? Clearly retail and funds are buying, while the independents like Micheal Burry and Warren Buffett sit on the sidelines ready to say “Told you so”. Stockmarket crashes are fine if your timeline is 5+ years and you just hold stocks.
Options/ Stocks
So, while we plod on with FTSE options, it transpired this week that traders with covered calls are having their own dilemmas. While we can roll position ad infinitum, when holding stock it can be a real issue to deal with losses that cannot easily be recouped. This is a problem when trading meets investing. Should you wait for a stock to bounce back? Will the stock actually bounce back? A pure trade is simpler, as is an investment. However the concept of earning premium or getting stocks at a discount works very well. So long as you are good at stock picking. Some stocks go for years doing little but generating short call premium and dividends. FTSE index gifts us no dividends, but we’re ok with that.
A.I.
Yours truly was informed of a service called https://notebooklm.google.com
While having a bit of fun seeing how autonomous it can be, it provided an instant snapshot of open interest when presented with a pdf of the October FTSE options chain.https://www.ice.com/report/265 Weirdly it threw up the 8200 put as having the highest open interest. We cannot know why this is the case as every buy= a sell.
Further on, more complicated requests were greeted with ‘computer says no’. As expected it needs the right inputs. Yours truly is too long in the tooth to attempt some advantage with such lofty machinations. But this may be a niche market for some clever young person to aid trade selection with options that is more helpful than our own eyeballs, and gut.
On the other side of A.I. paying particular attention to the downside! 
Volalbility will get you every time! OR…… is A.I. having fun with us mere mortals. Thanks to Gemini
In The Inbox
Price Headley gets all smiley! https://timingresearch.com/lighting/pdf-cfn-summary-pir24/
There’s more than just the initial pdf on offer and of course, it’s free.
Always an interesting day out(Oct24th) in West London : https://www.eventbrite.com/e/london-investor-show-2025-tickets-1319427756939?aff=ebdssbcategorybrowse&keep_tld=1
It’s free though there are some paid presentations. .
Distraction Trades
ADA was $0.8902 now $0.7843 ( a high of $1 recently)
XRP was $2.9795 now $2.7801 More downside for our chosen Cryptos.
DAX : 3 wins, 2 days no entry, nett 320 ( also investigating when the entry method breaks, trading the opposite direction, but we missed a whopping 250+ with no signal either way )
UK Gilts Were £15.73 now £15.72 This is based on the Vanguard ETF, more wobbling around. This has traded as high as £27 still not looking interesting, it seems.
Legacy Trades -Mixed/Losses plus new trade 434
Trade 424 High Risk Big Reward
We will roll Trade 415/415b but also instigate a new trade which is long August 8450call short 2 x 8650 call. Those prices: 531 and 342, so as a new trade there’s a CREDIT of 684-531= 153. As a legacy trade there is a small credit 34.5. This as you can see, is deep in the money with risk at 8850 This may be a struggle but what if we can roll, for a credit ad infinitum?
ROLL: SEPTEMBER TO OCTOBER Cost to close Sept:387, Credit to open 418. Nett Credit: 31
As new trade we owe 418, and took in 223, and now plus 31 =254 as legacy, we took in 104.5 +31 =135.5
We continue this and it breaks the cardinal rules of cutting losses, options can be forgiving. Margin is of course a consideration.
This week: 849.5, 652(x2)= 454.5 so still underwater and we await a big drop or the next roll and credit.
Trade 432 October Calls -pun intended! It’s a Put Position
Big and cheap is how we roll: big rewards, low cost, moderate risk. Here’s what we have: 2 ways to look at this: 2 put ratio spreads or a put butterfly paid in part by deep (7%) OTM puts.
Here’s the numbers, and strikes: buy 9400 put 149, sell 9200 put 64.5 x2, buy 9000 put 31, sell 8650 put 13.5 x2 So we pay 20+ 4= 24 And cross fingers! It’s horrible in this absurd market, but we have no upside risk. Logic of the trade, max reward 200 possibility of loss moderate.
Now: 9400 put 186, 9200 put 74, 9000 put 29.5, 8650 put 11 Crunching those numbers: 186+ 28.5 – ( 74×2 + 11×2) = 214.5- 170= 44.5 WIN!
While this has made nearly 100% in one scenario we’d close out, but here we will run it for the big bucks. THIS is how great options can be.
Now 135.5, 44×2, 16.5, 6.5×2= 51 WIN! We are running this but we paid 24, so it may have a lot more in the tank
Trade 433 A Clever Trick- Don’t Try This With Stocks (You can’t)
So 429 had this outcome(we now have a long 9250/9150 put spread) : 94.5-58 =36.5 + opening credit 5.5= 42 WIN! CLOSED
What if we sell the Oct 9250 put for 94.5? What if we buy the November 9250/9150 put spread to protect our short Oct 9150 put? That costs 147.5-108.5= 39. We trouser 94.5-39= 55.5
Our position once again, we have a calendar ratio spread- 2 short puts one long put at the higher strike 9250.
Oct 9150 put 33.5 Nov 9250 put 112, 9150 put 82 negative 3.5 now this has already given us 55.5, remember
Trade434 Calendar Crazy Again?
An old chestnut, the ratio calendar straddle. We sell one November 8300 straddle and buy 2xOct 8300 straddles. Why? It profits from a big move down and it’ s not a high risk trade, though theta (time decay) is brutal. Those prices 154 for Oct,(x2) 281.5 for November. so 308-281.5= 26.5 cost
Volatility and gamma will work well in the event of a drop, which as always seem unlikely, so we may look at closing this out early and taking a loss. Or it might make ££££, given that we own 2 spicy straddles against the one less active November position. We just need a crazy person to do something that the markets cannot accept.
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
All opinions expressed here are not to be taken too seriously and all of the trades are for educational purposes only.