That Was The Week Ending With a Wake Up
So, we all pretend things are normal. They’re not. However this may be just another toe dipping exercise as crazy returns to the world. While America is being torn apart in a clear power grab by the far right, the market has said ‘so what’, to date. Moral compasses rarely enter the fray of the financial arena. So, we just try to make sense of the status quo. No sense IS the status quo. America sneezes, we all catch a cold. That is the cold hard truth. The world’s biggest market. Also the World’s biggest stick with which to align hostile nations. Give a lunatic the World’s biggest stick and you’ll get results alright. Building resentment for the next guy to deal with? Of course, that is how it works. We’re all political ultimately.
Non Farms? Non!
We’ve been deprived of the job numbers again and we know how powerful their effect can be, so we’re in the dark again. Gold hit $4,000, Silver hit $50 this makes the ratio easy to work out. I’m not going to insult you, but they say when the ratio hits 100 it’s time to buy silver. I did. Then I sold. I then bought again. And sold. It’s been fun, but I have no idea what drives it. In fact I owned it at $28 a few years back and after about 3 years of doing nothing I sold that for a tiny profit, so it’s been good for me. Maybe buying mining companies is a smarter bet, it’s just a distraction for me. From ForexFactory: 
In the Inbox
1.Some wise words from victor Hill: https://masterinvestoruk.substack.com/p/victor-hills-october-outlook?utm_source=substack&publication_id=2822697&post_id=175785929&utm_medium=email&utm_content=share&utm_campaign=email-share&triggerShare=true&isFreemail=true&r=1fbdnd&triedRedirect=true
Substack seems to be the new bright shiny thing. Well worth a look as we rarely get in depth views on our market.
2. A personal recommendation and something that has plagued me for decades: https://www.youtube.com/watch?v=zWfBDCtJRnY
Paul is the real deal, wise honest and passionate about trading. This is about sizing, but there is plethora of videos.
Distraction Trades
ADA was $0.8424 now $0.6647 ( a high of $1 recently)
XRP was $2.9859 now $2.4765 So, our chosen Cryptos take a dump
DAX : 5 trades, 1 loser 4 wins, nett 390
UK Gilts Were £15.79 now £15.83 This is based on the Vanguard ETF, more wobbling around. No champagne this week!
Legacy Trades -Mixed/Losses plus new trade 436
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.
Last week: 849.5, 652(x2)= 454.5 so still underwater and we await a big drop or the next roll and credit.
About that BIG DROP.……..Ouch, and thrice, ouch. 1050, and 851.5 x2= 653 LOSS
This week: 971.5, 772.5×2= 573.5 A little move in our favour ( I use the word loosely)
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
Seems that was the best we could do. Now 28, – 8×2, 5,- 2.5×2 = 12 We’d have been happy with the previous week’s win of 51 but who knows?
This week: 9400 49, 9200 11×2, 9000 5, 8650 2×2. 54-26= 28 We’re unlikely to beat our proposed trade close of 51.
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
Last week Oct 9150 put is 7, Nov 9250 put 55.5 and 9150 put 40.5 gives us 8 That’s ok as our November spread has some mileage yet.
Now Oct 9150 put 8.5 and the Nov 9250/9150 put spread is: 76.5 56.5= 20, gives us 11.5 We’ll run to expiry and hope the Oct put doesn’t harm us.
Trade 434 Closed out for Big WIN
Trade 435 At These Lofty Heights, Should We Get All Protective?
Put options are cheap as chips right now so let’s buy something that might give us a bit of comfort and possible reward.
A cheap and cheesy Put butterfly -October prices 9500 put 60 9400 put 28 9300 put 13. I’m sure you are familiar with the butterfly, sell the body x2, buy the wings. So our wings cost 60+13, and our body sells for 28×2= 56 So it costs us a total of 17 and could make 100. I have little faith this market could ever make a sustained drop, but it’s low cost with no additional risk, and reward is good. We will probably run this to expiry.
9500 put 104. 9400 put 49(x2), 9300 put 21.5 =27.5 – We’re in profit
Trade 436 Who Knows What Next Week Will Bring?
So here’s the problem: The market tanked at the end of the day and looks like carrying on next week. It’s a jumble sale and Friday’s closing prices may not mean too much.
Let’s go with a very spicy 3×1 using November prices. We buy the 9400 put for 124 and sell 3x 9000put 38= 114. This is a bit spicy but we have a 400 point spread to protect us down to 8800
It still costs us 10 and spending money is annoying but the chances of the market rising and losing that 10 is minimal. It’d of course be no surprise if the market melts up, that has become the norm, after all.
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.