That Was The Week
The markets had another frenzy as the FTSE rose 3% in what one can only take as a personal assault! However in other news all this may be frivolity as speculation increases about the interstellar object 3I Atlas. Okay so both may be conspiracies but we cannot argue with facts, and those are sadly in absentia as NASA is supposed to be part of the US government shutdown. Now if you follow the US pantomime you’ll know that once the government is open, the Democrat governor from Arizona, Adelita Grijalva must be sworn in, and she will be the required 218th signatory to get the Epstein files released. Now if you’re innocent you have nothing to lose. Our own ‘Epsteinistas’ have been exposed and it’s free pass for the gutter press and a nice distraction from the troubling global events.So come on, spoilsports let’s see who was on the list!
End of the World
My lifelong fascination with space aliens has never diminished and the antics of 3I Atlas are deserving of far greater scrutiny. Should it be simply another comet then it has changed the rules, if it’s something else we may be in for such an upheaval as to boggle the mind. I’m optimistic either way as humanity seems to be in an existential crisis of its own making. Meanwhile the ‘No Kings’ protests were as peaceful as your nan’s crochet get togethers. Some potentially brutal legal cases are now pending against the administration of Mr. Trump and his band.
In The Inbox
Perhaps a more pragmatic assessment than personal opinion. The numbers are now staggering, it’s hard to comprehend a billion, but it’s not unrealistic to suggest Elon Musk will be the first trillionaire but would never live long enough to count it. Google says it would take about 31,700 years to spend one trillion dollars at the rate of one dollar per second.
An invitation to those within easy reach of London: https://www.sharesoc.org/events/signet-london-options-group-launch-meeting/
The aim is to have meetings in person at no charge, for people interesting in options from absolute newbies to those who just wish to rub shoulders with other traders. The ethos will be ‘ there are no stupid questions’ and options require a fair amount of learning. We will aim to give a presentation and discussion each time. It is NOT a sales pitch or recruitment exercise.
And this from trusted trading coach Paul https://youtu.be/Vr1PrQWwLFo?si=0QunEZmBM9CPa1cb
Distraction Trades
ADA was $0.6363 now $0.6545 ( a high of $1 recently)
XRP was $2.3766 now $2.5677 So, our chosen Cryptos share a little love.
DAX : 4 days no trades, 1 win 250
UK Gilts Were £15.96 now £16.11 This is based on the Vanguard ETF. Again, the ‘Safe’ haven getting some love.
Legacy Trades plus new trade 438
Trade 424 High Roller
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
Last week: 971.5, 772.5×2= 573.5 A little move in our favour ( I use the word loosely)
From credit 223, and as a legacy trade 104.5.( Previous roll gave us 31).
Rolling Oct to Nov. 8450 call 8650 at expiry 904 and 704×2= 500, Nov 8450 call 930, 736.5×2 gives us 543, so a CREDIT of 43. We continue to take in a credit
Giving us 266 or as legacy 147.5
Our rolling debit hits a catastrophic high: 1201.5 and 1004(x2) Gives us a whopping 606.5 Debit However we are NOT adjusting but for educational purposes, we keep on rolling.
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.
Now 148.5 and 47.5 x3 = 142.5 = 6 Not sure where we go with this as the US as previously mentioned, could get really crazy
9400 put 31.5 9000put 10.5 (x3) Gives us…….. ZERO!
Trade 437 Calling the Top is a Mug’s game
As volatility has bumped up a bit let’s do the higher vol trade- a Strangle: We sell the 9500 call and the 9150 put for 70 each. Gives us 140 credit. Risk at 9010 and 9640
It doesn’t get much simpler than this -too simple?……..
Well that couldn’t have gone worse. 9500 call 197.5. 9150 put 14.5 Here are some ideas.
- Do nothing -and this can often prove to be the right move
- Write another strangle –put premiums are too low.
- Roll up the call side from 9500 to 9650 at a cost of 197.5- 96.5= 101
- Close out for a loss of 72 -least favourable tactic. (You could close and then sell the 9650 call as a ‘Hail Mary’ )
Trade 438 a Nod to Tasty’s Liz &Jenny
We seem to get burned for having upside risk so we go the Jade Lizard route. We sell a call spread and a naked put with sufficient premium to cover the call spread if it goes wrong. So, we will sell the 9700 call 72 and buy the 9750 call 51.5, giving us the bear call spread.(max possible loss 50) A credit of 20.5. We also sell the 9400 put for 31.5, giving us 52 credit. Logic of the trade? We get 52 if this expires anywhere below 9700 and above 9400. No upside risk
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.