That Was The Week, Silver Went Ballistic Then…..
More on that story later, to quote. So, a quiet week of indecision then Thursday was up, Friday was up, then doooown. Shrugging off the economic reality the FTSE remains on a silly P/E of 19.4. However it is churlish to suggest the market is worth a penny less, or more, as pricing by consensus gives us a kind of equilibrium. So what can we do? With options, everything. We can prepare, strategise and take a view on a market 95% of people only know how to buy. And that is a sobering thought, what is to stop buyers paying ever higher valuations? The only time we buy with no prior evaluation of price is….the pub. Beer’s always worth it! And anyway we’re not able to short beer. Perish the thought.
EU/US relations are getting more strained and the irony of Belgium being a possible target for war is not lost on us. Quite how Euroclear had over $100 billion of Russian money is far from clear. I believe they used to do UK options clearing back in the Euronext Liffe days. However you’d think they might exercise some prudence in choosing who they deal with. Double irony is that our own cuddly Nationwide has a £44million fine for lack of oversight with Covid payments among other lax episodes. So, one rule for them…
It’s Not a Conspiracy
If it’s a matter of historical fact.
Keith Cotterill is a kindly wise soul who does a daily market alert and often talks about silver. https://www.youtube.com/@omni7575
Keith often mentions that the price gets slapped down for no reason the market would sensibly support. Comex comes online in the US 1.30 pm our time, LBMA in London also does a price fix at 12 and 12.30. Keith knows his stuff when it comes to silver, and he recommends one or two other silver sages.
It ‘seems‘ that silver gets slapped down at the behest of interested parties rather than an honest open market. However it’s doubtful that there are many retail silver futures traders, you decide. Here’s Friday’s chart for the Wisdom Tree physical silver ETF. 3% drop in the afternoon
In The Inbox
From John Mauldin, a freebie here and while it’s American, it trickles down to global markets. He phrases the approach to having a view thus:
Many investors fall into one of two camps: fundamentals-driven investors who think charts are tea leaves, or technicians who think fundamentals are noise. (OK we’re not investors ) Watch here:
https://youtu.be/wSEx09MHT6Q?si=OMVVCWVclNO6nrlW
Price Headley’s Big Trends has links to numerous options services, never used them personally but the US is head and shoulders above our paltry options market.
https://www.bigtrends.com/alert-services/
Distraction Trades
ADA was $0.4129 now $0.4118
XRP was $2.0356 now $2.0310 So, our chosen Cryptos have been spicy lately
DAX : 2 losers, one no entry 2 wins nett 180
UK Gilts Were £16.12 now £16.05 This is based on the Vanguard ETF. Surpassingly robust considering. It has peaked at £27 remember.
Legacy Trades plus new trade 445
Trade 424 High Roller
PRECIS: We start from a losing trade as below. Short calls are rarely a good idea.This is a ratio spread 8450/8650 calls
Last week: 8450call 1226 8650call 1027.5 x2 gives us 829 (against our credit 266 or as legacy147.5 )
Was 8450 call 1249.5 8650call 1050.5 x2 gives us: 851.5 -Expect a roll to December for credit ± 38
Rolling to December gives us 53 This was the average from 19-21 Nov. So our cumulative credit from Aug now 319 or from Oct, 147.5. We are in debit of 737 ( 1,125 minus 931×2 )
Now 8450 1297 and 8650 1098.5 x2 gives us -900 At least there’s another all due soon
8450 1236.5 8650 1037.5 x2 gives us: 838.5 Roll coming soon, or perhaps the market will get spicy.
Now: 8450 call 1207, 8650 calls 1007.5×2 now 808 –our next roll should see us take in 35 or more
Trade 442 We Use 440’s Win For Further Credit
So we arrived at the happy position of owning a December 9500/9400 put spread worth 29.5. (125.5- 96).
Our possibilities: Keep the spread and run it to expiry for max 100. (a)
Sell the 9500 put for 125.5 and buy a January 9500/9400 put spread( 166.5-135.5= 31) to protect the now naked 9400 put. Credit: 125.5-31= 94.5
Or…. We sell another Dec 9400 put for 96. This now gives us risk at 9300, but we have juicy credit
Previously 9500 put 34 9400 put 23.5 So had we gone with (a) we’d be disappointed, but (b) Credit 94.5 gave us Jan put spread: 9500 67, 9400 52 =15, short December 9400 put 23.5
(c) Credit 96, the put ratio spread now gives us a debit 13
(a) the 9500/9400put spread is now 22.5 and 14.5 = 8
(b) short Dec 9500put 22.5, the Jan 9500/9400put spread 60 and 44 = 16 smaller debit 6.5
(c) 9500/9400 put ratio spread now a smaller debit 6.5 (credit 96 remember) Close out?……..
This week;
(a) Dec 9500/9400 put spread 13, and 7= credit 6
(b) Dec 9500 put 13 January 9500/9400 put spread 56, 40.5, 2.5 credit
(c) Dec put ratio spread 13, 7×2, debit 1 Remember: we took in big Credit with each of these trades
Trade 443. Cannot Find A Put To Sell…….
Ok so I need to set aside my personal bias and support the long side. We are buying a ladder, selling more calls than we buy.
December prices: buy 9800 call 72.5, sell 9900 call 37, sell 9950 call 25.5 . Cost therefore: 10 How safe is this? Keen eyed readers will see there’s a long spread and an extra short call giving us risk at 9950+100= 10050.
Was 9800 call 25.5 9900 call 9.5, 9950 call 5.5 We have 10.5!
Now 7, 2, 1.5 gives us 3.5 Ugly trade but…..
Trade444
Strangle!!! Expiry on 19th December only 9.2 trading days 9900 call and 9275 put are both 9.5 = credit 19 We are making a huge assumption that this is a benign market and will not likely surprise either up or down. Prove me wrong!
Now 2 and 4.5=6.5 credit 19 gives us 12.5 WIN! ( we’d close out but run for fun)
Trade 445 Another Year -More of the Same?
9450/ 9200 Put ratio (January) 47 and 24×2. What is the logic of this trade? What, actually, is the trade? OK we buy one 9450 put and sell two 9200 puts. We thus have risk below 9000, at 8950. We speculate that support would be strong at 9000 and we don’t really want upside risk. Should 9000 be breached we’d look at buying the 8950 put and selling something 500 points lower.
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.