That Was The Week FTSE Smashed Up Again
As the world enters a phase of 1930s Germany combined with the last days of Rome, the cash is piling in, still. So, to comment on the state of the market would be churlish. However I really do not like, or trust it. Last April the Trump dump was the kind of disruption that must have hurt a lot of people who were not privy to the tariff shenanigans. So what are the chances of dump 2.0? The market can be rattled to the core with a few crass comments. Thus, this risk on tsunami seems to fly in the face of reason, IMHO. Banks are making fat profits and windfall taxes have been mooted by Labour. While the tax ‘may be’ just, government spending is always terrible value.
Bubbles everywhere were told: bonds, housing, stocks, metals AI, but what can we believe? We know US banks are being shored up by the Fed for about $20billion a month. However that is small beer. This guy makes some interesting points that pander to my bear position! https://youtu.be/OeXm8D4JFrw?si=ptwiatF73wlK9LVR
In the Inbox
CME, always good content. A trade simulator, a competition and some useful insights.
A little bit of home content from Victor and Jim https://masterinvestoruk.substack.com/?utm_source=substack&utm_medium=email
Distraction Trades- Including New Asset ‘Silver’
ADA was $0.3843 now $0.3912
XRP was $2.0003 now $2.0957 Some speculation, and more, over Bitcoin and pals this week. But, how can we value them? Beats me.
DAX : 4 wins one no entry(Friday) Nett: 400 This is traded in real time with a very simple entry rule. Exits are variable and discretionary
UK Gilts Were £16.03 now £16.25 This is based on the Vanguard ETF. Up 1.4% this week, but then everything’s up this week!
Silver: Using Wisdom Tree Physical Silver(PHAG) $66.05 now $73.11 Some massive moves as Comex tries to keep the price down while physical demand must surely mean it will keep rising
Legacy Trades to 448
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
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 )
Was : 8450 call 1207, 8650 calls 1007.5×2 now 808 –our next roll should see us take in 35 or more
Rolling gave us 33 but now the real horror ….. 8450c1479, 8650c 1281 x2 = 1083
In summary we have taken in 266 (legacy 147.5) and our rolling has given us 86 We’re a long way from home!
Was 8450call 1460 and 8650call 1265.5 x2= 2531 Gives us: 1071
Was 8450call 1521.5, 8650call 1322.5 (x2) gives us 1123.5
Ouch! 1684, 1484( x2)= 1284
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.
18 and 11.5×2= minus 5. Early doors.
Was 13 and 8.5×2= 14, gave us minus 4
Then: 7.5 and 5×2. Minus 2.5 -it could still do something……..
Now: 1.5 and 0.5(x2) We can take comfort in the fact this was a freebie
Trade 446
Big ugly butterfly anyone? Looking at Calls at these strikes: 9500, 9750 and 10,000. giving us the prices: 447, 223.5(x2) and 65.5 That’s right it costs us 65.5 Logic of the trade, market may soften in the new year as events in the next few week may get crazy. You KNOW what I mean!. It’s a plodder of a trade but the reward is 250 if the market favours us.
Was 428, 202(x2) and 51 Gives us 75 We’re in profit!
Last week: 480, 244.5 x2, 68.5 = 59.5 That’s not nice!
Now 636,388 (x2) and 148.5= 8.5 Well that’s a real kick in the pants
Trade 447
We really need some puts in the locker, but don’t want to pay for them, what’s to do? We are going to leg into a risk reversal, also known as a combination, which is a short call and a long put. However we start by buying a cheap put spread, long 9900put 53, and short 9800 put 30. Assuming Monday will be an up day we’ll look to sell a call and buy back the 9800 put. We’d just need a down day of 1% after that to make this a juicy trade. This goes against conventional wisdom which says the market is going up, value is irrelevant. We stand to lose a maximum of 23, so we’d like to win at least 50
Well that plan went awry but we could do this: Sell the 9900 put for 6.5 and take the 16.5 hit. Apologies, this was not a smart trade, and it ignored the Santa rally which can continue well into January.
Trade448, Jade Lizard Time? Feb expiry
Buy 10200 Call 122.5 and sell the 10250 Call 99.5. Sell 9750 put 40.5. Tasty Trade aficionados will know that we sell the call spread and a naked put. Here we have more credit than the upside risk of 50, the width of the call spread. In fact the premium we take in is 63.5, we thus have risk only at 9686.5. So we don’t mind a 400 point dip, a rise but at best we’d want the market just below 10,200
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, give it a whirl. (AI gets things wrong, remember)
All opinions expressed here are not to be taken too seriously and all of the trades are for educational purposes only.