That Was The Week
Software as a service ( SaaS) companies have lost $1Trillion since the start of the year. FTSE? UP 5.19% So what is going on, is the turgid olde worlde actually outperforming ? We often talk down our own book in the UK, like potholes in our overworked road system we don’t see the remaining 90% of the road that is fine! Shares like National Grid, Lloyds, Prudential have done well but the cynic in me says that a rising tide lifts all boats. The deluge of dosh has seen a radical boost and companies while overvalued, continue to be bought. With a mindset that sees no value it’s hard to buy at these levels but that does not deter the current participants. In fact buying at the top of the market is generally profitable, but you need a flexible timeline. Nobody knows when the dips will come.
Nice Graphic!
Well, that’s pretty damning evidence as GDP is a measure of economic activity. However, we know many of the UK’s top 100 companies are global ( I use the word in the traditional sense). While investment property has become something of a pariah it may be that the UK stock market is the new, er stock market. Conservative investors have still piled into money market funds and low interest bearing accounts. Wary of stock market returns it may now be the only way to ensure a future of financial security. However it seems to this simple mind that if stocks are doing so well why aren’t wages improving? Something like 2 million working households are claiming benefits. This is a subsidy in a way, to corporations, though the minimum wage in the UK is considerably more than the US.
Distraction Trades
ADA was $0.2698 now $0.2819
XRP was $1.4103now $1.4654 nothing to get excited about
DAX : 2 wins, 1 loser 2 no entries Nett 160
UK Gilts Were £16.01 now£16.18 This is based on the Vanguard ETF.
Silver: Using Wisdom Tree Physical Silver(PHAG) was $68.99 now $71.15 Tempted to go long at $69.70 and having put in a tongue in cheek order, got a fill. Sometimes rounded numbers get tested just a little but this $70 level may be support now. What could possibly derail my trades?
Legacy Trades to 452
Trade 424 High Roller
PRECIS: We start from a July 2025 losing trade as below. Short calls are rarely a good idea.This is a ratio spread 8450/8650 calls
In summary we have taken in 286 (legacy 167.5) and our rolling has given us 106 We’re a very long way from home!
This week 8450c 1689.5, 8650c1491.5 x2 = 1293 It’s possible this could run for a very long time and it eats margin, but the rolling Credits may well produce 10-20% p.a.
Double Ouch! 1755.5 and 1557.5×2= 1359 Of course the FTSE’s up again so it’s to be expected. We’re only concerned with rolling to the next month until the market meets us.
Was: 1913, 1713.5x 2 gives us 1514. Given this is £10 a point that’s a hefty chunk of change so while this is an exercise in what NOT to do it’s also not a good idea.
Now: 1967,1767.5 x2= 1568 We will roll into March expiry during the week. This is, however deeply underwater.
Trade448, Jade Lizard Time? Feb expiry
Sell 10200 Call 122.5 and buy the 10250 Call 99.5. (Apologies this was incorrect previously) 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
Those prices: 159.5, 136.5, and 31 which gives us 23+31= 64. Our credit was 63.5 so….. we’re in with a shout
The call spread: 92.5, 70= 22.5 and 33.5 for the 9750 put so that gives us 56. We took in 63.5 and there’s 4 weeks to go.
123.5 and 96=27.5, and the put is 31.5 gives us 59.
Now 218,179.5,= and 14 = 52.5 Best we can do is run to expiry where the short call spread will be worth 50 against us and we took in 63.5
The Call spread is 42.5, and the put 5.5 =48. The best we could do is to close out for 63.5-48 = 15.5 WIN!
Trade 449 It’s Gotta Be Puts, and A Calendar
Struggling to find trades with modest risk/reward, so what we have here is a February short (sold) 9700 put for 28, and a March spread that we buy 9850put 84, sell the 9650 put 57.5, so we pay 26.5 for the March put spread. Giving us a tiny 1.5 credit. We now have risk at about 9500 and no upside risk. We may live to regret this, after a year of ridiculous buying ( IMHO).
short Feb 9700 put 29.5 Long March put spread 95.5 and 63 =32.5 We’re in credit 3 !
This week: Feb 9700 put 27.5, March9850/9650 put spread 89.5 and 62= 27.5 We’re no longer(aside from 1.5 at entry) in credit
Feb 9700 put 12.5 March Put spread 63.5 and 45 =18.5 Credit 6+ opening premium 3 =9! Doesn’t look as if the Feb Put will ever be in trouble
Feb 9700 put 5, March Put spread is now 50.5-36.5= 14. So while this has made a few pence it’s not earth shatteringly good. We run to expiry
Trade 450 Classic Index Trade ….Strangle
10500 call 13.5 9250 put 13.5 For no particular reason, we have equal premium on either side giving us nett credit 27. We have risk at 10527, and 9223 ( 3.8% to the upside and around 10% to the dark side ) Given the precarious nature of everything it seems we need that big 10% buffer zone on the put side.
10500 call 18.5 and 9250 put 12.5 = 31 Hmm not what we hoped for, we took in 27 but it’s still 3 weeks to go, yet.
40 !!!!! SERIOUSLY???? The 10500 call just destroyed us at 40! 9250 put 5.5
[ We could adjust, by moving the call up to 10550, cost 15, selling another put 10100 37.5, buy back the 9250 for 5.5.] We will track both. Risk now getting spicy.
10500 call is 31.5, the 9250 put 2 We run to expiry and hope it’s < 10527
Trade 451 Struggling to Pick a Strategy(Feb expiry)
We ladder or ratio into a butterfly. Of sorts. Say what? We buy a put ratio spread buying the 10200 put,118.5, selling 2 of the 10000puts 60.5×2. Then, we buy the 9800 put, 36.5, and sell 2 of the 9500puts 18.5×2. This gives us 2.5 and 0.5 = Credit 3 We stand to make a profit anywhere from 10,200- 9810 and risk at 9500. It’s zero cost low risk possible 200 max profit. So, we have no upside risk, modest profit potential. We cannot have upside risk. But we need some skin in the game. I foresee an accommodating market for the trade. I also have little idea where we go next. Positivity is much needed while all around are doing ok against your own judgement
Now 54, 27×2, 15.5, 8.5×2 Gives us minus 1.5 but Credit 3 to open -high finance.
Now 22, 10.5(x2), 6 and 3.5(x2) Gives us 0! We will let these all be abandoned( and avoid fees )
Trade452 Straddle, Anyone?
A snapshot of the FTSE options chain: https://www.ice.com/report/265 We see the 10,400 straddle and we want to sell the call and the put. The numbers from left to right, 83 is the price of the call, 0 is intra day volume. 5,810 is Open Interest (the number of lots in existence). Next, 10400 is our strike, 119 is the price for the Put, 0 volume, and 12 is Open Interest( or lack of interest in this case).
So we sell both and take in 83+119= 202, so we have risk at 10600 and 10200 It’s bold it’s risky it’s probably not a good idea but we may see how well taking the opposing position might transpire. Remember we can close out at any time so if we get a very slow day, theta might gift us 20 or so.
Yikes -spicy but now 81 and 63 Gives us 144 and we took in a Credit of 202, we’d take 58 profit but we run to expiry too. WIN!
Trade 453 March Looms large
Time for an Iron Condor? It’s time to trade March, that is certain. You may recall an Iron Condor is a short strangle and a long strangle, or in other words, selling a call spread and a put spread, which are out-of-the-money. Call spread 10600 76 10650 59.5 gives us: 16.5 Put spread 10300 130 10250 115 gives us: 15.
Personally, I think the Credit from the Put spread is hopeless and I’d go for a naked 9650Put 36.5. Which, as you know, is a Jade Lizard! Let’s give both a shot. Max loss of the IC is 50-31.5=18.5
Our Jade Lizard gets spicy at 9600.
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.