461 W/e10Apr More Market Mayhem & ME Misery

 

Another Feeding Frenzy

Germans, the most level headed people you’d say. On Tuesday the DAX smashed up over 5%, because an idiot said something that is unlikely to be true. Now, markets can swing even more because of the ludicrous amount of money that has been printed. I did wonder if it coincides in equal measure to global debt. Oh wait:

Chart courtesy of Global Liquidity Indexes and John Mauldin

Global Debt:

Apparently there is a healthy surplus. What’s a few $trillion here or there, though. Can we believe that real growth is responsible for the massive increase in liquidity? Probably not! This may all be a bit of nonsense as it’s certainly beyond my pay grade. However if you like this sort of thing take a brief look at https://www.usdebtclock.org/world-debt-clock.html  But don’t linger.

Quite how our tiny island has managed to have a ratio of external debt to GDP of 299% shows the tidal wave of foreign money that has piled in and can just as easily fly away. This figure was 278% last September. No need to panic, then. This reminds me of the early 2000s when I was reading a lot of negative stuff about financial markets, and the parlous state of the world. Well, here’s the good news from A.I. :The UK’s external debt to GDP ratio has fluctuated significantly since 2000, reaching a peak of 393.3% in 2008 due to the financial crisis and then declining to 270.4% by 2025.

Predicting Markets -Folly? Yes.

So, as we have seen in recent times, the unpredictability has only increased as expected. Actually yours truly had expected a global meltdown in early 2025 when tariff boy went postal. That Trump dump and subsequent rise was clearly a gift to certain folk, but for regular ‘Joes’ like us it’s a real problem. We’ve seen a bounce off the 200ma on a daily chart but will that act a support next time? Personally I pay little attention to such things as they only seem to work retrospectively. We have no idea how global events will pan out from one hour to the next. This is the new normal. It’s almost as wild as 2020, so apologies if the trades here are boring/wrong/indifferent.

In The Inbox

A useful Email from Larry McMillan who has been around a lot longer than I have. https://mailchi.mp/optionstrategist/the-option-strategist-weekly-updater-4864328?e=5f15d5ff5d

Portfolio protection seminar looks good, while my own turgid investments don’t do much but they are safe. I do have a strategy for hedging that may not be advisable without deep pockets.

Not quite an email but Youtube: https://youtu.be/woTy4dTiT20?si=TYtXYtQIer2OSrhf  If you don’t want to watch the whole think fast forward to 10:00 and if you don’t find this message chilling, then good life to you. 

Distraction Trades

ADA  was   $0.2458 now $0.2501

XRP  was   $1.3186 now $1.3476    nothing to get excited or concerned about. A bit of love for Ripple

 DAX :  NO entries This is only the second time since we started this, but reflects the abnormal market conditions.

UK Gilts Were  £15.72 now £15.73    This is based on the Vanguard ETF. Not the cheeriest outlook.

Silver: Using Wisdom Tree Physical Silver(PHAG)  was   I had another go at $64.10  now it’s $69.62  it should have hit $100 according to the experts (this ETC does not mirror 1-for-1 but reflects the changes )

Legacy Trades New Trade 459

Trade 424 High Roller, This is a Trade Gone Wrong

PRECIS: We started from a July 2025  losing trade as below. Short calls are rarely a good idea.This is a ratio spread 8450/8650 calls

A Glitch as futures prices created a debit where we would normally expect a small credit, thus we pay 7.5 to roll into March (Feb: 2170.5, 1970.5×2,Mar 2159,1961×2)

We  had a  debit of 1763 ( total income 392 )

O, me miserum! Irrumator! (look it up, it’s rude)

Now 2452.5, 2,253.5 x2= 2054.5  Remember we can run this for years! (We may have to)

1805, 1608.5 x2= 1412  recovered more than £6,000  we soldier on.

1804.5 and 1604.5 (surprisingly enough!)  1404.5  

Rolled on Thursday from 1200 to 1230  Credit 30

Last week:  running a debit of 1107  (total income to date 392+30= 422) While this looks like folly it’s not a catastrophe as the income has been excellent relative to cash on account (margin)

Last week: 1525.5, 1331.5 x2 = 1137 It seemed the week was another big drop but it wasn’t.

Well, this is a horror show: 1974.5, 1774.5(x2) gives us 1574.5 Horrible but of course we will roll soon.

Another horror: 2154.5/1954.5(x2) =  1754.5 hopefully we can roll this for decent credit again. We ill aim to get this done before expiry next Friday.

Trade 458 Big Vol? Bet The Farm- This is a Lottery

The longstanding view is always sell big volatility so let’s try to keep out of trouble with a very wide strangle. We sell the 8500 Put for 29 and sell the 10500 call for 29.5. Our credit is 58.5 and our risk is at  8441.5  and 10508.5. However if premium on one side trebles, we may adjust.

8500 put 19 10500 call 39.5= 58.5  Doesn’t feel right, frankly but here we are, the prices don’t lie

8500 put 1.5, 10500 call 112.5  On Wednesday the call went to almost 3x premium, so we could have closed out for 84, and either accepted the loss or sold a 10650 call for 38, and the Puts? Close out the 8500, for 1.5  Sell 9900 for 45  giving us 112.5+1.5  cost, premiums taken in 58.5, + 38+45= 141.5 (overall credit 29)and a new Strangle 10650call 9900put  Part of me says sit tight……… 

This week: 8500 put 0  10500 call 147   After adjustment 9900 put 3  10650call  52   We really want <10500  

Trade459 What Can We trade in a No Sense Zone?

What trades are bulletproof? Debit spread trades, condors and butterflies.Other trades may also fit this profile, but may not be practical for retail traders.

Here we go, we are buying 2 cheap (April) butterflies:  calls: 9900/10000/10100  those prices 265, 208(x2), 159. Gives us a debit of 8

And for the blue team we have the put butterfly 9900/9800/9700, those prices 204.5, 168.5(x2), 139 gives us a debit of 6.5

So for a total of 14.5 we could make a decent profit, or not, anywhere between 10,050 and 9750 We’d like to land on either 9800 or 10,000 for the max 100.

Apologies to those who rightly point out I get the strikes in the wrong order most of the time. However you’re all aware the centre strike is where we are selling 2 lots, called the body,  against the single lots that we own, which we call the wings.

Both butterflies now worth……… 2.5 each. We might as well stick with them, who knows?

OK technically the Put ‘fly is worth 0.5 and the Call ‘fly is worth  1 So much for safe trading

Trade 460 Standing in Front of a Steamroller

……. Collecting pennies. The famous saying about selling options premiums.  Well, we try to do better than that but in this jumble sale?

10800 call 23.5 9800 put for 26. These would seem to be safe from the mayhem with two weeks to expiry. We sell both, making a strangle, with risk ± at 10850 and 9750.  Other strategies are available. Also contemplating a ‘ladder’, but that may be for next week.

Now 9.5 for the Call and 2 for the Put  CLOSE OUT !!! 49.5-11.5= 38 profit   We will run to expiry too, but it can only make another 11.5 which is not a good prospect in this market.

Trade 461 Calendar We Go High Risk

Well, playing safe has not served us well, so let’s see what kind of trouble we can find with a calendar trio.(we have 3 short options for 1 long)  This time we sell 2x in the front (April) month against the long spreads in the far (May) month. April 10750 Call 18(x2) April 10400 put 24(x2).  May long spreads, 10650/10750 call spread 165.5/117, 10500/10400 put spread 151/121.

April shorts give us a credit: 36+48= 85, The long spreads will cost us: 48.5 + 30 = 78.5

Thus we have a small credit and a nail biting week in  prospect. Should we find ourselves in a pickle we will trade out of it. Possibility of profit? No idea, it’s going to get spicy, so please don’t do this in your own account! 

 Glossary:

There are two types of options: Puts, give you the right but not the obligation to sell the underlying. Calls give you the right, but not the obligation to buy the underlying.

When you sell those options, the opposite happens, with puts you get stock ‘put‘ to you at an unfavourable price (or not) and calls you get the stock you own taken, or ‘called’ away. If you don’t own the stock you need to stump up the cash, but in both cases with the FTSE index they are cash settled at £10 a point, so losses and gains are uncomplicated.

Please read the links below for a more comprehensive explanation in simple terms. Options are about mindset, only a modicum of intelligence required.

 

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.