That Was The Week Oil Dropped 20% Silver shone!
Many thanks to https://tradingeconomics.com/commodity/crude-oil for the chart and the various commodity prices, sometimes these are the wags that tail the dog(pun intended!). Our world runs on oil and we hear of protests and road blocks in Ireland about fuel prices. So, whilst I can sympathise, I’m not sure protesting is going to change anything. Personally it now means an extra £7-£11 to fill the tank of my modest vehicle, which I do maybe 10 times a year. This increase will filter into the main markets and the liberal in me wonders if bus services will continue to be running at losses soon to be a whole lot more painful. Inflation can also assist stock markets, however, it’s business as usual. If you like that sort of thing!
So another expiry and this was at 10,593 up 5.8% from last month. It should come as no surprise that the BTFD* is constantly in play even in international crises. There are times when the market seems like elastic and reaches a point of overstretch, but quite why it doesn’t work often** in reverse shows a change that yours truly has been unable to take on board for 2 years when FTSE breached 8,000. Funny that I can still recall a friend in a foreign land who hadn’t traded FTSE for a while thought I meant 6,000 during a conversation on trading. My own doom and gloom bias means I miss out on 70% of market action! Hard to shake off the old attitudes. I’m still here only because options give us an edge.
*Buy the ****ing dip.
**in normal market conditions
In the Inbox
In a homage to Trade 459, Larry gives us this belated wisdom: https://mailchi.mp/optionstrategist/feature-article-cheap-butterflies-as-speculative-trades?e=5f15d5ff5d
Honestly, I don’t know if the options world knows about us or even takes us seriously. But a happy coincidence. I really like very very wide butterflies but you need some luck.
Meetup has the odd glimmer of options activity too https://www.meetup.com/london-options-trading/?utm_medium=email&utm_source=braze_canvas&utm_campaign=mmrk_alleng_event_announcement_prod_unfiltered_v7_en&utm_term=promo&utm_content=lp_meetup&dispatch_id=69d8f9e1429b2fc848297e52d71fe25c This is about hedging a portfolio with options
Distraction Trades
ADA was $0.2501 now $0.2521
XRP was $1.3476 now $1.4346 nothing to get excited or concerned about. A bit of love for Ripple
DAX : NO entries last week. This week 4 days no entry, 1 win +100nett
UK Gilts Were £15.73 now £15.74 This is based on the Vanguard ETF. Not the cheeriest outlook, yields in the short term may be worth a look, apparently.
Silver: Using Wisdom Tree Physical Silver(PHAG) I had another go at $64.10 now it’s $75.04 it should have hit $100 according to the experts (this ETC does not mirror 1-for-1 but reflects the changes ) This is a pure punt
Legacy Trades 2 small losers, 3 big winners plus New Trade 462
I had messaged with trade close outs but we have done ok without.
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 will aim to get this done before expiry next Friday.
Rolling on Thursday gave us a level 1741 to roll into May, therefore no credit
In summary we have an old trade from July 2025 which is a loss of 1741 against the credits taken in, of 422
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
So, the original strangle would have had a big loss, but the adjustment worked for a WIN 29
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
2Losers But it is a tiny loss 14.5
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.
WIN! Collect the full 49.5 As prudent traders we would not rely have wanted the risk for the 11.5 extra
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!
So, our April shower 1750 calls and 10400 puts were gracious enough to expire worthless. Our May long spreads? 10650/10750 calls 154.5 and 101, 10500/10400 puts 85 and 65.
Gives us 73.5 plus our credit to open 6.5= 80 Biiiig WIN!
Trade 462 Calendar or Something Else?
What if we could buy a cheap Put spread and make something happen with that? We could use the one we own from Trade 461 This may be nuts but…. we SELL a June 10100 put for 80, giving us risk at 10,000. This exploits something we may not have done before, but we have a month’s protection at 10400 giving a full 100 so if things get spicy(and I really hope they will) there will be some interesting possibilities. We learn by doing and if we don’t break stuff we’re not trying hard enough!
https://optioncreator.com/stvdj8f
Have fun with this,I’m not even sure if this strategy has a name but the chances of profit look good, and theta is our friend. Remember if the market does drop to 10400, we will collect 100 from the long spread with which we can buy some excellent protection or close out.
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.