That WasThe Week We Were ‘Having a Heatwave’
There’s a song about this, from 1933 but it’s too awful to contemplate with bizarre lyrics here: https://genius.com/Irving-berlin-heat-wave-lyrics
Sell in May and go away. That has no longer aged gracefully, I cannot imagine today’s stockbrokers missing out on a single dollar in exchange for a life of leisure. Different times and as we well know you can trade 24/7 most weeks of the year. There is always a ‘game in town’ somewhere. Thankfully there is the more sedate world of options although 0DTEs seem to be gaining ground, certainly in the US. We are late comers* but I understand this market is taking off as a kinder way of intra day trading as opposed to futures. Buy a call spread and the market drops 50 you might lose a few quid, futures will cost you £500 in a heartbeat.(Spread bet for £1 a point if you must!)
*Would like to hear from you if you are using these from the ICE exchange via IB.
So, in other news, there was nothing major to report, as Iran continue to make it clear they are not going to compromise and they are in charge of the Homuz Straits. Quite how the US hasn’t erupted into mass civil disobedience is no surprise as their administration continues to deny truth and justice. We learned about youth unemployment, Cuba’s crisis due to US blockade, Putin’s desperate and brutal attacks on Ukraine’s capital, Kyiv. The weather was front and centre, not helped by Amazon’s Jeff Bezos having a bit of a blow up on the launch pad.(Kidding!)
In The Inbox or…. On The Tube
A personal favourite, the esteemed Mr N Taleb https://youtu.be/gPs9dd88Km8?si=o1jyGgyEG9F9liWC Whilst this is talking in general terms he makes the point well in this rather low quality clip.
Actually from CBOE email https://www.cboe.com/insights/posts/how-stocks-and-the-vix-index-can-rise-together?utm_source=mcae&utm_medium=email&utm_campaign=traders_edge&utm_content=email_type-newsletter-read_on
As always, a weather eye on volatility is key. Whenever we do our pre-trade analysis, volatility is the main act using the calculator. Remember: https://www.cmegroup.com/tools-information/quikstrike/options-calculator.html
Distraction Trades
ADA was $0.2380 now $0.2352
XRP was $1.3248 now $1.3389 Not sure about the crypto world, seems like another era now . I like this source https://coinmarketcap.com
DAX : Only 1 trade WIN 100
UK Gilts Were £15.60 now £15.69 This is based on the Vanguard ETF. Not the cheeriest outlook, yields in the short term may be worth a look, apparently. NB I thought I was buying this at £15.41 but paid £15.50. This is in my pension and the situation is, that funds take time to buy and sell. It’s not my idea of a level playing field but that’s the reality.
Silver: Using Wisdom Tree Physical Silver(PHAG) Went long at $71.31 and now it’s $69.13 After the massive 10% rise it crashed back down and hence my entry. Do not follow me this is not a huge position and luckily I have done well this year with Ag. Near term gloom, long term boom? End of year $300 or $30?
Legacy Trades( and New Trade 468
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
In summary we have an old trade from July 2025 which is a loss of 1741 against the credits taken in, of 422
Was 1539 big yawn but that’s the point. This will run until it’s no longer in a loss.
then 1912, 1712.5(x2) gives us 1513
then 1771 1571.5×2 = 1372
Crazy time, as our strike( 8450) does not exist for June so we roll from 1914,1714=1514, to the new strikes up 50, 8500/8700: 1875.5,1678 =1480.5.
Our new position therefore is 1480.5 underwater and we have a debit of 33.5 So the running income is now 422-33.5= 388.5
Was 1984,1786= 1588 underwater
Now, 1939.5, 1740.5= 1541.5 ( Currently rolling to July would give 1579.5 )
Trade 466 Shoot ME! It’s NOT a Butterfly
It’s so simple- we use the long spread(June 10100/10000 put spread) from 465 and create a butterfly by selling the 9900/9800 spread for 98.5,78.5= 20. We carry forward the 3 debit
Now this is not only bulletproof but can still make 100 such is the beauty of options, we take a credit every month and sometimes we get the big win. Worst way we still have 17 credit and there is no margin used for a butterfly. In fact it’s a credit in margin.
Now: 48.5,37.5 and 29.5,23.5 =5 And……. it is a C O N D O R !!! Why? The ‘body’ is wider than a butterfly which simply uses the same strike 2x for the body. You know this
Those prices now: 10100 33.5 10000 24.5 9900 19.5 9800 14.5 = 4 That’s a bit rubbish!
Trade467 What Does This Latest Rise Mean?
Looks like the 10000 level is easy pickings for Put sellers but as always we like to have something in the back pocket. We sell the 10000 put twice for 37.5. We buy the 10150 put 55.5. So we now have risk as 9850 which strike seems unassailable. We have a credit of 37.5 (x2)- 55.5=19.5. Ideally you’d sell puts when the volatility is high but it’s never that simple. Friday 15th May looked like the start of a bigger move down. Hard to be emotionally neutral these days
10150 39.5, 10000 24.5= 9.5 ( We took in a credit of 19.5 remember ) Sort of winning….
Trade 468 Ratio Iron Condor – acronym Rico?
Ok, there’s something going on that doesn’t add up. VIX is at the year’s low, markets are hitting highs, FTSE is not. Either it will catch up, or it is ahead of the game and the much flaunted crash will be in a market near you. We don’t always like to take a credit just for the sake of it, but ticking over with small wins is ok. We have a ‘short’ iron condor though on both sides we have ratio spreads. Traditionally the middle strikes (body) is sold and the wings (outer strikes) are bought. Here we buy nearer the money on both puts and calls and sell x2 further out. We have a credit of 12.5 just to keep us turning over. Prices: Calls: 10700 28 10800 14x2 Puts: 10000 24.5, 9900 18.5x2 Risk is at 10900 and/or 9800
Glossary:
There are two types of options: Puts, give you the right but not the obligation to sell the underlying asset . Calls give you the right, but not the obligation to buy the underlying asset.
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.(I’m living proof)
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.