That Was The Week of Fa Rage, US Tech Stocks and BTC Plummeted.
An horrific murder and a gross failure of judgement by the Police is far from being a common event, but maybe a lot to unpack. America’s murder rate per capita is 6.4 times as large as our own. Crime is never acceptable but we’re all exhausted as government local and national seems to be a proper mess. We can only hope that trust does not break down as we have seen in the US. One bad actor installed with the aid of America’s enemies changed the World for the worse. We all feel the change and it is unsettling. We can and should do better.
This week the market action was an expression of bewilderment. FTSE seemed to have support >10200 and resistance <10400. If we believe the US leads the market add the Nasdaq leads the US indices, then this week’s move down 4.77% on Friday may mark a sea change. Let’s hope it can be an orderly affair. Yes, stocks are at silly heights, but people were still paying silly money all the week until Friday. Non-Farm payrolls* did not reflect the unemployment rate, and the number has always been a tad ‘wooly’. Don’t predict, prepare.
*https://www.forexfactory.com/calendar
Insights from the US re: why the market keeps rising
This makes sense and it makes you wonder if it also applies to UK stock traders. Remember when houses actually cost 3x your annual income? This is worth a read but as newbies, will they act like proverbial rats on a sinking ship? https://nationalmortgageprofessional.com/news/gen-z-turns-stocks-housing-costs-shut-them-out
Personally I like to be able to apply a rationale to market action though it’s a bit like reading the mind of a cat. And it may be worth bearing in mind the housing market in the UK is starting to drop, perhaps giving Gen Z the chance of buying a first home. Not near me, thank you!
In The Inbox
I like David Linton and Updata, but have, over time, used fewer indicators, not because they don’t work, but because I lack the insights gained from a proper TA course. Here’s an interesting take. My wife likes to impress by being able to pronounce this particular charting tool from the land of the rising Sun. https://www.updata.co.uk/IGInterview
I still like point and figure, and Updata are also keen adherents to such. That’s TA stripped to the bare bones, and when it works, it works well.
Have a play -the default is a box size 50, and 3 box reversal. Floor traders used this with a note pad and pencil, AI has a real problem with it.
https://www.tradingview.com/chart/
Thanks to Tradingview, as is easily observable the red 0s denote down moves and we currently have 3 boxes down.
In other news. These guys emerged after a long silence, and one or two names you may know. It is US based but the methods are good. https://timingresearch.com
Distraction Trades
ADA was $0.2352 now $0.1571
XRP was $1.3389 now $1.0838 Crypto takes a dump.No idea why. I like this source https://coinmarketcap.com
DAX : 2 WINS, 3 no entries +200
UK Gilts Were £15.69 now £15.60 This is based on the Vanguard ETF. Not the cheeriest outlook, yields in the short term may be worth a look, current yield 4.78%
Silver: Using Wisdom Tree Physical Silver(PHAG) Went long at $71.31 and now it’s $62.66 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? Yikes, that’s a painful drop!
Legacy Trades( and New Trade 469)
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
Previously 1984,1786= 1588 underwater
Last, 1939.5, 1740.5= 1541.5 ( Currently rolling to July would give 1579.5 )
This week: 1,884.5, 1,685×2 = 1,486 ( possible roll to July 1507.5 )
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 were: 10100 33.5 10000 24.5 9900 19.5 9800 14.5 = 4 That’s a bit rubbish!
Now 10100 23.5, 10000 15.5, 9900, 10.5 9800 8 gives us 5.5 Come on you sellers and uber bears!
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….
Now 10150 30, 10000 15.5(x2) -1 Is this the roller coaster ride for June expiry?
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
Now Calls 10700 9.5, 10800 4(x2) Puts 10000 15.5, 9900 10.5(x2) = -4 Headed, inexorably in our favour. Surely?
Trade 469 It’s That Bonkers Trade Again
So the trick with this is that it’s a gamma play -and as we near expiry, gamma* increases dramatically more in the near month than the far month. In English, a June straddle would move more than a July straddle, but we don’t do one for one. We sell 2 x July straddles, buy 3 (three) June straddles. What could go wrong? T H E T A will bite us. What could go right? Gamma and near month volatility can work in our favour. So here’s the deal: 10400 Jun straddle 88.5, 102= 190.5. July 10400 straddle 176, 170.5= 346.5. This can work in a heartbeat but can drag on for a soul crushing 2 weeks. So we pay 190.5×3= 571.5, we take in 346.5×2= 693. Credit 121.5
While the credit looks spicy, remember we will have to pay big to close this out but the trick is to pay a lot less than 121.5 Did I mention this trade is bonkers but has worked in the past…
*Gamma rate of change of Delta -you know this stuff!
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.