That Was The Week Trump Did His ‘Taco’ moves again
I doubt I’m alone in feeling exhausted by the inanities and insanities of the Trump circus. We are not privy to the machinations of that ‘brain’. However without doubt there has been some massive insider trading in the US and we can only ponder the implications for our tiny FTSE. It was an exciting week and the 10200 level was breached which had this trader eager for 10000. I do not think the market holds its breath for my modest positions, suffice to say expiry week may yet produce the goods. Politicians manipulating markets – never a good idea. It sullies the market and those attempting to mess with it for a quick buck. Perhaps it’s naive to think the markets are squeaky clean. Does it matter? Yes.
I hope you will join me in looking at the point and figure chart to understand how it works. A 3 box reversal has happened and printed a column of 5 ‘Xs’. So for example the FTSE hit 10200, then, as it went up to 10350 it printed the up move. Can it predict next week? That seems to be in the hands of a very suspect actor. In other times, it has been helpful. https://www.tradingview.com/chart/ruRQwx7O/
As I understand it the Space-X IPO went well and the share price moved up 19%. Not sure how this works but I understand some bigger buyers are locked in to holding the stock for 6 months. As it stands the stock may not enter the S&P 500 for another 12 months, but pension fund investors may be a tad anxious about the imbalance of the effect of the tech stocks. It may be worth noting that Space-X does not make money and is priced at 100x forward earnings -or as I would say ∞ Infinity.
In The Inbox
Among the freebies is https://www.mauldineconomics.com
I’d recommend signing up as the macro view can help us make better decisions. A.I. is on the march and it boggles the mind to imagine how A.I. is going to affect our trading. There are no guard rails it can do anything outside the bounds of the reasonable and crush us all. That is a sobering thought, as it could sweep through the markets looking for positions it can bust. Are we the masters or the servants of tech? Anthropic built a model so powerful (Mythos) that it decided against releasing it because of the threat it poses to global cybersecurity. Cheers!
This from the latest email: 
Advances in cures and vaccinations against horrific diseases are being made daily with the assistance of A.I. Not sure if that comes under technology or health care. Comforting and alarming
This from the excellent Erik from CME if you’re a follower of the precious metals https://view.the.cmegroup.com/?vawpToken=UPUF5CXR6JIE7FEONDM4Y4CARY.110049
And finally our old chum Larry: https://mailchi.mp/optionstrategist/the-option-strategist-weekly-updater-4864902?e=5f15d5ff5d
Distraction Trades
ADA was $0.1571 now $01724
XRP was $1.0838 now $1.1445 Crypto had a little rally. I like this source https://coinmarketcap.com
DAX : 1 win 1 no entry 3 losers Nett: -70 We are floundering here as volatility hits our 40 point stop even while direction is right – a case for 0DTEs?
UK Gilts Were £15.60 now £15.68 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 $61.69 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 470
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 )
Last week: 1,884.5, 1,685×2 = 1,486 ( possible roll to July 1507.5 )
Now: 8500 1963.5, 8700 1764 x2= 1643 Looks like a roll might cost money
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!
10100 8.5 10000 5.5 9900 4 9800 3 =2 Horrible!
Trade 467 Easy Money?
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….
Was 10150 30, 10000 15.5(x2) -1 Is this the roller coaster ride for June expiry?
Now 10150 10.5 and 10000 5.5 x2= -0.5
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
Was Calls 10700 9.5, 10800 4(x2) Puts 10000 15.5, 9900 10.5(x2) = -4 Headed, inexorably in our favour. Surely?
Calls 10700 9 10800 3.5(x2) Puts 10000 5.5 9900 4(x2) Yawn……
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…
On Friday we’d have paid 182 but on Wednesday we’d pay 83 to close. As stated you have to be nimble and so the best was a profit 38.5. You would not leave it to run as shown by Friday’s number. We will not run this to expiry by choice, but to see how ugly it gets
*Gamma rate of change of Delta -you know this stuff!
Trade 470 Risk and Repeat
Cheeky repeat trade, the spicy strangle selling both: 10200 Put 13.5, 10650 Call 15 gives us 28.5 It’s not much reward for high risk, so we may need to get active. However we can add a little downside insurance for not a lot of money buying the July 10200/10100 put spread for 65.5-50= 15.5.
Next week’ s expiry may be a crazy affair either way but promise to find some more interesting trades.
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.