That Was The Week US Hit $40Trillion in Debt
You know when you’re thinking ‘this time it’s different’ and the sages of the financial world say no? I would not beg to differ but surely with each passing day of crazy in the US, nothing has been like this before. The Japanese Yen has been having serious wobbles, and their debt is over 200% of GDP. So, the way through this is for Japan to sell US bonds. They are the largest owners by far, of US debt. This has now created wobbles in US bond yields and mortgage rates which rely on this have now increased to almost 7%. https://www.bbc.co.uk/news/articles/c9d8z72nn02o
Tariff war 2.0 (actually I’ve lost count, so n.0) is on again with another law :The action is being taken under Section 301 of the Trade Act of 1974, based on claims that the US’s economic partners have failed to properly tackle forced labour. Migrant sweat shops have provided the US with cheap goods in the same way cheap migrant labour built US infrastructure. Market forces are far more compelling than any kind of altruism. However, tariffs, are back on. We only have a 10% tariff on UK stuff and there are some exemptions. We run deficit to the US anyway. Effectively robbing poor people seems to be the Modus Operandi of the US administration. So maybe it’s not identical this time.
In The Inbox
Heeeeeeeere’s Larry https://mailchi.mp/optionstrategist/the-option-strategist-weekly-updater-4865585?e=5f15d5ff5d
We’ve seen this before: https://youtu.be/0oYe7xKmC84?si=3jSe_2mtGSHzxBTf Now I like these guys but we are at variance as the video shows the horror of losing a million. Cut short your losses. Always. When Covid became a real threat I closed out and lost half a year’s profits. Did I learn the lesson? No! I’m a terrible trader, underwater with short calls.
And this, we simply cannot ignore AI, but it seems we’re powerless against it. https://www.mauldineconomics.com/the-world-isnt-ending/ai-robots-and-rok?_sc=OTQzMjQwNSM0MDgxNg%3D%3D
Expiry: 
Hard to capture, in real time, but the bonkers spike seems to happen every month.
Distraction Trades
ADA was $0.1996 now $0.2228 Wild swings this week. Has this cheapie bottomed out? Or is it headed for $0.03 again?
XRP was $1.0376 now $1.4885 Crypto -it’s a mystery! I like this source https://coinmarketcap.com
DAX : Under review after poor record lately. Yikes! No trades.
UK Gilts Were £15.46 now £15.36 This is based on the Vanguard ETF. (VGOV) Not the worst outlook, yields in the short term may be worth a look, currently 4.78%
Silver: Using Wisdom Tree Physical Silver(PHAG) last week $59.16 now $63.15 Good for you if you climbed on board at $52. Do not follow me but if you have to own silver, this ETF is backed by Physical. I’m on the sidelines as I took my eye off the ball when it was $52.
Legacy Trades, Expiry and New Trade 480
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 was 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
So, cost 1606.5 to close, buy to open for July 1640. A credit 33.5 ( Running income 422 )
8500 2035.5, 8700 1836.5(x2) gives us –1637.5
Then:
2180, 1980.5(x2) Gives us 1781 Brutal, but we ignore the pain.
Now 8500 2006, 8700 1806.5 x2, gives us 1607 We need to roll into August expiry but the 8500 strike does not exist, so we’ll take a view in the week ( we could go with other strikes of course)
Rolling on Thursday meant going lower to 8400/8600 which gave us 17450 against the cost of closing out 16520.5 = 930, running total of income 930+422 = 1352
Still a horror show but the plan is to illustrate the ‘sunk cost fallacy’. It’s always better to close out losing trades, but we can run things to the end of days
Previously: 8400 2305.5 8600 2106.5×2 = 1907.5 – Uglier than the White House alterations!
Previously: 8400 2431.5 8600 2,232.5×2 = 2033.5 Yikes!
Last Week: 2481.5 and 2282×2= 2082.5 Nasty!
now 2352, 2152 (x2)= 1952 No words…….
8400 2355 8600 2155=1955 rolled to Sept (on Thursday) 8400 2379 8600 2180 = 1981
Credit 26 Rolling income 1352+26 = 1378
However now it is 2431, 2232×2= 2033
Trade 475 New Expiry Cycle
A wide bodied butterfly of puts – why not? We fancy having a wide profit area in our August trade long 10600 put 165.5, short x3 10300 put 69.5, long x2 10150 put 46.5. Gives us a net cost of 50 with the trade in profit down to 10200-ish. We’re toast if the buying frenzy carries on, so can we mitigate costs? Let’s sell a 10100 put for 41. Now our cost is reduced but we have risk <10100 Our risk is limited to 9 to the upside. So we don’t mind losing 9 to be rewarded up to 300. It would be nice to say X+Y=Z where Z is the expected market range with a bias to the downside. but we have zero guidance currently. Hand on heart, this is highly speculative. You could just sell a 10100 put! (Don’t be THAT guy )
Put Butterfly 110.5, 47.5, 33. Short puts [47.5×3= 142.5] Long Puts [110.5+33×2= 176.5] Gives us 34 Our semi-naked short put 29.5 We now have credit 4.5 (we paid 9)
I’d do this again for the princely sum of 4.5
10600 51, 10300 20 x3, 10150 14 x2, 10100 12.5 =6.5 ( Naked10100 short put knocks it out of the park, grrr )
10600 15.5, 10300 5, 10150 3.5 = 4 10100 put 3 Frankly disappointing but very far from being in trouble. ( The short Put again sold for 41 now 3 of course you’d close out )
10600 12, 10300 2.5,(x3) 10150 1.5,(x2), 10000 1 = 6.5! Horrible, it cost us 9 remember.
LOSER!
Trade 476 Keep It Simple, Stupid
Sometimes it pays to do the obvious and so here’s a strangle, selling the 11000 call and selling the 10300 put Here’s the numbers: 38 and 47.5.
The Greeks: Delta -0.03, Gamma 0.0004 but the biggie…. Theta 1.6557+ 2.2164= 3.8721 Looks sweet to me! (Ok it’s boring)
Good grief. I can not claim any kudos for this, oh wait…. 11000 call 51, 10300 put 20 gives us 85.5-71=14.5 We’re in credit
10300 put 5 11000 call 32 =37 We could close out for >50% profit
10300 put 2.5 and 1100 call 2 WIN! Close out (Expiry gave us the full credit but all that risk for a couple of pennies)
Trade 477 Calendar Time, Some Risk, Much Hope.
AI hates this trade and it will come undone at some point. I hope we can do a decent trade repair if it goes belly up. Winning is not educational. Experience is good pain. Let’s try what we like! Using the immutable truth of greater time decay as you get nearer to expiry we sell near month and buy far month. We sell August 10500 put for 36. September, we buy 10650 put for 115.5 and sell the 10500 put for 82. Let’s do the numbers 36+82 from the puts we sell: 118. We pay for the long 10650 put 115.5. Gives us a tiny credit of 2.5 We’d be ok with the FTSE at 10350 as we have some wiggle room. Now, bask in the sunshine for the next 3 weeks, come back and collect ££££. We don’t know the future of course.
https://www.cmegroup.com/tools-information/quikstrike/options-calculator.html
Theta >2, wide range of possibility of profit.
So the August 10500 put now 10 the Sept put spread: 10650 put 72 and 10500 put 48 Looking ok as we had a credit 2.5 and it’s now worth 14 in our favour.
Aug Put 10500 6, Sept Puts 10650 86, 10500 52.5 = 27.5 + 2.5 Credit to open = 30 total We run it.
Now, 35 and 58.5 = 23.5 and of course the August 10500 put expired worthless. So we can close out, or, buy a far month put spread and sell the 10650 put WIN!
Trade 478 Calendar 2.0?
This is a very very safe* curate’s egg of a trade. It’s calendar spreads whereby we sell a near month spread to buy a far month spread. Here’s the numbers:
Aug 10800/10700 put spread: 47-26=21, Sept put spread 10800/10700 110.5-82.5 = 28. We have a DEBIT, or cost of 28-21=7 It’d probably cost more in commissions than the trade cost! We’re going to run this to expiry and beyond!
Aug: 75, 29=46 Sept 144, 102,=42, minus 4 Ouch!
Now: expiry at 10762 meaning our short 10800 put is worth –38. Sept put spread 104, and 71 = 33 Tiny loss
*No such thing!
Trade 479 Is Cheap Ever A Reason To Buy?
Here’s a bonkers idea but frankly this is silly money we will buy the 10750 straddle call, 51, put 47.5 = 98.5. Only 5 trading days to expiry, this is one trade I would never normally take but it seems FTSE has had 5 down days and may well see a big up >100. (Not that I approve of people buying FTSE!) Unless we test things to destruction we don’t find out.
YES! The worst possible outcome and a big fat loser. Is there EVER a good time to buy a straddle?
Trade 480 We’re Going To try The Worst Trade, The 1-1-2
SanJose Options have featured this and also mentioned it can be a quick death. The trade is this: Buy one option, we use a Put, sell a lower put and sell 2 lower puts.
The strikes and numbers: buy 10750, sell 10600 sell 2x 10500 gives us: 85.5, 49 and 35×2= 33.5 Credit
Frankly I have never seen such a skewed market to the upside, so this may be an easy win.
NB SJ Options will talk about Vomma, Vanna and Lamda when what they mean is if the market takes a dump, you’re in the brown stuff. Rocket science it is not.
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.
[ Answer : $6. ]