That Was The Week Trump Bought Dodgy Beef and Stole Oil
I like the old saying ‘ in the long run the market is a weighing machine, in the short term it’s a voting machine. I would also say it’s akin to passengers on the deck of a ship all piling over to the port side to watch a spectacle. The ship, of course, is now listing heavily, it either capsizes or the crowd charges starboard. Voting implies a one off event. Anyone seeing the S&P price reaction to Jackson Hole’s Fed meeting will be wondering who won the day.Traders of note may have been chilling, in the last ‘summer’ weekend. Seeing volume at the lowest for a couple of decades may mean the big boys and girls are back off holiday on Monday. Summer is usually ‘silly’ season.
Churlish to comment on the lunacy that prevails in the US, but we cannot ignore the World’s largest economy. Meanwhile there’s Test cricket and apparently it’s the football season. Who knew it had a season? It’s never off the telly!
In The Inbox
Forgive the deviation but it’s Youtube https://youtu.be/d6mPQhhup_Q?si=XrhCuJdxElCl2Ekk
What occurred to me was that greed is very far from our mandate here. Options can produce explosive profits especially puts, but we are not all about making a massive fortune with a day’s trading. Fear and greed drive the markets they tell us. We traders should have a little fear as each trade is a leap in the dark, but with hefty assistance that options can provide. Get rich SLOW. Or rather, trade safe with all eyes on the risk. Better to make £10 than lose £1,000.
Larry’s missive: https://mailchi.mp/optionstrategist/the-option-strategist-weekly-updater-4865675?e=5f15d5ff5d He’s been trading options for decades, so check out the other stuff on his site.
While we trade the index, no harm in diversifying https://go.reliabletrading.com/how-to-buy-stocks-at-a-discount-and-collect-a-premium-on-day-one-wbt Of course it’s a freebie.
Don’t forget you can email us and send comments at the bottom of the page. All comments welcomed. Expect honesty.
Distraction Trades
ADA was $0.2228 now $0.2004 Wild swings this week. Has this cheapie bottomed out? Or is it headed for $0.03 again?
XRP was $1.4885 now $1.3859 Crypto -it’s a mystery! I like this source https://coinmarketcap.com
DAX : Under review after poor record lately. Yikes! Two trades. 100 nett. Still problematic as Dax has been wild lately.
UK Gilts Were £15.36 now £15.39 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 $63.15 now $62.89 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. I’m not sure about the latest moves, a lot of gold rumours around.
Legacy Trade 424 and New Trade 481
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
Last week: 2431, 2232×2= 2033
Now: 2431, 2232×2=2033 What are the chances?
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.
63, 31.5, 21(x2)= minus 10.5 (Our Credit was 33.5 so a nice result. We run it of course )
Trade 481 Strangle In The Back Half (?)
The TastyTrade standard is to sell (write) a strangle about 45DTE (days to expiry) when this was worth 94.5 for the Calls and 70.5 for the Puts.
We’re doing this with 21 days, to expiry, but here’s the twist, we’re also going to run the October strangle -same strikes 79.5 and 72. Total 151.5
So here’s our trade: .16 Delta put 10550, 25.5, and the .18 Delta 11050 call, 22. Clearly this has lost a ton of value, but hindsight is of course 20:20 vision.
Next week, we’ll do an analysis of the one example, which may well justify the Tasty Trade approach as they would have closed out at 50% profit.( They’d actually take the October trade on Tuesday)
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.