That Was The Week The UN was unUN, As the US and Israel Fall Short
In even more dystopian Trumpian nonsense, the DOJ is trying to save Elon €100 million in fines for his blue ticks on X. So, Elon spent untold $millions as we know to get Trump in power and now Trump’s DOJ is trying to help him out. There is no equivalent action from any other nation defending a commercial enterprise of such low character. So, in other news, it was a quiet week for financials. However, bond yields are now the canary in the coal mine. So should the stock markets be concerned that the risk free rate is 5%? While FTSE is on a p/e of 16.63 it’s hard to know if earnings really are that good. So, bonds, debt, AI, conflict, inflation what’s not to like?
Accounting tricks aside, we know the real economy is not the Stockmarket. I am more concerned about geopolitics than earnings. We carry on, of course and let the crazy happen. Nothing gets in the way of profits. I was once told when the ‘establishment’ is wealthy, the people are worse off. Banksters can bask in the glory of having assets almost 360% of UK GDP. I often wondered if a national ‘withdraw your cash day’ would be a wake up for our ‘revered’ banking institutions. I now know it wouldn’t make a scrap of difference. Hard to get your head around those numbers. We assume the gold is still in Fort Knox. We hope the UK still has some under the mattress!
In The Inbox
From the excellent David Linton-a ton of free stuff on technical analysis.
https://read.amazon.co.uk/sample/B0HJ4688XY?clientId=share
Larry’s take on the state of the market: https://mailchi.mp/optionstrategist/the-option-strategist-weekly-updater-4865930?e=5f15d5ff5d
Distraction Trades
ADA was $0.2248, now $0.2560 Wild but positive swings this week.
XRP was $1.4205 now $1.5455 Crypto -it’s a mystery! I like this source https://coinmarketcap.com
DAX : Under review after poor record lately. We’ll get back to you! Old method 2 wins one loser 160nett
UK Gilts Were £15.26 now £15.16 This is based on the Vanguard ETF. (VGOV) The sheer panic instilled in us is not justified. Remember this ETF has a yield of 4.61%
Silver: Using Wisdom Tree Physical Silver(PHAG) was $60.37 now $58.37 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. Confession, made a quick £50 this week in and out
Legacy Trade 424, 484 and New Trade 485
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 was a loss of 1741 against the credits taken in, of 422
(Rolling credit as of Sept2026 now 1408)
Last week 8400call 2266.5 8600 call 2067.5×2 = 1868.5
Now 8400 call 2308.5 8600 call 2109 = 1909.5
Trade 484 Tried and Tested Formula
October options are upon us. What to do?
Wash, rinse and repeat let’s do that calendar ‘ratio’ spread using Puts. We sell: Oct 10250 put 43 We buy: Nov 10400put 126, we sell the Nov 10250 put which is 94.5.
So we have a long PUT spread 10400 -10250, and an October put that we sold at 10250. Credit 10.5 Risk <10200 Max reward, 160 no upside risk.
Oct 10250 Put is now 21.5 November 10400 Put 97.5, short 10250 Put 71.5 =4.5 Credit!
Trade 485 Are We Subject to Octoberphobia?
In the spirit of Hallowe’en , we’re having a pitchfork! Here’s the trade:
1.Take the straddle, the at-the-money call and put.
2. We use 10700 strikes, and then subtract the value of the straddle (120.5 and 107.5) this takes us roughly down to 10500 level. Here, the Call is 262.5 and the Put 50.
3.We sell 1 call and 3 puts.
With us so far? We have taken in 262.5 and 50×3= 412.5 We now have a problem if the FTSE hits 10900-ish, we land the big prize at 10500, we have a problem at 10350-ish.
For fun we compare the strangle at our risk levels 10900, the call is 36 and the10350 put 29.5. So our pitchfork can make up to 412.5 the strangle can only make 65.5 Which is better?
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.