That Was The Week -More Crazy Than You Can Shake A Stick At!
I try to leave politics out of this tiny corner of the financial world, but clearly the effects of America’s madness are global and harmful. Trading is not a matter of prediction it’s a matter of doing the right thing having made an informed decision. We no longer have reliable inputs as the wild swings arising from the decisions of madmen are unhelpful. A few words shift the global outlook, making those inputs unreliable by the hour. So what’s to do? Trade with more caution, reduce position size and just make sure you’re still there on Friday.Unlike our ‘buy and hope’ cousins we have a myriad of strategies some of which we show because they are bad. We also show numerous different approaches and occasionally, trade management. We can always close out, adjust or add to a trade. Ironically upsizing was what I did in March 2020. I closed out.
It’s easy in hindsight to see how anyone buying cheap far dated spreads would have made serious coin, but I didn’t have any experience trading a pandemic.So, anyone trawling through the archive here would see the note: paper trading only. It seems like the may be a wise idea today as there is no telling how the numerous upheavals will pan out. I get uncomfortable when I don’t have a lot of positions but this has been another year of just surviving. Living well within one’s means helps. Paper trading alongside your real trades is also good practice. Or, simply follow the trades here and see how things have panned out. Zero cost and perhaps a tiny bit of helpful real world trading. Education comes at a hefty cost when you don’t have it.
In The Inbox
Investment advice( What!!!!) This is from Wisdom Tree and may be of interest though it’s not options https://image.mail.wisdomtree.com/lib/fe3211737164047d7c1371/m/1/36976fef-3ab3-41a8-aecc-947970300c78.pdf?subscriberKey=%25%25SubscriberKey%25%25
Then there’s Larry the old war horse https://mailchi.mp/optionstrategist/the-option-strategist-weekly-updater-4866095?e=5f15d5ff5d
Frankly there is so much financial information it’s easy to waste a whole day going down the rabbit hole. Worse still, we are all encouraged to use A.I. and that way madness lies if you value your free time.
Distraction Trades
ADA was $0.2452 Now: $0.2544
XRP was $1.4836 now $1.4035 Crypto -it’s a mystery! I like this source https://coinmarketcap.com
DAX : 1 win 1 loser nett 60 Honestly it is hard to get a handle on this at a 5 min time frame.
UK Gilts Were £15.20 now £15.12 This is based on the Vanguard ETF. (VGOV) A rocky week . Remember this ETF has a yield of 4.61%
Silver: Using Wisdom Tree Physical Silver(PHAG) was $54.75 now $55.35 All over the place this week.
Legacy Trade 424, 484,5 and New Trade 486
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)
Previously 8400call 2266.5 8600 call 2067.5×2 = 1868.5
Was 8400 call 2308.5 8600 call 2109 = 1909.5
Was 2070.5, 1871(x2) = 1671.5 Position improving
Now 2164, 1964×2 = 1764 annoying and we need to roll soon, currently 2170.5, 1972(x2)= 1774.5
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!
10250 all PUTS 52.5 Nov 10400 175.5, 10250 128.5 Gives us minus 5.5 No panic we were paid 10.5 to enter the trade
10250 9.5 Nov Puts 117.5, 80.5 =27.5 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? This has 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?
Pitchfork gives us 103.5 for the Call and 130.5 (x3) for the Puts Gives us 494 OUCH!
Strangle? 6.5 and 75 =81.5 Ouch! But not as bad as the pitchfork OUCH!
Please note: The Pitchfork is best placed when the straddle is at least 300 in a higher volatility environment.
112.5 and 47(x3) gives us 253.5 -wow! We took in 412.5 to open the trade Profit: 159 We’d take that but of course we run for fun. WIN!
Strangle? 10900 call 2.5 and 10350 put 17.5= 20 we took in 65.5, so a WIN! (But it’s rubbish compared to the Pitchfork )
Trade 486 Playing Safe
So, in this peculiar environment we need some safety. I object to paying to trade but sometimes it makes sense. So,I propose a Put butterfly with the following strikes 10500,10350,10200 This makes money anywhere between 10470 and 10230 130.5, 75(x2), 44. Costing 25.5 ( We could sell a 10000 put for 22.5 to help pay for it) I have low confidence in any trade due to my perceived implosion in slow motion of the US.
Now: 47, 17.5(x2), 7 = 9 rubbish!
Trade 487 Nothing Make sense – November Expiry cycle Beckons
With only one week, or 5 trading days in October, we look at November and this means the US Mid Terms chaos may ensue. Let’s place a simple put ratio spread, so we’re not taking a full naked put position 10200 71.5 9900 37.5 (x2) credit 3.5 Max profit 300 risk at 9600. This is a recurrent theme but frankly these trades have done well over decades for this idiot. Remember the markets will see wild swings as events unfold with certain ‘World leaders’
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.