That Was The Week It Ended Badly in the US.
So, VIX as is apparent, smashed up on Friday. A.I. may be the central concern as short sellers had a bumper week. However, I claim no special insights but there may be a disconnect between US markets and the wider world. Indonesia has seen a dramatic change of fortunes as their stock market has a massive drop https://youtu.be/_HtlkHuC2RQ?si=Owku6FsOEUEY89yc Joe gives sensible and jargon free news and analysis. Little stirrings in far off places have a habit of derailing the world’s markets. Closer to home it seems the budget may be benign, again we saw a modest rise in GDP. So, personally the big picture is that short term there is buying before the storm facing the US, the Ukraine and the wider world. We may see a gentle transition in the US and a secretive ‘retirement’ arranged. However the big elephant in the room is the mountain of cash.
Present day trading compared to say 20 years ago, we see much bigger ‘melt ups’. I believe this trend started before the GFC, and actually contributed to it. QE has never really gone away IMHO. We used to talk about the FED Put and the ‘plunge protection team’ . A sledgehammer of free money. Like a teenager with their first credit card. The bill eventually comes due and the cost of repaying national debts in the developed world has become a real headwind. Throwing more money at it will have the same result as we’ve seen before. IMHO. Rant over. We know we can tuck away a far dated cheap put spread like March 10200/ 9,400 put spread for £750.00, max profit £8,000. So, if your £50k stock portfolio dumps 20% it eases the pain. Just sayin’
Musing on a Thorny Subject
I know some traders are using A.I. which is ok but is it a predictive tool? No. Following a discussion with a real physicist I wanted to understand better how A.I understands the word ‘please’. It defined it as something we do for the benefit of another ‘pleasing our partner etc’. It parrots lines about feelings. That in itself is hard to comprehend as we ‘know’ such words having lived with them since our early childhood.A.I. has instant comprehension of ‘meaning’ including correctly assuming typo’s are a simple mistake, thus sticking with the theme. It wants to ‘please’ us without understanding what that really means. As an aid to trading? It’s like being put in the cockpit of a fighter jet. You may have a great outcome……
In The Inbox
A.I guru David Linton gives us: https://www.updata.co.uk/newsletter/q4-2026 Technical analysis is creditable and he is highly regarded.
Money Show! Oct 30. This popped up with no advance notice: https://newsletter.smartbrief.com/servlet/ArchiveServlet?issueid=82E3D835-5166-4104-A989-7BAAFC9CE632&sid=65475148-9060-4EF0-93CB-8D4DF195EAAE
SJ Options are getting spicy with their 1 DTE trades: https://us12.campaign-archive.com/?e=a6d15b8777&u=6f6dd1454734e10d0f08f73e6&id=252084db8b
Distraction Trades
ADA was $0.2544 now $0.2230 more downside
XRP was $1.4035 now $1.3068 Crypto -it’s a mystery! I like this source https://coinmarketcap.com
DAX : Yikes! Another week of nothing it seems that only Friday has trades that fit any of our criteria. Nett 100 The chart looks sinusoidal for the most part, until the late day plummets!
UK Gilts Were £15.12 now £15.20 again 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 $55.35 now $52.24 All over the place, again this week. It’s either going to be $40 or $100 I don’t know which!
Legacy Trade 424, 484,5,6,7 and New Trade 488
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
Ouch! We got slammed rolling meant we took in a credit of 10 But the horror show got ugly: 2492 and 2293(x2) gives us: 2094
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, the long spread 117.5, 80.5 =27.5 CREDIT
Our long Nov Put spread is now 42.5 and 30.5=12 combined with our credit at entry 22.5 WIN! Not as good as last week which was peachy, but we’ll use this later.
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 )
Had we run this to expiry at 10830 we took in 412.5 and this closed costing us 330, profit of 82.5 still a WIN!
The strangle? 65.5 profit N.B.The pitchfork was a gain of >200 during the week
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!
At expiry, worth 0 LOSER But this need only cost 3 and 10000 was not a likely price
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’
10200 Put is 27.5 and the 9900 Put 15.5 x2 Gives us -3.5 We now run this to expiry with 5 weeks to go.
Trade 488, We Can Use Trade 484
So we have the long Put spread 10400/10250 42.5 and 30.5 Can we use this? We can sell another 10250 put for 30.5. We can sell the 10400 put for 42.5 and buy the December 10400/10250 spread for 80-62=18.
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.