Discussion Forum

the naked call is now 5.5 (sold at 8.5) it has been lower.
the 7600/7650 spread is now worth 6
the ratio spread is now 3 -clearly the winner here.
I have to confess that while we are making money(and missing good trades too) this market is a complete basket case, in my opinion.

this trade now a credit of 9 as the call spread is now 6, and the put spread is 15. Another winner it seems.

Very true..any credit spread is 1:1 chances of winning

I have been otherwise engaged this week but this trade has seen profits in the 5- 10 range but you need to place a limit order to catch them. I still get a bit uncomfortable about limit orders,and on Wednesday this week placed a limit order, took a ‘comfort break’ and the market had move another 20 points in my favour. So my limit of 23 could have been 28.That’s the difference between a rubbish trader like me who is too impatient,and failed 3 times to optimise this week’s trading,where another trader might have waited to open the trades on tuesday, not monday as I did. This was a pure volatility play and still made 100% however

today that trade? the June puts are 5 (x2=10) the July put=55-giving a value of 45
We paid 14 for this profit of 31. That equates to £310 per lot or around £2,000 margin thus a 15% return in a week.

the put spread- possible close out for 30 today(50% profit) , the straddle-sitting there like a strong and stable thing!

much to be pondered but this straddle would be 127 to buy on IG -with their huge spreads it might not be a great trade,but at least it could be done for £127 instead of £1,270. Tempted to look at this on Monday

Ouch…that’s straddle is still expensive. I wonder how they are pricing vftse to be so low! We would find out soon but I agree it does not harm to have a bit of uspide risk, so may be buy the put spread and sell a call instead?

I have rarely used the ’25’ strikes,always gravitating to the round hundreds or fifties. I don’t know if that makes any difference and it may be that we backtest using quirky strikes. That is very much in the pipeline.

I love the many articlkes written by PhDs on markets- about seeking alpha etc. For me I can never be a part of that world,but it intrigues me and there is always some value in reading and getting insights from the smart guys. I just don’t see buying a share portfolio as a way of optimising money for the individual

Today you could have closed out for a credit of 14 ( call at 28.5 and 42.5 for the put) You may have got that price or a bit less as the market has been crazy this week
I was also going to show a helpful adjustment but that can wait for a while-in fact I’m reluctant to share it as it has taken me years to figure it out. Smarter traders may know a few twists here……

Today that 7550 call is 48.5. I had no time yesterday tpo show an adjustment wbut I will aim to update everyone throughout the week’s moves. After 10 consecutive up days,a new all time high in the face of inflation,and terrible numbers from VOD you have to suspect something is rotten in the state of Denmark.
again I hope to reveal some of that too

The smart mopney is in options trading-the dumb money is in the market-that’s all they can do-buy stocks-risking a lot to get a measly dividend and perhaps more QE to boost the share price to an already stupid high valuation that will never make sense.
Hence VIX is a very smart indicator and derivatives of it are traded big time.

It looks risky as you could be faced with a short put spread costing 100. Yes you could-this trade has to be managed,but think of the flip side. Would you be doing the ratio spread? Would you be selling for a credit of 3? Not on your life- volatility is just way below the norm again. The only issue is the amount of time-we have <3 weeks for this to be a winner. However if FTSE stays above 7150 we lose 3, and live to fight another day. I looked at June prices but you'd be paying (63.5x2) minus 93= 34. While profit to the downside is theoretically massive I'd be looking for low cost trades that you can afford to lose. Some people might sweat on the June trade and watch that premium cost dribble away. Enjoy, and watch this one daily

Another winner-the put is now trading for 1-why not close out and accept an annualised 18%- that’s twenty times what your bank would pay

I spend more time looking at options prices than anything else. Prices tell us a lot, so when calls are cheap but vol is up it looks like the market is not pricing in a meaningful rise.

return on capital is best with a short spread and risk is limited. £500- £115= £385, worst way.
You could do say 20 spreads with a trading account of £10k- just sayin’

thecall spread is now about 8, puts still about 11

Really?? 16 doubles is less than two years! Exciting information. We can certainly backtest and i am sure if we are just aiming for 10 points, it would be something like less than 10 delta.. Awesome trade with more than 90% win probability.

I was told it takes 16 doubles to get to that million from £100-doesn’t SOUND like a tall order….

it’s been a while since we did this but the variation is that we are ignoring the Greeks and using premium as our guide, resulting in the strikes that select themselves- assuming that makes sense to anyone!
After a while you get used to the way options are priced and while you may briefly see mis-priced options which you miss becasue the algo’s have seen them too, you will get a ‘feel’ for price and no trader should ever underestimate ‘gut feel’. We all want to sell options that expire worthless but that game has only one outcome-nobody wants to buy eventually.

ok currently this trade is worth about 10- but it’s there to run to expiry- it’s cheap enough not to worry about

now trading at about 6- again- easy isn’t it? Still sweating on futures or forex? Forget it- nothing comes close to options

now 21 for the put and 6 for the call spread- easy isn’t it?

interesting move today- looks like the 7300 put may have some value in it at expiry, the trade is now 18-20

this trade is now worth 36- still 30 for the put, but only 6 for the call spread

After all these years of trading-some terrible trades some well executed,I can honestly say I am still not able to define myself as a trader. I can be fickle and just suddenly ‘see trades’ or I can be methodical and super cautious as I have been for almost a year.
There is nothing in our options world thet remotely equates to the sickening gut-wrenching horrors of day trading and trying to,in essence, guess a direction. Go with the trend? Yeah sure except the one day I choose to go in big. Use indicators-yes I like them but feel they are of limited use.Gann, Fibonacci,pivots,Andrews pitchfork,S&R? Love them all but…
Take a well reasoned position in options? Every time. Do not be fooled into thinking options are like those other ETPs (exhcnage traded products) or even spread betting.
We can trade intra-day intra-week intra-month/year.
Most people are too bone idle to bother with options- but I’m so lazy I can’t be bothered with anything else, after an exhasutive journey into trading. Yes I’d love a bit of intra-day rough and tumble,but I don’t think it’s remotely realistic to make serious coin. If it was all you need to do to make a million is double up on each trade 16 times,starting with £100.

Haha – I enjoyed the last image. FTSE100 has definitely been moving at snails pace – at least compared to the US indices!

it’s the 7375 straddle- which you already know of course. anyway it’s about 155 now. Hold or fold? We need to see some semblance of normality-we have over a month of less than half the daily movements normally seen. I have never seen this in 16 years of trading. Just shows-there’s always something new.

price hit 135- more than doubling our money.

OK well I saw the price around 59 on Monday-let’s stick with that- it hit 73,but it’s got until 10 on Friday to come right

Have to make some decisions on this- still some value in the long puts but I have quite large exposure here and I don’t want to leave naked puts hanging for too long. The world continues to go crazy,the marketcontinues to ingore it-until it pays attention.

Ha ha! This strangle would be about 13 to close-so even selling in these desperately weird times can be ok. I’ll chalk that up as a big fat victory thank you!
Have we seen the last of 7400 for now is the next question-and expiry looms….

Well this is a damp squib! 2 weeks to go,and some possibilities using the long puts as part of another strategy I sometimes employ in expiry week

today that strangle is trading at 16.5 -theta gnaws away while the market remains clueless

ok- confession time ….. I have never used monthly pivots but I want to see how this pans out. The idea is to show what other tools one can use and for our readers to go on their own journey-backtest, forwardtest, mash it up-but get your hands dirty. Feel the fresh breeze of options trading instead of the dank cellar-like atmosphere of directional forex,shares,whatever. Experiment, follow the links your time will be rewarded.

this trade peaked at about 9 today but it’s not a done deal until the cash is in the account. I’m hanging on and looking for more of these trades at very low cost, with low risk high reward potential- with so many fruit loops in international politics from North Korea to Iran to the US to France, anything could give the market the excuse to close up shop and leave all the dumb money to fend for itself -people like to cut losses when their shares plummet to round prices or levels. We still have 3 weeks to expiry-that’s a long time in politics. Curious how deperate the market seems to stay aloft when it has failed repeatedly at 7300

I think my trade is now worth 2. I may be going nuts* but I don’t think a 200point wide put ratio spread would ever be so cheap -last time I found a super cheap trade it was 11 for the first tranche then zero-turned out to be a monster winner which I closed prematurely missing out on that Aston Martin. But hey I sleep well and I’d be worried about parking it out and about
* Looking ahead there are some silly prices in my humble opinion-this market cannot stay aloft forever

The pressure is on for Trade 17 – England rugby team always rely on my support!

Today (Saturday 11th Feb) this strangle is now trading at 35, or £350, so that’s £90 profit, or £900 on 10 lots, which would require about £15,000 in margin.
To be clear margin just means having that money in your account and the minimum really for options would be £25,000. That does not represent total risk.
Margin can also be in the form of stock or bonds,it does not have to be cash.
Again this is a trade that I do not like as adjustment when the market moves big can be horrible, and I do NOT like to roll into next month-for me you thn have opportunity cost.
Rule 1 NEVER be a forced buyer or seller. We are not forex, or futures traders who get smashed to bits every week, we have choices

I shopuld add that there is an argument that says you should trade 100% of your account as margin,and be in the market constantly,and adjust when you have to.

I just hope the missiles aren’t flying next week as Iran seems to be quite jolly about these sorts of things

‘Flu has made me think less about rading and more about living! Bear with me until normal service is resumed-if that is a posibility given the extraordinary situation in global politics right now

today that trade hit 8 – a 60% profit but if this had been in size with low commissions you’d take that all day long.

Stockcharts is a great resource and J Murphy wrote the book on TA. It is worth taking some time to look at technical analysis, or charting- it may not be for you,but you may find your niche. Either way there are people who make serious money from charts, and in trading we need to find our own way, often ruling out that which doesn’t suit.
The trade this week is a bit boring but in my defence I am still unwell,and cannot honestly see ‘what the heck is going on until our people figure this out’. To quote!
In the past I believe the charts will show that twice a year the market dips by 4-6%. You may wish to construct a strategy around this sortof thing- I have not done it but I know there are times when put prices go to the Moon. You can multiply your money buying put strategies in times of market peaks and low volatility. I’m not a great trader but I’d bet there are many who sit on the sidelines until conditions line up for a big fat drop.

I am short FTSE I have vested interest in seeing it plummet up to 10%! 1% would be peachy,though.

FTSE sweetly obliged- I closed out for a nice profit

When I state my views they are highly cynical- I don’t believe anyone knows what goes on beyond their own microcosm. I have met economists who have no idea about simple money transactions, airline pilots who got lost in the supermarket and musicians who could not count beyond 4. I’m far from the sharpest knife in the drawer, but I do have a track record of sorts. We have not seen volatility like the early noughties and everything I have read tells me VIX https://www.bloomberg.com/quote/VIX:IND is mean reverting.
We may even see a triple digit spike. Put sellers are not getting bang for buck-I’m super cautious in my own put positions, but confess to being short and caught with a call position,which will need some astute adjustments.

We could of course trade the March,April expiry or even further out-but markets get thin and prices get a bit crazy-quite naturally. It’s be interesting to compare this trade with say buying 400 shares BP at 515 after it’s had an incredible run. Just for fun.

Yes I got burned trading stocks based on the ‘fundamentals’ it’s an industry that serves only the fund managers-yet still they cock things up. Almost £400 billion in QE-we don’t even know the real figure-this really gets me angry. Banks, like politicians, are there to serve, not to dictate. The economy has never been so skewed, and like an athlete on banned substances, performance looks great, until it gets found out. That is simply my opinion- maybe things are going great- car sales are up, but so is household debt.

Hope it’s clear that while you can enter a whole position, you can ‘leg in’ to any number of option strategies, in any order. No other trading vehicle gives you that flexibility,and almost limitless choices. You can vary the strikes, the expiry, the amounts and continually morph/adjust whenever you want.You can mix puts and calls in ‘iron’ strategies.You can trade volatility,time decay,direction. You can limit losses/gains,close out partially, it’s all about your own mindset.

Everything else is frankly one-dimensional-you’re in the trade you win or lose.