Trade 188 Week Ending 11 September

That Was The Week

FTSE headed north as £sterling was battered.1.3484 to 1.2795  a drop of 5%. Didn’t see that coming but it made FTSE stock cheap to foreign buyers, which in a way shows trust in our companies. FTSE is comprised of global companies as we know but  the index and constituents are priced in £ -even though some are also listed in the US. The madness both sides of the Atlantic continues and it’s hard to see how our leaders are still employed. Enough politics.

The US dollar has revalued and there may be reasons, but it’s of no concern, we can only react to market moves. Bitcoin and silver(my favourite metal) also dropped from 1st Sept.

Another Tool In The Box?

Last week we took a cursory if mildly skeptical look at drawing lines on a chart. Here’s a couple more charts with an interesting comparator.

Fibonnacis and parallel lines- can we draw any conclusions? Channels seem to look like patterns we are trying to make. Humans have this desire to see patterns in everything. Adventurers may want to try Andrews pitchfork-it’s there somewhere.

Above is something I have not seen before- it’s the Pound Index. Plotted against FTSE(red) I have followed the USD index(dropped in May) for many years but perhaps this is more helpful as the strength of a currency tends to be, like VIX, inversely correlated. How much store one puts into this is a matter of discretion for us retail players . For balance here’s the US$Index againstSPX(blue)

 

 

Meanwhile, I get regular notices from Alpesh Patel who suggests from his reading of the charts that NAS and FTSE are due for a tumble, before continuing the relentless grind. Notably NAS has ground its way up, FTSE has gone nowhere in 20 years! Harsh comparison as so many new industries are in NAS compared to dinosaurs like BP in FTSE

Distraction Trades

A distraction week as events seem to overtake chart watching though the entry signal hit and missed some good trades. EURUSD had one or two minor breakouts but it seems rangebound. However that would make sense given the size of those markets. I watch a trader whose plan is to short this most days and it’s probably not a great idea. This permabear would always look to the downside, but trading means having no bias if we are to be profitable. It’s just a squiggly line on a chart.

Those Legacy Trades 3 Wins to Us, Another loss to the Weekend Strangler

Weekend strangler

Last  week Oct expiry 6100 call  53  5200 put  55 = 108 

Now  86.5 and 31 =117.5. Loser! Ha!  On balance this is high risk/low reward but if run for a few days may produce good outcomes.  As of close this week,however  16.5 plus 117.5   Ugly. 

This week 5700 put 56.5   and 6250 call 57.5 =114

Trade 185 Semi-calendar butterfly The Terrapin Butterfly- or Terrafly, in short!

( Wrongly got this pegged as Trade 186 last week )

So here are the opening prices- Sep 6100put 189. 6000put 132(x2) Oct 5900 put 156.5

Prices last week about 85, but this DID hit 97 during the week -close out comfortably for 93 but we’re running it.

Risk is max 71.5 remember, this week 93 and 46×2  100.5 = 101.5. Win!!!!

 Trade186

Sold  Call spread 6200/6250  23.5 15.5=8   Sold put spread 5750/5700  51.5,42.5 =9   Dreary old Iron Condor for credit of 17– risk is max 50-17=33. September expiry was only 21 days to expiry

Last week  call spread = 5.5-3.5=2   put spread  101.5-86.5= 15 =….17 total

Closed out call spread  for 2 now we have put spread  9.5 and 7.5=2   WIN!!!!! 

Trade 187 Trying to Find something Left Field

The trade. It’s BIIIG it’s ballsy…it’s a 3 x 1. We  bought 1 x 5500 put and sold 3x 5350 puts .Thus we took in premium 23×3-39 = 30  

The market has been kind here – its’ now 3.5 and 2.5×3=  4 WIIIIIIIINNNNNN!!!

Trade 188 October- Reputation for Crazy but Often a Positive month

https://www.investopedia.com/articles/financial-theory/09/october-effect.asp

In case we get carried away, read the link

So….. a clean sheet with no extant liabilities let’s go nuts with the weekend strangler and make it a combo, or reversal. We buy the 5700 put, and pay for it by selling the 6250 call. The eagle eyed among you will see that’s a penny credit. This is a bit of mad money- (homage to Cramer). Based on the possibility of a drop next week. The key here is what we do when it goes against us-either way let’s have naked directional fun with it.