Trade 19- An Update

All Time High- What Are They Smoking?

So, FTSE hit 7394.61 How significant will that number be?

To summarise from last week’s strangle: premium taken in 21.5.  Now 27+2.5 =29.5 Choices now-

1.buy back the 6900 put (2.5)and sell a 7200 put(11) making premium taken in 30. The 6400call is 27, the trade is still not a loser.
Or…..2. rollup the call to 7450 costing 27-12.5= 14.5,making your premium taken in 21.5-14.5=7.
Or….3. a combination of both the above.
Or……….4. sit it out until expiry week when there is no extrinsic value to pay. 7400 is still above the all time high.

What’s the Lesson Here?

If there is one takeaway it is that strangles are not the worst trade ever,so long as you don’t get involved with a crazy stock. Capita just went from 587 to 502. So if you’d strangled at say 550 and 650 for a few pence you’d be looking at a big loss right now. Many US sites advocate strangling stocks. We don’t see the need unless you like the thrill. We trade to make money while loving the process. Most UK shares(stocks) have little liquidity in options and many are just not there to trade. You can check this out via our link to ICE.com.

So- What ARE They Smoking?

I don’t think these numbers are fudged but I cannot personally get into a frenzy about this ‘bull market’. That does not mean the stock market is connected with reality. I always say the market rises on lies and drops on the truth. The truth can be concealed when you have an infinite bank account called QE. I make these comments politically from a personal view. We must trade what we see.

Trade 19- we have 2 weeks to be wrong yet. Point is, we have the tools to adjust calmly.