Trade 52 Playing Not To Lose

Terrapin Trader,

Storm of ’87, crash of ’87? Trade of the Year?

We anticipate a severe storm this coming week and curiously it’s the 30th anniversary of the great storm of ‘87. This week will also be the great crash anniversary of course. Coincidence? Could it happen again? http://www.bbc.co.uk/news/uk-41620071

Famous Quotations

1.”When the tide goes out we see who’s swimming naked” Warren Buffett

2.”History speaks pretty clearly that the markets do better with Democrats. *Republicans’ ideas of what constitutes fiscal responsibility simply are not good for the stock market. Democrats have many tendencies, but one of them is to look after the workers, and actually that tends to be good for demand and good for markets”. Jeremy Grantham.

3. “When will we see some volatility?” …..Us!

*Trump is a Republican, just sayin’. The last 2 out of 4 Republican administrations presided over slumps- George Dubya Bush and Nixon.
The stats below mean little without  context- inflation, conflicts other events.But they do tell a different story from the Republican line.

 

 

 

 

                                   Trade 52 Long Both Sides- Why?

This is a long (short-actually a strangle IS a short) strangle-we are thus  buying BOTH sides.

long strangle 7650 call 23 (7700 call= 13.5)  7250 put for 16  (7200 put = 13) Why the figures in brackets?

One side sees a big move, we  sell the outer leg making a spread aiming for a free trade. Thus, letting  the market make the moves. The FTSE may rise 30 points making the 7700 call worth, say, 25.(Today it’s 13.5) We sell that and wait for a drop to sell the 7200 put. If the market keeps on up- our spread will be worth at least say 25 and we have only spent 14 (39-25). AND….we still have a put. Who knows where this is going?Watch this space.
  NB. I am NOT saying there is a crash imminent . I  think  there may be a real, but passing disconnect from normal market activity.

And This

 http://www.mauldineconomics.com/frontlinethoughts/the-world-turned-upside-down

 

Published by Terrapin Trader

First found out about options in 1995.From the arcane magazine Exchange and Mart! First trade- a covered call on VOD in 1999. Made 10%,VOD almost doubled. That's when I realised I was not a good trader,and I was forgiven thanks to the amazing world of exchange traded options

3 Comments

  1. I would not expect this trade to do very much but any big move would see it make a healthy profit. Now most of the hedge funds have shut up shop as there are no more dips. We just have long only funds pounding the index higher day after day-while real earnings are almost mythical, inflation- predicated on wage increases is nothing. Debt is more than it was in 2008- both government and personal -any return to realistic interest rates will kill the global economy faster than you can say “Despot”

  2. The strangle is losing money already- the market has stopped being a market so we might take a 50% loss on this. I am no longer able to assess market conditions as none exist in the proper sense.

  3. Actually the puts must have hit well over 40 on Wednesday so this could be a win-you’d just have sold the put and let the call run- 8.5 on Friday,so 48.5 on 39 is a nice return, though unintended! And they tell you options are risky!

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