That Was The Week
So, from the precipitous drop as seen from the open on Monday to close on Friday, this was the tiniest move, with some major wobbles in between. Traders with a keen eye will have seen how small the volumes are. While we know it’s the silly season for the press,and the holiday season is at its zenith, the market continues to surprise. This trader saw some good entries and we await expiry with some gleeful expectation. So- what to do? Braver souls than I have their own expiry week strategies, but never been comfortable with PIN risk. (risk of getting something nasty ‘pinned’ to you)
Is There A Bigger Picture?
Many active traders and pundits talk of recession, but then this trader always has a weather eye on this. More so on the anticipation than the actual event. You don’t know you’re in a recession until some time after it’s started. Germany has seen a slump in industry and Deutsche Bank is the Titanic, we are told. Now 1/4 the value it was in 2010, and almost 1/3 the price it was in the brief bump in 2017.( Brexiteers tend to overstate the EU’s dwindling economic output. Remainers tell us!)
Banks are important to the market, they are the leading edge of economic activity. A fellow trader and friend always says “There’s no bull market without the banks”.
Legacy Trade- Just the One
Meanwhile, back to options. Trade 143 was a put butterfly- possible close out for 50% profit. We’ll run it for fun to expiry. Those strikes again- 7400/7300/7200.
Trade144 A Touch of The Old ICs
Let’s be guided by Bollinger Band width that served us so well recently. Was it a fluke? It looks like the bands will be narrowing as width is at an extreme level. Options volatility is mean reverting. We can use this to our advantage.
So here we go- an Iron Condor- selling a put spread and a call spread:
short 7000 put long 6950 put for credit 71-60.5= 10.5
short 7450 call long 7500 call for credit 35.5-25=10.5.
Total credit 21, max risk 50-21 =29.Risk at 6979 and 7471.
