That Was The Week – Political Pettifoggery
No comment needed, we trade options, manage risk sensibly and separate noise from signal. We are awaiting news on VFTSE, but VIX is a fair proxy for now. Tuesday saw some nice volatility, and this trader again ignored the *45dte trading window. Why? Curiously,in a conversation about options to a potential trader I pointed out a fairly good looking trade, which could have been sold for 45. I noted at close of play yesterday it was trading at 25. This represents 10%+ return on required margin. Of course I don’t take the real beauties, I’m a rubbish trader! Do as I say not do as I do. Thus, I hope that by dispensing the wisdom of others, there are some traders making serious coin here, though I do ok.
*days to expiry
A Nod to CMC Markets
A very pleasant evening was had this week at a fine venue right by the Bank of England. I am pleased to say the BofE looked in rude health.(No Purple Bricks signs outside) The evening was enlightening twofold. Firstly a big nod to the tech of the CMC platform,though sadly options are not yet traded. We’re told this is in the pipeline…please! Secondly there was an excellent presentation from the esteemed Trevor Neil https://www.youtube.com/watch?v=Sbybffyu1W8 Trevor Neil
I am not one to take direction too seriously but I think this method may be extremely powerful. However, with long options you can safely leverage your trading in individual stocks. Also, this can be a great way to get into options too- I think the Robin Hood platform is full of such trades. Newbies who confuse luck with judgement, do meet with my disdain. They mostly seem to pile in and lose a bundle. However traders like us go steady and safely, getting excellent realistic returns. No fireworks but no poor house either.
Those Legacy Trades – A Sulking Butterfly But Another Win
TRADE 146
Owners we are, of a put Butterfly buy (Sept) 7000( 86)/ sell 6900(63×2) / buy 6800(46.5). 86+46.5 – (63×2) =6.5 Debit
Risk? – just the premium paid, 6.5 max reward 93.5 ………we’d take 25. Last week worth 5.5 Now just 2
Trade 147 I’ve Been Spooked and Calmed- What To Do?
So, we were buying the 7200 put, selling the 7100 put giving us a long put spread costing 105-68.5 =36.5. That’s a chunk of change so we’d part financed this by selling (ideally we’d wait for better premium)the 6900 put for 30.
Logic of that trade- risk at 6800,max profit 100-6.5= 93.5 Should FTSE stay above these levels we might lose our entire 6.5. Now trading for 16 – 4.5= 11.5. In %age terms we did ok- would we close out? Profit 5 from outlay 6.5= 77% Chalk up another win and close.
Trade148 Combo Lizard Thing!
Traders watch out! This is directional but also takes advantage of theta, though there is a whiff of danger. The trade is an expectation of FTSE staying at least below 7400, and ideally around 7100-7200. Observers of the market may conclude that the exogenous events have no bearing. I think that may be the case and we could see a drift either way but no fireworks.
Sell 7400 Call 14 Buy 7200put 31 7100 put 15 DEBIT (31-15) -14= 2
