FTSE This Week – DOWN! : Monday- Friday Tiny Loss 12 . Same comment -we no longer have a market just long only ETFs
Daily Volatility:10.55-8.66 from 11 – 9.13 tiny range again,and about 50% lower than ‘ normal ‘
FTSE cash index – open 7535 high 7560 low 7485 close 7523
FTSE volatility- 9.13-9.8 (last week: open 9.98 close 9.13)
What Trades Would Have Done well
TRADE 52 – a loss having bought at 39– we are looking at a valuation for the ‘long’ strangle of about 27. Therefore the only ball game in town was selling terrible low premium and letting theta (time decay) take its toll. For me, selling naked premium is a ‘vulture’ trade. You actually take away and do not contribute anything. How many smug naked traders get blown up and their accounts have insufficient funds? We know banks walked away from this in 2009.(And STILL owe us billions) That is not in our remit, it’s not fair. We are better than that.
SUMMARY
Friday saw expiry- and a bit of jiggerypokery for the 10:00 am auction.
In my own trading I am using debit trades to position for a vol explosion, which may be a forlorn hope- but costs are stupid low. Why is anyone taking the other side of the trade? Are they SO confident the market cannot drop? With a high-low range of<1% in a whole week it’s easy to see that point of view. Many traders do not know about big losses. Funds have the comfort of monthly cash injections-enforced by pension legislation in the UK. How do these funds do? The stockmarket rises 15%-funds are lucky if they do 3%. We can always beat these numbers,with managed risk too. Long equity funds may be hard pressed to liquidate when they need to. I’d like to say they are prudently hedged. I’d like to say England have a great football team.
