FTSE, This Week – UP : < 100 points
Daily Volatility: this week: 11.58 – 9.59 from 11.5-10.98
FTSE cash index – 7217 high 7320 low 7208 close 7310 Last week: open 7378 high7435 low 7196 close 7215
FTSE volatility- open 10.98 close 10.6 (last week open 11.56 close 10.98)
Federal Open Market Committee (FOMC)- Nothing happened- the market didn’t blink. The EU/Brexit debacle rumbles on. Nobody cares. It is getting impossible to estimate what sort of event will sink the market, but we live in hope.
What Trades Would Have Done well
Previous week’s Trade 47– sold a put to buy a call butterfly – closed out early for profit 17.https://optionsinvesting.co.uk/trade-47-3rd-friday-month/
Last week-Trade 48 did something similar though it started with a call ratio spread.Closed for credit 9. Again selling a naked put worked fine, but you wouldn’t hold that kind of short to expiry-you just tie up capital for little return.
Market Volatility
From 11.58 to 9.598 ( last week’s range 13 to 7.0) As observed : August and September are the only two months to average a stock decline since 1980, according to LPL Financial.(quote from CNN) So far September is down <2% so it’s hard to know what remains,but we are in October expiry now,with 28 days to go. Where did vol go? http://stockcharts.com/h-sc/ui?s=%24VIX&p=W&b=5&g=0&id=p96892063473
It may be that this time it is different- volatility used to be mean reverting and we are very far below norms https://finance.google.co.uk/finance?chdnp=0&chdd=1&chds=0&chdv=1&chvs=Logarithmic&chdeh=0&chfdeh=0&chdet=1506163597749&chddm=511000&chddi=604800&chls=CandleStick&q=INDEXEURO:VFTSE&&ei=gTvGWfG_JIfQUcv4gfgE
Summary
US Treasury yield hits a 9 year high -the US$ index has, this year, dropped from 108 to 98. Dollar weakness doesn’t harm the SPX it seems. The UK’s credit rating was downgraded by Moody’s. Many of us in the UK use the word ‘moody’ to describe something illegal or stolen! The ratings agencies became, and remain,in my opinion, comedy central. They were shown to be hopeless as portrayed in the film ‘ The Big Short’ which is essential viewing.
The market continues to frustrate, to delight, to give us hours of musings. It’s important not to lose sight of what it is- a bunch of opinions. Nothing more. HSBC is the biggest component by marketcap of FTSE-how many failed loan accounts are on its books? Nobody knows.