Bank Decision

From the press summary:
Regulation 6(2)(b) states that the assessment of the fairness of a term in a contract “shall not relate . . .
to the adequacy of the price or remuneration, as against the goods or services supplied in exchange”.
In other words, the “value for money” equation is excluded.
So this was an utter crock from the start. This was stated in the act 1999, so how could a bunch of idiot lawyers manage to spin this one out?
OFT frankly need their flabby backsides kicked, this could not stand a moment's scrutiny, so quite why the banks bothered to refund half a billion is a mystery- I guess it kind of softened their vile image as they knew they would forever be in debt to us the British taxpayer.
We cannot beat the banksters- so it's time to start a new kind of bank, like the mutuals, but without smug gits running them.
What will people say in 10 years about this time? How Dubya and Bliar sold us out, how Mandleson become ruler of all he surveyed. How people overpaid themselves, from doctors to train drivers, public sector gorged on fat salaries and pensions, not stopping to question, am I really worth it?
That's it for now. Best wishes to my reader!

No Word since August

I had been intending to keep up with my entries knowing that a select few were reading this, but I came to the point of losing the plot with my trading. Since March of this year nothing I have done has come right-the facile view that the markets simply go up all the time seems to be the correct view, and perhaps I try and over complicate things.
Indicators and chart patterns however seem to have failed the great and the good and this bizarre market action just serves to make me even more suspicious. Logic and the markets however are not bedfellows, and I recall a few lengthy periods when markets refused to pull back.
The end of October gave a small respite but I was already in a market neutral position, that could have done a lot better had I not been so fearful.
Somehow being unable to 'see' trades is more frustrating than sitting on a loser( or short calls as they are known)
I have failed to get the break I needed, so still lacking in application.
On the plus side looking at longer term forex trades is promising, and an intra day futures method had until last week been performing amazingly well.
When and if I have something meaningful to say I will post it here- meanwhile the anarchist in me has put in a Freedom of Information Act request to discover RBS's debt positions, and why some of them may have been 'written off'
They have until 10th Dec to comply.

Put Xmas tree

briefly- bought 4500/4450 put spread and sold 4400 puts-ratio 1:1. This is expiry week and the last one shot up over 6%-we may get the same kind of downside, so I'm on my guard. Sadly the position is a tiny debit due to commissions. Now expect the F to wiffle around in no mans land. My call Xmas tree needs the F up at 4850 for max profit.
All looking well on forex,even though august is the flakiest month to trade.
My mentor John Piper sent a system to test out and so far is has looked fantastic. I have done some primitive backtesting from early charts and again very encouraging results. the brilliant thing is that while it is low risk if stops are put on soon enough, but you don't have to wait around more than a few minutes for a trade.
I do not have a clue about this market yet again, but it seems it does not want to go down. I just find it so hard to go long.

Confidence Lacking

Must confess to being risk averse this week and missing 2 possible combo's and an opportunity to turn my long 4800/4850 ftse call spread into Xmas tree. Looking at forex and trying to determine background trends.
Goldmine continues to mine gold, Berkshire Hathaway makes a profit, so everything is back in order. I'm not fighting the tape, here but concerned that as recent evidence suggests, selling option spreads is not a viable business and has not been for nearly 2 years. Vix is low, so, as is my plan -it is vital to try and leg into trades, to get the appropriate bang for yer buck. Just have to take those trades-simples.
I still have no idea what the point of Twitter is or how it is supposed to be used, but I don't think that makes me a bad person

Pain but limited

I allude to the pain of a wisdom tooth that decided to rebel and give me a sleepless monday night. Now last week I didn't see any trades and it was the first week of a 5 week month for options, so I was eagerly looking for a 4800/4300 combo.
Prices lined up on tuesday as I was enduring max pain and thanks to some serious painkillers I didn't know what day it was, so decided against trading. Dentist duly removed the shattered pieces of tooth.
Sod's law- the flippin' trade was a peach. I'm looking for the F to hit that key 4620 level again and try to capture a down move which would bring the old account bank into the black. Patience and a small tolerance of pain required, but this week is pretty much a write off for profits-though I have about 6 fx pairs on a watchlist and most days have paper traded- one tiny loser so far but averaging over 100 pips a day profit- which the spreadbetters would reduce to about 30 by my reckoning-so risk/reward is ugly. More work to be done there.

Wise Words of Price Headley

I recall him saying that he'd made more money sitting on his hands and doing nothing, than he had from trading. I did likewise on Thursday-watched the market go berserk in the afternoon, which forced me to rethink my levels.
Indecision?
No say I, as it is prudent if you have no clues to stay away- no point in guessing, when none of your parameters are met.
Thus now I'm looking at a possible combo -4800/4300 as I want to get that quickly into an iron condor. The risks of a big down day are at extremes now based on daily volatility. FTSE volumes are well down, so maybe this whole rally has been an illusion.
Those with the clout to buy the market to the moon are fully aware of the damage they have done, and there does seem to be an exodus of traders out of the stock market (which is clearly as bent as a nine bob note, but is tradeable sometimes), to foreign exchange.
I have been looking at this myself but it's unlikely I'll abandon my passion for options- but how long do people have to take a kicking, before they move on to a 'scum free level playing field'?
The forex market and attendant trading platforms and bits and bobs have been the new rock 'n' roll for many years now, and on the basis that it is too big to fiddle, continues to attract many new players. Early ( 6.30 a.m.) starts are de rigeur.
Now where's my trusty alarm clock?

Webinar wobbles

I was quite excited that I was able to watch archived webinar from Price Headley and Alex Elder, two trading greats.
While I learned, as always a bit from Alex and Price, the webinar itself was painful, and just shows we are a long way off getting these things sorted when TradeStation took itself off for a rest repeatedly, and mic volume was variable. Valuable lesson -make sure you have a back up plan in case the technology fails. Dr. Elder made some interesting comments however and his take on the market is ambiguous- like a good trader should hedge he reckoned to be wary of the bull and while on charts the signs of a drop were there, this rally may go a lot further. I think it may go sideways too, but that's an option trader's perspective.(and hope)
Seems the F is clueless without being told what to do by Goldman Sachs, I mean the US markets (oops!) but if we hit 4520 I'm looking to trade a combo- sell 4700 call to buy 4200 put for a credit, and depending on its outcome either leg into iron condor or if it's losing sell the puts and buy call spreads, or if it's a big winner just close it out. My price target is currently looking a bit feeble. Has the market run out of steroids just when I need it up a bit?

FX and Time out

As I decided to step back from options this week- as August is a 5 week month and volatility is not in favour of the seller currently, I thought it'd be interesting to have another look at forex, and while cable (pound/dollar) is the old warhorse, also looking at pound/swiss. Both described a perfect retrace to my famous moving average and proceeded to plummet for a trade of 100 pips.
This is the classic situation you get with trading- you see the first big winner and think you are a genius. Winning teaches us nothing, and there's no good reason why my method should work anyway- but it does. I know it is hard to trade this method but the time slot for these trades is really 7-9.30 a.m. so it may kill me to get up a bit earlier but I am intrigued that a higher time frame has made a world of difference, and the system still seems to hold.
Multiple income streams are the ideal. I'll start my takeaway porridge service next.

Wrong- Ouch!

The indexes smashed up >6% in concert this week as banks' grubby profits soared-as of course they will being bulletproof and beyond the law.
I had sold 4300 calls on monday- F opened at 4127, and the index was up 60 then faded. My selling price for the 4300 calls was 12.5- well the price dropped to 8-9, and I was thinking that I have 20 years of stats that tell me that 4300 is a safe level.
The market was obviously hit by a freakin' tsunami of cash at about 3.30 on monday, and to quote a friend it was a 'key reversal day'.
While manipulation is how markets work to favour the few who have the funds to do such things, usually it is tradeable.
The fact that the world and his wife had spotted a head and shoulders formation on DOW seemed to wake up the sidelined cash, and the banksters duly waded in all guns blazing, ensuring max. pain for a great many.
Anyway I was the one thing I am not supposed to be - a forced buyer. The calls went to 93 as I closed out before expiry when it became apparent they were gunning for 4400.
So twice recently we have seen the market on the brink of a big down move, and magically it smashes up. It makes it impoossible to quantify risk, but it's not a problem to limit risk. I shall be looking at selling spreads in iron condors initially, but also looking at Xmas trees as credit trades.
Meanwhile http://www.zerohedge.com/article/max-keiser-goldman-sachs-are-scum
Max is my new hero- we all know the banks own Obama and Broon, so it is nauseating to see them pretend they wield any real power over the financial behemoths. Regulation? not in the banks' vocabulary.

Expiry week trade

Hope to pull in some fat premiums this week, and close out my long put spread for a good return.
I think I shall revise my views on buying spreads, and limit them to being an adjunct to my central methods, as it is a pain waiting until expiry week to see if the spread is worth anything- been here before, and the point of buying the spread is that you can sell naked options further out and pull in premium- when they become a debit trade, they are too painful.
I have not been in a position to trade combo's lately,but the market has not obliged.

4200

The next key level 4200, has been violated, and unless the Chronic Investor have got it right with their 'Coppock' indicator, I think the rally is over and while the 'unseen hand' tries to keep the market aloft we may wobble around here for a few more days. thereafter I would expect to see some further drops and 4000 might be support.
More and more alarming stats are being trotted out each week and the media is doing a 'bang up' job of saying how great it is that the rate of disaster is slowing. House prices of course are constantly providing 'glimmers of hope' until you look at the real figures from the Land Registry. Imagine that- estate agents telling fibs about prices, or being elaborately over optimistic in a genial and charming way.
Currently sitting on my hands as my positions dictate no action.

Quick update

Sold some FTSE july 4500 calls yesterday at 16.5 I am expecting the F to drop, but evidently someone else has other ideas.
I have been pondering which sort of businesses are recession-proof and I think insurance is probably a steady earner, though you can't prevent the banks making massive profits, as we well know!
Heat, Wimbledon, and hayfever have seriously addled my brain so very light touch this week, unless the market decides to provide.

Conspiracy

I do like a conspiracy theory and I just stumbled across an article pointing the finger at Goldmine Sachs, the architects of the credit crunch(allegedly) who are now making out like bandits and getting record bonuses on top of the record profits at everyone else's expense. Let's hope Americans have a pair where we in the UK do not. Let's see some real action against the Wall st banksters- after all if terrorists inflicted that much damage on the world we'd be spending billions bombing sand dunes.
Which brings me to the point of the article- everyone remembers being baffled as to why Gordon Brown sold off over half of the UKs' gold at rock bottom prices- well apparently Goldmines had a short position amounting to 1,000 tons, and they were about to be blown up. Broon being the banksters' pet poodle dutifully obliged, sending the gold price lower. True or false- it was a very odd decision, even in light of Labour's loony spending.
Well, not quick enough on Fri for a risk reversal- missed it by a whisker as I put the order in- sell 4550 calls buy 3900 puts, I only wanted a credit of 2, but FTSE was thinly up about 50 or so at 4300 -which is the new resistance. Last week I noted 4400 was it. Coincidentally it was pivot level R1 on the daily chart.
Wonder how much longer the markets are going to stay aloft- more importantly how will I trade whichever way it goes.
Lastly as I keep talking about legging in I was reminded of an ancient TV comedy- early Goodies perhaps, about the life of a great Russian composer, his name?






Yaputya Lefleggin. It still make me smile!

Late To the Party

Didn't see a potential risk reversal as the F made a 70 point drop, but recovered when the US went bonkers because the recession is clearly over- GDP only a negative 5.5%. Actually no idea why the US got the hots, but is is prone to doing that-the BS machine is far more efficient over there.
I have been for some time wrestling with the actualities of trading iron condors- ie selling put spread and a call spread, both out of the money.
I'll admit to being supremely biased as I thought adjustment might be unworkable. As time marches on ( and I miss getting my price for said iron condor), and I monitor a joke trade made in anger for a financial website, I start to see a great many ways to adjust- the key thing with options traders is to get that premium tucked away first, and while IC (iron condor) might almost negate my Xmas tree, I am prepared to admit that while everyone is calling the market down, it really does not want to go just yet.
So to be neutral on direction- which the market has gifted to those astute traders for 2 months now looks like the smart move. It's easy to call these things after the event, and as VIX shrinks to (unacceptably low levels) I'll have to review this situation.
Proposed trade- sell put spread-4100/4050 and sell the call spread 4450/4500. I wanted at least 20.5 but didn't get it. A bolder trader might have legged in with a put spread first.
Trade has only 21 days to go-actually it's more like 14 trading days take out w/ends and expiry at 10:a.m. Risk = 50 minus premium taken in(20.5) = 29.5. Based on 10 lots that would be risk of £2,950 to make £2,050 plus costs. Assuming trade is 100% successful it represents a return of 68%. Compared to short strangle it might make more sense, but of course one takes a haircut on every aspect of the spreads, which is of no relevance as it is good to know the market maker can still buy a capalatte -triple mochachoca-double -decaff on his way to the factory!

Legging in

Legging into a christmas tree-bought the 4050/4000 july put spread and sold a smattering of 3900 puts, hoping to leg into more of these later if market does do the decent thing. The obvious supports if there is a sizable drop- 4000 and 3800- which would be ok for me. Any more than 3800 would be a challenge.
My position currently gives a negative theta(time decay in my favour) of-1.9 and delta +0.1, pretty much gamma neutral too.
Having fun with Samoasky which of course disagrees with me on most of my calculations, but the differences are tiny. the optimum return for this position as it stands,would give 26.46% profit apparently.

RBS gets new bankster

Apparently 9 mill gets you a top notch high flying bankster- I sincerely hope he's not of the same calibre as the lamentable bunch of imbeciles who were running things under Sir Fred- most of them lost their own shirt because they are too stupid to know how to hedge their own stock-allegedly.
The business model for a bank is the same as a charity shop-your stock is not only donated for free, it is delivered free of charge to your premises. Even the worst run charity shops make a profit, so banksters might want to go away and have a big think about things. I hope RBS will recover- they have our money after all, and it'd be nice to get it back-with extortionate interest and default charges of course.
I hear Natwest will open a new account for anyone with a detectable pulse!
No obvious trades today as I think the US might fall further once europe closes, so tuesday is possibly going to throw up a trade or two- possibly a combo selling very far otm puts to buy some calls.

The Stunned Mullet

I read about one of the posters on a well known UK financial website who used the above epithet to describe some investors he knew. This was in reaction to an article by a staff member who had explained why he was selling his Barclays shares.
All too often with people who buy shares, they cannot help but watch the prices and then get stressed out when the shares tank- which they always do. Sometimes they bounce back and that then causes further stress for these mullets- do they now sell and recoup their losses or hold on in case it goes higher?
No rules means no win.
Winners have rules.
A loser is a forced buyer or seller- a good trader will have losses but will not be a forced buyer or seller- they will have closed out before the market forces their hand.
I have a rule of thumb for selling naked options- if premium trebles it's time to adjust. It has thus far served me well, though I will confess to premium trebling+5%, and the market then reversing in my favour. It's not 100% rigid but it's not an exact science.
So why oh why do major institutions try to make trading an exact science with their armies of quants and super computers?
I don't see them making the big bucks-that seems to be done by the 'barrow boy' traders

Expiry Shenanigans

While I decided this week not to be an idle screenwatcher if there is nothing to be done, this morning's expiry was a bit of fun.
My liabilities went out worthless. I was short 4200 puts, and with the F almost 100 above they looked pretty safe so we won't mention how I accidentally paid a fiver each on IB. Doh! What I should have been focused on was the 4300 call- which in the space of 30 minutes went from 6 to 30. I am sure there are expiry experts, and I have met a real life specialist in this arena, but I do like the wild punts based on the predictability of a rising market from the preceding thursday lunchtime, or the Fri morning swings.
I can imagine a few niche traders around the world who trade these few hours once a month, spending the rest of their time sailing or on the golf course. It's a low risk strategy with such rich risk reward.
Meanwhile I was delighted to see Pakistan beat South Africa- I'm convinced that SA are in league with the devil, they just seem to make impossible catches, and have batsmen who never get themselves out.

Funny old day on the F

40 point range -all quiet after yesterday's thought provoking drop. There are times as Price Headley says when you earn more by sitting on your hands and doing nothing. I could have possibly traded in and out of my short 4200 puts, but comms would have swallowed a chunk of that as moves were not so big.
I see no reason for the market to get excited one way or another- so while I think shares are priced at twice what they are worth, the market thinks they are just right. I just trade the wiggly line on the screen and the statistical 'edge'. I'd like the F up about 200 though, I'd like to sell some calls.

Expiry week trade

Sold to open 4200 jun puts- these of course expire at 10.10 Fri morning, so hope the drop is not the pending plummet that I expected last month. Much talk of Jun 30th being a crunch point as fund managers look to do something or other.
CNBC reported a trade - someone buying 45/55 VIX options call spread for July expiry based on a possible big drop(in equity markets obviously). I have little faith in CNBC's investigative powers, and they claim that this is 20,000 lots, you'd question how they were able to place such a monster trade, and why would you place it all at once?. VIX has blipped up, and I'll be looking to place a July put Xmas tree, and maybe I'll leg into the naked shorts.
I will hope to sell some calls this week- the June series, but the market may not be kind enough to offer meaningful premiums.
Meanwhile the 20-20 cricket has surprised me as an entertainment- a slogfest, but quite enjoyable.

Wither Vix?

That's some downtrend, what next?
Collapse of options volatility has scuppered my expiry trade entry for friday, but market action was lacklustre, as it seems the clueless are running out of steam. Volume is declining, so like a good options trader I expect and actually enjoy a dropping market, mostly.
The disconnect with the real economy and ACTUAL data like real house prices, do not reflect any 'green shoots'.
The next crisis will likely be gov bonds being shunned, and an increasing mortgage rate giving rise to more foreclosures.
Employment is not picking up and the governments efforts to provide jobs, and to help people in mortgage difficulties have proved less than worthless.
The government will have to make massive cutbacks to the bloated army of civil servants, the tax take will be down, so quite how the economy can be moving out of recession looks a bit suspect to me.
Printing money works well until it doesn't, like the last debt bubble. I get the idea that there is a natural level of 'value' by that I mean consumption and overall quality of life, which is on a gentle slope upwards, but gets beyond itself and corrects-there may well be someone who plots such metrics and has a perfect model for trading the stockmarket. That person is not me!
Terminator Salvation is fun but while the plot lacks a degree of sense, the action is great-big nasty machines against soft squidgey people- quite what the machines want is not clear, but I'm steering clear of any appliances that show a modicum of ambition!

Phew!

Managed to get a trade finally. Wed morning the F smashed up to pivot level R2 and just below it around 4470 I placed a combo-'risk reversal' selling 4600 calls and buying 4250 puts for credit of 4. Closed out for credit 6 this morning. Had I been around to leg in half and half I could have got a better entry for as much as 15, so averaging into the trade at >10. I was not around.
Prices per lot.10= £100.
As long as I can capture one or two of these each week until expiry week( and might have the chance to do a combo even then) I am confident I can remain profitable.
I have now moved into the black for my trading year to date, as March was such a horrible month as the banks took our money refused to lend it out and got busy buying the stockmarket and commodities.
I don't care if this rally is phoney or not, but every instinct, and my own empirical evidence suggests we are only halfway up the Swannee. I trade intra- day, and intra-week, overall direction has some value, and while I rant about the real economy, the game we play in the markets is another world, a wiggly line on a chart.
Expiry next week, so I was keen to clear the decks today and even indulge myself with a trip to the cinema to watch the latest Terminator movie, which may be as lame as Angels and Demons, though it would be hard to beat that piece of garbage, in my opinion.

Up and Down combo's

Possible trades- yesterday with the F down over 50 it was possible to trade a combo selling the 4150 jun put and buying the 4550 jun call, for a profit of around 20 per lot. Today market was up enough to close out of that and get into the downside trade, selling 4550 call and buying 4250 put for a profit of >20 per lot. Did I trade them? No, I saw both trades too late and then got fearful about entering late into today's downside combo which even if I had got into for zero would at one point have given me a profit of 10 per lot.
Let's see how many trades I can miss in total this week.
I believe I have often said there are at least 2 combo trades per week- you just don't expect consecutive and instantaneous ones.
Note to self: Is the high now in for the summer?

Make me a Fool why not!

I have recently been testing out the reality of volatility over its calculated value, and the FTSE according to Wolfram had a daily vol of 2.4% which meant that you'd expect 100 point moves on a daily basis. On thursday I was discussing this with friends and the apparent paucity of such events- well this week we've had 3 days of >100 point moves. Last week 2 days, and so on.
What this tells me is that I have a perception that is frequently wrong, and this was based on the performance of binary bets, to wit the ftse to stay in range ±100 on IG Index. I have tried to trade this as a sell for 90-95, when ftse is at parity at lunchtime, on the basis that it will move when the US opens- not by 100 but by enough to justify a small stake of 5-10, with the hope of getting 20.These have been dismal lately, and Fri morning I placed my first real money bet on the F staying within range- buying at 56. I closed out for a small profit, as I didn't want to be in the trade for non farm payrolls, and I was right to be out of it, as the F smashed up with the usual fervour of a 6 week old puppy only to drop back 50 points.
The moves happen they are tradeable, and I need to be a bit more 'on the ball'.
I'm not sure about any more upside on ftse, and stochastic may be signalling some doubts.

Just a Quickie

Bought to close my short 4650 calls -sold for 33.5 bought back at 25.
Reason for this? Wasn't comfortable with the trade, and I think the market will go higher because everyone's telling it to.
Latest bit of the jigsaw is the Coppock indicator which may well prove a self fulfilling prophecy.
I'm nervous about shorts after the FT proclaimed there was almost twice as much cash sitting in funds as there would normally be at the bottom of a bear market.
Everyone says the US will lead the world out of recession, and so far very little of the TARP money has been used, we are told.
Looks like the markets are stronger than the real economy suggests.
I fully expected today to be an up day and with 90 minutes remaining that may be the case.
Yesterday may have been skewed by the European public holidays also.
Note: FTSE has been above the 200 Ma on weekly and daily charts for a while, the US has yet to catch up- that will probably happen.

Half Portion

Sold 4650 calls for 33.5 this morning, caution advised as the Americans seem to be 'on something' again. This is after all the stockmarket that has been given a risk free multi billion $ injection. It reminds me of a space escalator, where the markets are leaving terra firma further and further behind, on a journey to the outer atmosphere. You look down and there's nothing below!
The US markets are still below their 200 Mas and if volumes are light today, it might be a good time to add to my short calls and buy some puts.
I note for the first time in several months the volume of puts now exceeds that of calls, and prices are starting to normalize- the volatility relationship is nearly back to 'sensible' to reflect that downside risk insurance should be more expensive than upside.
It's a wake up to me as I have never seen such a skew in call prices as we had recently, and should have taken that as the cue to go long.
Boat? Missed the? As per usual I fail to get on the big trends, it's not really how I trade, but also shows how hard it is to know which way the wind blows.
Option 'prices' should never be a barrier to a trade- if you have the conviction on a direction, just trade a spread*. In the very short term, intra day I reckon buying naked is ok, but I would only do that if I'd sold something else to pay for it!
* this is why I think covered warrants are such a ripoff, you cannot sell to open, and they are about 25% more expensive than exchange traded options.

Faint Heart Ne'er won Fair Maiden

As my grandmother used to say- so this week some fainthearted non- trading, as I failed to see the 2 or more combo trades this week, and yesterday didn't get a fill selling 4650 jun calls. I was out at civic duties from 11.a.m and am not entirely comfortable trading when away from the screen, although only once have I changed my mind intra day. However my levels would have been hit, as I also put in a cheeky order to close out some of my short 3900 puts. I re-placed the order when I had the opportunity on Fri afternoon but the high was in and the F was fading ( I was looking at R2 - around 4460 as the high).
Point is- I realized this week how sensitive I am to outside interference, and I am more fickle about taking trades than ever I was as a pro musician. I have had more tantrums as a non- musician but the one I did have cost us a major record deal.
OK I don't have tantrums with trading, but I kind of 'sulk' when I miss trades, get annoyed when I am losing, and feel a little 'lighter' with winning trades- but frankly it's not about winning it's about probable profits, so it's no big 'hurrah ring the bell' kind of thing for me. I reward myself with time away from the screen.
Not sure what I do about being so fickle- living with a woman tends to give one empathic moodswings, and while I love every day of my life with my chosen one, there are times..............

Lame day

Well after yesterday's frenzy as a survey revealed 8% didn't think the world was going to end in 2010( I love the bias in these things) a pretty dull day, though I almost got excited about selling calls.
Now according to the FT these surveys have a big influence on markets- what George Soros calls reflexivity- Hungarian for 'a bunch of idiots sharing the same delusion'
Can't deny the influence and how often does one see optimism produce amazing outcomes?
A little off track- our vet today gave us a reduced rate on rabbit vaccinations, because she's a lovely human being, and a great vet. Would it hurt the banks to show a little kindness after the huge amount of charity we've shown them?
Barclays should be ashamed at charging 21% interest, when they get the money for 'free'.
If, and this is a biiiiiiig 'if' the government were sincere about giving the economy a boost, they would give the money to the people ( a 2 year break from council tax I say). They are simply, and beyond argument, the pathetic poodles of the banks and do whatever they are told- nothing has changed in 100 years. The Great War enriched the financiers while the great and the good suffered and died.
Can I be a capitalist with a sense of fair play?

Fun day

How bizarre- the F tanks, then finds support at 4300, shoots up and ends up about 50 as the US reacted to a 'survey' of consumer confidence. So 20 'domestic engineers' on Prozac move the world's markets.
Of course the markets trade 6 months ahead, and this is just a coincidence.
I may have missed the long trade for this week, so wait until it looks like a short term top.
June is a bad month statistically, Murphy's Law or rather the Fed's trillions might prove otherwise.

It's Xmas time

Another Xmas tree- bought 4100/4050 put spread sold 3900 puts for credit of 9.5
Curiously and for the first time, I was able to place this trade as a limit order and it was classed as a ladder.
My logic- market highly unlikely to do much for Jun expiry(famous last words) I am taking in some premium, and market may take off to recent highs, so I keep the premium and get to morph the position. Should market drop 14%+ I will have to adjust, but I'm thinking there may be another risk reversal opportunity next week, so I will close off the shorts first with proceeds from short calls. Or I might not! 3840( break even point) is a looooong way from here.
Check the VIX for mean reversion- I think it'll drop back at the 20Ma, but it behaves so well at bolly bands.
I hope you are all aware as I have recently been made aware of....... http://www44.wolframalpha.com/input/?i=FTSE
With thanks to the good doctor.
PS I'm also watching index butterflies- while they are commission heavy, with premiums still quite good you can see a risk reward of 8/50. You don't need to run to expiry to double your money either- a 150 point move in your favour can be good enough, but if closing out, remember costs and the fact you are taking multiple haircuts on the bid/offer spreads. I tend to look at final outcomes with trades and just accept the spreads are a fact of life. Calculations are one thing and what prices should be is NOT what prices are.
Open interest is high on puts and calls, and areas that to me look like S&R based on this: 4000 and 4800. As always DYOR and debate the matter with others.

Size is important-size and position

Background- felt ill this morning -flu like again, so not ideal for making trading decisions. However I was happy to see the F down 70 points to S1*, so decided to close out my combo-short 4700 call long 4000 put, for a credit of 6.
The trade was placed for a credit of 4, but went against me as F smashed up about 80 above my entry level, which didn't bother me, but should have made me think about averaging in. I saw key level of 4450, but possibly 4500-turns out the 4500 was attained, so I could have really juiced up my combo by putting on more of the same trade.(possible credit of 20)
What to do? Curse my luck, blame the rabbits? Of course! And then when the mist clears, get analytical, and see how I could have done better.
I will re-evaluate my entry size, and accept that position is often not the optimum, and this can be mitigated (al la Oliver Velez) by legging in. Legging out can be good too- eliminating all risk, and leaving room to capture more of the move- e.g. closing out short calls and selling puts further out creating say a 4000/3850 put spread. I may be wrong but I just don't see the F down at those levels-Brown and his B of E chums won't let that happen. I am out of the market now, and will reward myself with a trip to the cinema with 'er indoors' blessing. Angels and Demons will be a gentle distraction.
*Pivot levels seem to work much better on DOW- for help with these- mypivots.com is terrific, and free.

Another go at 4500

Hope that is the top of the market for now- it is good for no one when markets rise on nothing more than 'free' money.
The damage done by banks is still filtering through to the real economy, and my heart goes out to the thousands of small businesses that will not survive. For a long time now millions of Brits have been squeaking along making minimum payments on credit cards, and all too frequently I hear how small business people have deluded themselves thinking their business is making money. This is the knock on effect of our society's distorted view. It is like the American dream, it never really seems to happen and most people scrape by thinking how it'll all turn out like a Disney film. The world needs dreamers, but dreaming is free, and needs no credit card.

Too soon?

Although I traded at the top of the market on monday we have seen a rise again today, and a fail at the key 4500 level, which I hope means the top is now in and failure to close above 4500 will bring sellers back into this bear market rally.
There is something to be said for averaging in* and I have considered this, and today was a good example of how much better my position would be looking now, but nothing to do right now, just want the F to give back 100+
* check out Oliver Velez and his position building-simply averaging in and if the pot's big enough your trade will come right eventually. Like a Martingale, but not closing out with each trade. Must be a name for that....

Hit and Miss

For better or worse have taken a combo -selling 4700calls to buy 4000 puts, on the basis that this was a big up day and this level may be the high- traded at F=4444.
This morning, and this is my lack of faith in myself, I failed to enter the opposite trade-more or less- the 3850 put/4650call which was a credit of 6 to enter and 35-40 to close. I 'missed' this, as I was not prepared, according to my new pilot's check list.
Rule 1. Market expectations- be prepared.
I needed to have in place a plan if market went up down or sideways- and NO trade is also a position. F opened down and 4300 is my idea of support and it duly obliged- I certainly didn't see such a big rise- and would have closed out very happily for a credit of 12, and joined my chums at the pub!
I do not intend to be married to these trades- they are short term- 2-5 days at most, but my first thought about this week is that Vix has dropped to what for me looks like support, and the relentless flow of total BS financial news has to take its toll soon, and the market is not pricing in anything as yet. Another bank boss gets the heave-ho and everyone starts foaming at the mouth, as if it makes a difference- and as the market gurus are so fond of pointing out, they are looking ahead 6 months( yeh right and I'm batting at 3 for England in the first ashes test). I wonder if anyone can be bothered to backtest the market moves based on this claim? I seem to recall the Chronic Investor making pronouncements which were 100% wrong in the ensuing months.
Let's have that Vix back where it belongs, where the eagles fly etc.

End of Week

My fears of a market collapse proved unfounded and I should have traded better- actually recording a small loss this week, on trade number 16 of my fiscal year. (loss<£100)
My track record is not so good currently, and this is mainly down to NOT taking trades, due to confidence taking a bit of a hit.
I think it must be so reassuring to be in a trading environment with other traders who understand what trading is. My chums and I all trade differently, and often prefer different instruments, but for me it's still FTSE options.
I was surprised to see the point and figure chart of F now showing a target of 4750, though a column of 0s has appeared.
(Stockcharts- market summary)
I shall be looking for combo's next week, and prefer to go short on a big up day- I have less clue about market direction as time goes on, and in the long term I have no interest either, though perhaps I should put in place some much longer term trades- maybe calendars.
Some more research going on as I look at binary bets and the ±100 daily bets. I have been forced to abandon my pivot method for binaries as it patently didn't work, despite my initial conviction.
June expiry is a 5 week period so be careful out there. Remember there ARE free lunches, but someone always has to pay for them.

Middle finger Salute

Well the US market and its tame puppy the F enjoyed a pleasant afternoon while laughing at the unemployment numbers- life's good at the banks, plenty of cash and zero risk, so the great 'unwashed' can go hang!
My eager anticipation of a precipitous drop came to nought, as I knew it would deep down, I'm just having a tough time convincing myself that I am right quite often on combo's and shorts. Have to step up to the plate soon, or the small army of rabbits that share our home( mostly outdoors) will have to eat the lawn, or what's left of the lawn.
Expiry tomorrow and there is a lot of open interest on both calls and puts at 4400- be fascinating to see who wins that battle, on the basis that those are short option trades, so market makers won't want to be caught with them-watch for expiry at 4402, at 10.10 tomorrow morning.
Next week- need to see some combo action, and if we get a big up day on monday should be a great opportunity-the top may well be in at 4450-4500.

What is a missed trade?

Yesterday noted in my journal (still handwritten -apparently by a 12yr old) trade to watch -June combo 4700call 4000put
Looked at it this morning and have to say didn't contemplate placing the trade as I am out wed and fri on civic duties.I also have some long puts.
The trade could have been placed for a small credit- maybe 5, but you could have closed out for at least 40.
That equates to £450 per lot, and I'll be honest here- I don't think I'd ever do just 1 lot.
I reckon there could be two of these trades every week, as I've said before- and last week missed out on a monster on Thursday.
So far this week then there was a smallish one to be had on monday as well, but being expiry week I just wasn't looking.
This reminds me of a friend suggesting many years ago that as traders we should have a clipboard(which he has) and we have a 'pilot's checklist' like a pilot does before takeoff.
Now pilots aren't idiots-but they are human and we forget stuff, so perhaps part of my joining the adult world and getting business like would make such a checklist a vital tool.
I hope this blog is enlightening some, amusing others and provoking everyone to think about what trading is.
In time I may just find out for myself.

Suddenly....... Nothing Happened

Just as I predicted except not- market has just whiffled around showing utter indiference to my position. Expiry week has no premium left in it so looking at June premium- and this is a 5 week month- do not be fooled by fab premiums- this is a 5 week expiry cycle. I'll be looking for combo's and consider the market too horrible for iron condors as they need to be ±5% of index to make any sense and recent monthly moves would seem to exceed that.

What to do?

Well it's expiry week and these have their own character which I have studied for some time- so how do I trade it?
I had expected, nay demanded an up day today to sell some calls, but it was not to be. I should just sell some puts, but we are at such a stretch on the scale of being overbought, I want to wait for a better opportunity to sell puts-this may not happen, so I am prepared to take a tiny loss on a zero cost trade- a ratio put spread for zero (cost = commissions).
bought 4200 puts and sold 4100 puts x2.
This would be great if F tanks, and I'm in profit all the way down to 4050- about 9% from current level. Problem is ........
I need a substantial drop, which probably won't happen, but my gut tells me that Dow might plummet later.
Either way I didn't fancy having naked puts hanging there in case some horrible things happen in the interim.
As I write F is only down about 30, making it look like 4400 was the low- again I was being 'clever' and expecting it to drop below just to test that level.
I do have plans for my put trade and have a variety of choices if market moves down.

Non Farm Payrolls

Cannot trade this morning as this is the big event of each month and can move the market hugely. I don't know what they grow on Non farms, before you ask! Happy weekend to my reader( or maybe it's just me)

The Dichotomy

While certain that the 'infinite wallet of bad government' is driving the market- I can't help feeling that such a crazy rise HAS to fall at some point- but fighting this looks like a bad idea. The banks now have risk free trades forever- they know they will not be allowed to fail, and then there is the real economy-global trade has dropped 44% apparently-no one told the stockmarkets.
Today watched F pass up through R1 then R2. I don't have a strategy for this- unless we count the 'Hail Mary' trade!
F is now beyond Fibonnacis and the longer term 200 day and 40 week moving averages though the 'dead cross of the 50/200 is still in place and is the last bear signal, if you count out all the overbought indicators- which seem to stay overbought/sold for so long it's not helpful.
Watching- sell 4650 call/buy 4300 for 10 or 4350 put for zero

Feeling grim

Felt like a touch of 'flu this morning so entered a trade and went back to bed!
Trade was a combo and not thinking straight but eager not to miss out after a few misses recently, I took the trade for a credit of 2 and market dropped enough for me to close out for credit of 4, so no damage done.
Trade was -sell 4450 call buy 4150 put- a combo known as risk reversal or 'synthetic short' (mentioned that before and it sounds like that awful cycling gear).
Here's the painful bit -could have entered the trade at R1,( for credit of 10 or more) even though price went through it, and closed out for about 6, so could have made 16.
We fight to live another day. (joke!)

Wither the market next?

While the buyers are having fun it seems that the relentless slow motion avalanche of economic disaster is being kept at arms length. Presuming that government largesse in baling out the banks was not entirely without rationale, and it was intended to ease the pressure on those struggling with debt, it looks like that piece of thinking might be a little wayward. While banks boost their balance sheets, rent arrears and mortgage repossessions- so blissfully ignored, are mounting and hitting record levels.
Shops are having a ball, while landlords, and lenders subsidize the spending frenzy.
The facile language of 'kickstarting the economy' may well produce a much worse outcome as the unintended consequences of the 'infinite wallet of bad government' undermines a financial system that needed replacing not patching up.
I'd like to think that I am simply pre-disposed to the doomier side of things, I'm naturally a happy person, but cannot see any evidence to suggest there are green shoots, or stabilizing of house prices. I see a huge swathe of indebted people not facing up to their responsibilities, and yet they want to maintain a lifestyle that is plain unrealistic.
People will need to learn a new word -penury.

Dick for a Tick!

I was poised somewhat tentatively to place a combo- risk reversal as usual- selling 4450 calls to buy 4000 puts- May series, and put in a price of a credit of 2. It must have teetered on 1.5 a couple of times, and I didn't want to chase the trade, as I am still out of sorts, but it would have been perfect with Dow now negative, I could have run the trade or taken a profit of 12 per lot.
These are like futures trades but you don't get smashed to bits by volatility, so sometimes futures trades are stopped out when right on the trade, correct in your stop position but some genius decides to take everyone's stops out. there is no answer to that as futures traders will attest, it's just the 'rent on the shop' but with our option combos we can make nice stress free trades-especially as I have now figured out what to do when a combo goes horribly against you. (price of this info? £25K)

Market Moved by Idiots

Laughed out loud as I read on Yahoo that RBS had 'upgraded' banks and said they were all going to make a profit.
This coming for the world's most stupid bank-they are utter utter morons in my opinion, and even the directors are as ignorant as that variety of 'flu that is no longer a serious threat! Too stupid to understand options.
They are not even mental midgets, they are intellectual vacuums.
So when the horse's backside says something you have to take the opposite view. Caveat- Brown is owned by the banks and will now and forever more do their bidding, so RBS's particular piece of genius comes on the back of a banking sector that is positively foaming at the mouth with all that delicious cash. Obama of course is also the stooge of the US banks and his boy Geithner is in a spot of bother over some 'plain brown envelopes' I understand.(Allegedly)
Trading is one thing, but our own dignity is another matter and I feel that the banks have repeatedly raped the British public- maybe it's the same for the US, and still there is no whisper of punishment for their evil doings. Me and Taleb are mad as hell about it!

Pre- Conceived Ideas

Rec'd a timely email about this, and it is of course sheer folly to have fixed ideas about where the market is going, we can only trade based on our own interpretation of the true information available. The only true information is the last price of something as denoted on a chart, everything else is just someone's truth or another's lies.
So when the market goes up, I should be more willing to go with the flow but at times it makes me feel ill just to see the F soaring, because my heart tells me it is another illusion, but my head doesn't often overrule that notion. I shouldn't care what sort of money is buying the market-( the vilest numpties in the world probably) it is simply a market move and is tradeable.
So preconceived ideas must be relegated to my taste in wine, music and cars.

Closed out

Well the market reacted to something,but I don't think it was the 'flu- a drop was in order as the oil companies disappoint, but still no clues as to where we are headed. Anyway closed out those calls for 29 thus making 13 per lot. Could have got a better price,and even looked at a combo- sell puts to buy calls which was not a bad trade as the Dow scooted up after opening down about 70- the F rallied by 50 or so-but of course the market is looking 6 months ahead and is in no way influenced by whatever the Americans are doing- which in turn is governed by the amount of TARP.
According to Nassim Taleb the banks have lost $4trillion and change which is more money than they have ever made- this was hotly disputed by a fellow poster on Motley Fool,who seems to work for a bank, but is a very smart guy. I guess he is duty bound to talk up the banks- Taleb says let 'em rot, we don't need them anyway, which is my stance. Mutuals and credit unions seem to work fine for retail banking, and who knows what banks do with their obscene profits anyway? Barclays used to be the big Satan, but I don't think any of them occupy the moral high ground-especially the one that started the toxic asset scam-and they know who they are,and remain untouched by the whole thing. Some might call this a Zionist plot.

Wet Monday part deux

Sold some 4300 May Calls at 42. Market went positive, so thinking that I have no idea where we're headed next, I have a half portion.
Looks like this is another key level, but conflicting data from the various indices.
The Dow was a terrific pivot play completely wrongfooting the system that says you go short if price opens below central pivot-well it opened below S1 smashed up through that and through the pivot- over 100 points in the first hour or so. Looks like the money trucks are being backed up to the loading bays at the stock exchanges!
My mantra is : "Do not fight the infinite wallet of bad government" It will end in tears -every government messes things up, but they can buy for a lot longer than we can stay short.
I'm still trying to make up a joke with the punchline about the bank that broke the man from Monte Carlo. The simple pleasures keep me amused.

Wet Monday

A soggy sort of day, but the market is resilient in the face of global swine flu. Looking to sell calls as is my wont, but having placed an order, I pulled it just before 1 as the market looked to be making a new high for the day. One of my metrics suggests we will have an up day so I am skittish. F has been in a 20 point range since after the first hour, and again I am inclined to see if the US futures while down pre-open, will actually smash up, as is often the trend and give me a better price for the 4300 calls.
A mentor of mine has taken a binary bet on the basis that F will not hit 4180 in this May expiry cycle- I am inclined to be a contrarian when he does this!

Mental states

Missed yesterday the combo- 4300 calls and 3600 puts- just strikes that I like-no particular advantage. The morning trade based on my thoughts that market would rise, was to sell the puts to buy the calls- this was a credit trade for 6. the market went up and it was a credit of 16 to close out the trade. Now the reverse trade,and my favourite, the risk reversal, comes into play -sell the calls to buy the puts, based on market drop. So that was a credit of 16 and close out for zero. A possible max of 38 per lot.
Missed both, annoyed and now looking a little more desperately for that trade again, but am I just looking for the 'revenge trade' as my broker used to say?
Patience required, and my gut tells me to wait until after 1.30 when most of the US news comes out. UK has some news at 09:30 which could actually keep me out of a bad trade, so I'll bide my time.
Does anyone else think it is seriously odd that this 'greatest recession since world war 2' has so far seen record profits in the shops, the banks are doing great, and everyone apart from new car salesmen seem to be doing fabulously?

Fear but no Greed

I was concerned about my short calls so closed out for a small profit, instead of doing the pukka trade-which was to add the other half to the position and buy puts, making the trade a combo or 'risk reversal' which would have been a monster trade.
It's all about mental states, and I am not too happy with my trading currently, I never seem to be able to focus on much other than options. I have had a nibble at a couple of binary bets, one loser one winner, but overall a small loss. I have enough data for developing a system and yesterday was simply a case of it didn't work-as in 40% of the time it doesn't work. Point is that the loss must be smaller than the gains, even if you have a tiny edge. This is how big traders make money- get rich sloooooow.
I love trading and have no intention of retiring-ever, though as a matter of principle I will accept any meagre pension the state may wish to confer upon me.

Tiny trader

Like several of my colleagues, sold May ftse 4300 calls as we think this rally may run out of steam, but if not the size of the position means some comfort in adjustment (like I meant to do in the last few weeks, but failed!).
My civic duties show me a side of the real economy that doesn't bear looking at- the awful poverty of the low paid, and debts pushed ever onwards until the bailiffs arrive.
I have to counter this with the knowledge that Darling is laundering our money into the banks, so they can play their games with the stockmarket, and given that they have lost more than they have ever made, they are on the biggest revenge trade this side of '87.
A wise old trader once said to me never confuse what looks like downright viciousness with stupidity-given that banks possess both those 'qualities' in spades, extra caution is warranted.
It is sickening to see the big US banks get away with murder, and I wonder if the US will see the kind of unrest that our Gallic cousins are famous for.
Not sure where Vix is headed now but a new low corresponding with the bear rally is in place. Personally I think the idea of a W bottom rather than the 'V' is more likely-I was wrong about this in 2003,2004,2005 however, and hope I have become less dogmatic-just because the markets SHOULD be on the floor, in one's estimation, means nothing.
VIX chart may mean something more than I can see in it- I think a small blip up next week maybe, but a new lower range could be defined as we head into thinner trading.

Important, please pass on the link

http://www.goldmansachs666.com/
This is to expose the ripoffs of Wall Street and how the US economy is not how it appears.
Obama is of course complicit in all the new TARP dealings,and has a 'gun to his head' same as any politician who gets in the way of the money fascists. Change no one believes in!
You may also be interested in the goings on of the Bilderberger group- named after the hotel in Holland where the group first met. These are the real power brokers, whose influence is inestimable.

What the....?

I left the house for a bike ride this morning having closed out my short calls position, and the F was up over 50 points, in fact above R1. At 11.20 someone did or said something and the wheels came off big style. Just after 2 and the market was down over 30, down to S1. Can anyone say this is not manipulation?
I am annoyed mildly because I missed an opportunity again, but should in hindsight have taken the expiry week trade when F was up 50 odd. Serves me right!
I am now thinking the only sane trade would be a very wide short strangle, as the bias again has shifted to the down side, as the US retailers confess to a drop in sales (we all know they massage the numbers horribly anyway).

Now that's unfair!

The market made a mockery of my forecast as the US starting foaming at the mouth and buying banks after Wells Fargo claimed they had made $several billion profit. Well, many of the banks have been having a ball-being recapitalized for free, and enjoying the fruits of government largesse as money is doled out hot off the printing press. (Wells Fargo may be one of the prudent banks that didn't give out ninja loans).
Doubtless there will be more rises to come, and few are now sticking their necks out proclaiming this rally to be a dead cat bounce.
So far the B of E has given away £26 billion, and more in hand, so markets can have a soft ride for a while yet.
I need to have some exposure for expiry week, and managed only to get 1/4 of my usual trade size taken as my price for a 4100 Apr call was 22, and the F flopped around the day's high for a while.
The world's economies are in danger of becoming so unbalanced as the only industry surviving is the credit industry, all around shops and factories are closing and there are a lot of angry people. The banks continue to behave badly.
It is extraordinary that as Nasim Taleb says we are rewarding the people who drove the school bus blindfold and then crashed it.
I had to revisit the long forgotten definition of the Sharpe ratio, which the banks evidently failed to comprehend as their risk was catastrophic and their rewards are actually negative. Sharpe also devised other metrics for assessing performance- all of which would seem to be looking rather sorry now. Taleb also railed against the idea of a Nobel prize for financial maths, and as seemingly everyone got it wrong in retrospect, that makes sense- though I am forever indebted to Myron Scholes and the late Fisher Black, without whom I'd be pricing options with an abacus.Or more likely phoning a friend.

Nowhere

Effectively the market had a nowhere day, just as I predicted except not.
Need to take in some premium for the Apr expiry, or the rabbits won't be getting carrots, I'll have to resort to foraging for dandelions.
Probably be a quiet day tomorrow as most traders will be taking a long break, and expiry week is usually quiet someone once told me.

Link

http://adamsoptions.blogspot.com/
Interesting and reflects my own views about what the hell is up with the VIX and call prices in general.

Cunning plan

I was hoping to sell some 4100 calls at >50 this morning, and just as I got to the screens, there was a small blip down, with F right at the pivot. I should have taken those calls at 47 and been happy about it,as the market tanked, so I could have bought them back for 20 or so- nice trade, and could have been even better as a combo, buying puts as well as shorting calls. I was not looking for that trade however, and was not entirely convinced the market was headed south.
The market seems to have moved on industrial output numbers which were better than expected although still negative. Sometimes the market wants the 'moon on a stick' and their expectations are wildly unrealistic. So the numbers were better, the market tanked. they claim to be forward looking-if that were the case they would ignore daily news, and the markets would not look like the Himalayas. Too many clever people trying to outsmart each other makes the market a dumb animal, so when it outsmarts me, I take exception.

The Trader At work

Closed out

Paid up big for my short 4000 calls a horrible 87- ouch! This now means that I am in a loss for my trading year-not by a huge amount, but March has been very unkind. My year starts 31Jan, so I have a few months yet to redeem myself and if the F throws itself off a cliff I could do well on that side too.
I can't remember a more deeply frustrating time and many traders are getting mashed by these crazy moves. there are times to stand aside and times to trade, and perhaps I should have used my brains to think about what was odd about the market- the volatility and in particular the excessive pricing of calls. I've seen puts and calls trade at the same vol, and didn't know how to trade that either- both were 9%, and using my system of comparing level premium it made no sense, until the market cracked.
Now options too cheap means a disregard for risk, options too expensive means a volatile market, but when pricing of puts against calls makes no sense again, it tells me there is risk to the upside- which in a way is more risky than downside as upside can go as far as a trillion dollars will take it.

Markets Poised

In my opinion-and you can check the charts, the plunge protection team in the US, is busy busy busy and yet again in the final hour or so they buy the market to the Moon. Obama wants the kitchen sink thrown at the market to deflect from the parlous state of the US. DOW over 8000 will they hope sucker in the mug punters and the algo traders.
I'd buy the markets if the real economy wasn't looking so dire, and not just anecdotally. I mean dire!
House prices we're told 1 minute are bouncing back,then Halifax says they are down. With 40-50 thousand repo's in the mix, it cannot possibly make sense to say house prices are rising, and compared to long term norms houses are still 20% overpriced.
Cherry picking data is what the sales people do, that's why you cannot trade on fundamentals-current markets 20%+ rise is testimony to that.
I don't mind being wrong- that just happens in trading, but I do object to the whopping great lies being trotted out.
As usual the old adage 'sell in May go away come back on St. Ledgers day' will hold good- not because the markets drop as such but trading is thinner and more volatile.
Happy trading, don't be too gloomy.

From Motley Fool(apologies)

Ugh! what the hell are they thinking? G20 will save the world? I am staggered that markets have pre-empted good news, so expect a huge disappointment when they come back down to earth.(fingers crossed)
I am short a few calls at 4000, from my idiot trade last month, and may have to spend the rest of 2009 rolling up calls!
Truly hoping this is the end of the buying frenzy that has smashed the index up 8% in 17 hours of trading, and thus yet again the myth of markets falling faster than they rise is exposed for the utter tosh it always was-the last 5 years charts show that.
What really burns my behind is that I had sold a half position of puts on monday and was a whisker away from closing out short calls -they were a buy at 37, and selling a few more 3550 puts at 50.
So far I have had several opportunities to trade out of this and each time the market has fooled me- well I can't be wrong forever, even a broken clock is right twice a day.
The above was posted today on options board on Fool, but the sentiments are what I wanted to express here, so nothing to add.
Except:
I know many traders are short calls right now, and hope they can manage. Morality is on our side!

Market Frenzy- again

I have no idea what yesterday's eruption by F is all about, but I think it lacks any sincerity in as much as the buying was absurd and in my opinion the work of an 'unseen hand'. Brown desperately wants the UK to look good with so many visitors for G20.
I was at Liffe yesterday for a 'course', but good to be in London and see a couple of friends.
One of the burning questions for me was answered- are there any equity option traders left? Answer very few- liquidity on many of the biggies is often zero, so it's all down to the index- boring though it may be.
I missed out on shorting (by buying puts) Yell and RBS(inside info on latter)But will keep an eye on my watchlist -one company I think will survive very well is MAN group.The odd long term equity play can be a good adjunct.Only using options though.

On the Way?

Are the markets headed south again? And if so I am ok down to 3300 on the F, as I sold some 3550 puts against a long 3700/3650 put spread. I may be on the way to completing my first ever 'Box' trade- owning both the put and call spreads at 3700/3650, so locking in at expiry a guaranteed 50. I aim to pay as little as possible for this but so far only paid 12 for the puts so anything below 30 for the calls would be perfect. Assuming I pay 30 for the call spread, my buy price is now 42, to get 50, BUT I also sell other premium to finance the trade, which may mean it costs as little as 20 or so.
It would have been much better had I got out of last month's horrible trade, but I am still stuck with short 4000 calls, which are decaying and despite a jump in volatility were trading at 38 or so.
Can't win 'em all but I aim for zero losses. Protection of capital and monthly profits are the fundamentals of my trading.
Meanwhile our politicians continue to shoot themselves in the foot, showing how rotten our society has become.
As I'm in the city tomorrow I wonder if I'll be considered a capitalist or anarchist- my loyalties are divided!
PS. Anarchy does NOT mean chaos- it means leaderless- as in, we do not need to be led, especially by moral bankrupts and inept faux economists.

Trillions

Well despite the trillions thrown into the pot by Obama and pals, FTSE resolutely refused to hit 4000. Dow transports were up 34%-including an 8% rise yesterday- quite why is a mystery in an economy that is contracting, sales of goods are down so who is buying the index? Personally I need this to be froth and a bear market rally that is turning. March has so far managed to kick me in the privates more than I feel I deserve. Usually repeated failure at a level means a drop- triple and double tops are quite reliable. G20 next week and who knows what that will produce.

Confused of Surrey

Well somebody has got a serious case of the hots for the market- the US seems unstoppable, quite why and on what basis is another thing entirely. The economy and employment are contracting ferociously. We, however, have to trade what the market gives us, good bad or downright silly.
Caveat- California has a tent city in Sacremento, just like the first great depression. Arnie the guv'nor has arranged for them to pitch in a fairground.

I am impelled to disclose

http://www.thedailymash.co.uk/
I was directed to the above piece of daily frippery and belly laughs by someone on Motley Fool Joker's Corner.
When all is darkest I turn to my depression busting soaraway Daily Mash- great stuff though rude at times.
I noted the DOW started the day foaming at the mouth, and has since started(hopefully for me) its correct path towards 6000.
Only when all the indicators are on the floor will people force the powers that be to grow up and get serious about our dilemma.
The bailouts have created a massive divide between haves and have nots, and there are many rumblings from anarchist groups.
I was not in the UK for the poll tax riots but that was a very big wake up for Mrs.T.
Broon and his hideous stormtroopers will no doubt be arresting vicars and senior citizens at the slightest sign of protest, which will notch things up I fear.
The answer? take the hit now- lose the rotten banks, start again with a humbler nation of caring citizens. Broon is only sucking up to them because he owes them big for his largesse over the 12 years of phoneyism.

Twitter

Well apparently Barack Hussein Obama ( you couldn't invent a better name for public enemy number one could you?) seems to think that he sees signs of a recovery. It brings to mind Monty Python and the dead parrot sketch.
It's easy to gloss over the detail for politicians, and our own Gordon Brown is on a world tour to 'save the world' in some bizarre pantomime. They just don't get it-but they will when it's too late and they will use their political skills to explain that they did what they could yadda yadda. Meanwhile the banks must be laughing their socks off at the crass stupidity, and overwhelming joy that they get a free ride. Who they going to lend to this time though? The small business whose prospects are dwindling daily?
the homeless? The unemployed?
I know -Zimbabwe-the only country with real growth prospects once Ebagum and his thugs have been rounded up.

the end of the beginning?

Is this just a fat bear market rally based simply on printed ponzi dollars pumping up moribund stocks? I think it will take a while longer but even McDonalds has to take a hit soon-either that or the taxpayer stops subsidising them by paying off the credit of the incompetents. Help people when they are down, but not when they are reckless- like millions here and in the US who will never pay off their easy credit, but still enjoy the mobile phone/junk food/ sky tv lifestyle. The welfare state cannot support the ongoing massed unemployment, something has to give, so credit card companies must soon take the biggest hit of all.
So when the bottom line of credit falls away there will be too much money chasing too few people yet again, so where that leads I'm not sure- 50% inflation probably. I think governments have overreacted to such an extent because they know how dire finances really are. I doubt as a non-economist that throwing trillions into the economy will do anything helpful.
I recall once, long ago whilst working a temp job in a chocolate factory, I suggested instead of working, the government just printed more money- so a whole generation could sit back and do nothing! Seems someone was listening.

Convinced!

I'm not sure if this is just a bear market rally and soon enough reality will kick in and we'll see the F back down at the low 3000s, but I bought a put spread-3700/3650 for 12 today. That makes me massively delta negative, so I need a few hundred points south now. What does the chart say? Massive overhead resistance and just because 4000 is the obvious big hurdle doesn't mean it'll be an exact trigger for a decline, but decline I reason there will be- stochastic and William%R overbought, and the trusty 62 Ema is about where we are now-3950 0dd.
Expect some shocking news soon, and I do hope it is only of a financial nature as the terrorists seem to be rampant in Pakistan Afghanistan and Iraq.

Oops!

Carpetright is not optionable- I was thinking of Homeretail -which was displaying signs of cracking. There are spreadbets and single stock futures. I am watching IG's Sept SSF.

Option Trader survey

One of the newsletters I get from options people had a survey -so I thought it'd be fun to do. I was shocked when they said that 73% of their traders had lost money -some big, in the last year. I was also at variance with them about picking the underlying-seeing as I mostly trade the index that is not surprising. I spotted Yell as a massive short about a year ago- it went from 200 to about 17. Now a far dated put or even put spread would have been a monster trade-at least 10 to 1.
I forgot to do the trade!
One I have seen currently is Carpetright- which appears to be optionable. It kept going up recently, hitting a fiver-totally against all logic. No-one is buying carpet, let's be serious for a second. Houses are not selling, money is tight, so only the uncreditworthy would be suckered into some suspect 'buy now pay in 2 years' deal. I would expect to see CPR. on the floor in the next 6 months, but don't like option prices -any input gratefully rec'd. I will review this-but do not like to have short options on mad things like equities that defy the rules of the universe.
Link: http://uk.finance.yahoo.com/q/ta?s=CPR.L&t=6m&l=on&z=l&q=c&p=e20&a=w14,m26-12-9&c=
I'd like to see it back up at the 20 before going short via a put position. Happy trading.

Idiot!

Had I not messed with any of my positions I would have been fine-short at 3700 and 3800-perhaps ignorance is bliss-but I knew it was quad witching and expected the market to smash up again today-looks like thursday was action day.
Back to the drawing board and no 'investing in myself' for a while!
Actually PIN risk is unknowable, and in the past I have avoided it- closing out for a few pennies the short options that stood the remotest chance of being hit. I do however have a specific strategy for expiry week-and on that basis had sold the 3700 puts- the 3800 calls were just outside the comfort zone.
We live to fight another day.

Grrrrrr

Well I had a bad feeling about the market today and when you think it's out to get you it probably is. The F breached 3900 comfortably and then took out the pivot R1- the US meanwhile was up and the trin ( will explain another time) was at 0.43 which is monster bullish. So, I am thinking:
1. Another trillion dumped into the market 2. Bad news has been shrugged off 3. A key level has been breached and 4. the obvious target is 4000.
So- I rolled my short 3800 calls one for one into April 4000 calls. I was able to set a limit of zero as the trade is recognized as a diagonal calendar. So I bought at 105.5 and sold at 105.5, giving up a month's time premium and hoping we have seen off the highs for now. I can have an expensive lie in for tomorrow's expiry, so it's not all doom and gloom. Trouble is I have been here before- chasing the flippin market as it goes to the moon and each month you think it's still too high to take any downside risk, so you make little profit.
On a sidenote- I was very risk averse this morning and closed out short puts -paying 9.5, but I had sold them 2 days ago for 20.5.
I figured I could dip in again if the market tanked, as it usually rises for the expiry.
Anyway I was played for a fool today, and put myself in the position of being a forced seller and forced buyer.
That is not what a good terrapin does.

Eeek! They are trying to kill me

Yes, the market knows my positions at all times and tries to get me whenever possible. Currently the stupid F is up 80, as the US and UK governments give away the next 40 years earnings, which is going straight into the stockmarket and avoiding the real economy like the plague.
Why do politicians always expect people to do the thing they want them to do? Banks will do what the hell they like with our money, and nothing will change that unless we pull the rug out. I say let the banks go and start afresh with a new system of clearing banks that operate like a mutual and can only lend the cash on its books, and with straightforward criteria-it's not hard to make monster profits when you borrow money for 0% and lend it at 6%.
Many of the doom mongers predict the doubling of unemployment, based on simple facts-when 2 million are out of work they are not spending and cannot borrow, which leads to more job losses of course. The government ignores the fact that the many who still have a job are under water with credit card and mortgage debt and rent and council tax arrears- if banks had lowered rates this would have been a big help but they have simply avoided giving away anything more than absolutely neccessary.
So banks still make profits at the expense of the rest of us.
I'm not saying anything new and I guess not many would disagree with my angry sentiments, but we are being royally sh*fted and we may not recover for many years.

When things go wrong

Well evidently someone is pumping trillions into the stockmarket at taxpayer's expense. Excuse my cynicism.
I am short 3800 calls which expire on Friday. I could have bought them back to close at best today at 65, and frankly have no idea where this rally is going, but rolling these into April now looks the best plan, but I have no desire to pay any time value to add to my misery. I hope that common sense rears its head and brings the markets back down to reality- nothing has changed. The army of unemployed grows daily, repossessions and bankruptcies are running at all time highs, so should I be long? Quite probably yes-while US snake oil salesmen are doing their bit to tell people the recession is over.

Ugly, but it's expiry week

Well the curse of Friday 13th didn't materialise, even though this was the second one this year.
My trade means that I am short 3800 calls and may well have to adjust. The one outstanding feature of the charts, is that the VIX has come down to the rising 200 Ma, and lower Bollinger band. One would expect a bounce here, but if not, this rally may have a lot more legs yet.
I am exposed to the real economy perhaps a bit too much and the debt stats are alarming for ordinary folk, who seemed to think that credit cards were easy sources of cash. I know that efforts to rein in the debts are proceeding way beyond legal acceptability and harassment is rife with collection agencies. The real toxic end of the market (what's in yer wallet type of thing) and others with names with a G in them have always misbehaved and used threats-but it serves no purpose if there is no money to be had.
Thus any rally should fizzle out based on the real world but we are talking about the stockmarket-and other people's money.
To quote P.J. O'Rourke:
You buy something for yourself with your money you are not too concerned about the cost. You buy something for someone else with your money you are cautious. You buy something for someone else with other people's money -you don't give a sh*t. thus go government and fund managers.
There will be reckless buyers at the top and desperate sellers at the bottom- they are called financial professionals. Us lowly retail players have to be a tad more cautious- I can't afford to be Warren Buffett and lose over 50% of my pot.
Meanwhile our one-eyed rabbit Barney had to have his one remaining eye removed surgically. The eye didn't work, and he was in pain-he is recovering well, and his blindness notwithstanding, his quality of life will be much improved.
We made a pledge that where costs were reasonable, we would do all we could to preserve life and eliminate suffering, and Barney and his lady Summer were our first rabbits.

Calls

I have been having sporadic comms with a fellow trader who has had some success with plain calls. I am always open to debate, and my views on the subject are quite well known and I believe widely held. I don't like buying calls because as markets rise volatility drops and hence the value of the call drops. I like covered calls even less, as it is always the underlying that is a problem -you cap your profits and then let the underlying go to hell. I prefer to trade index options as you have the least headwinds.
Having said that, my current trade is a bit underwater, having sold the 3800 calls to buy 3300 puts. So the other side of this trade would have been a good winner with a market move of 200 points in its favour. My preferred strategy if selling puts, however is to buy a call spread, to negate time decay and have some trade off with volatility.
I'm also reminded that I had forgotten the difference between a simple put or call ratio spread and a backspread. Having had a problem with the former a while ago I had dismissed these as too horrible for my tastes.
A ratio spread would mean buying 1x 100 strike call and selling 2x 120 strike calls, with the expectation that the underlying won't go above 120. Of course if it goes to the moon you are in trouble as you are effectively naked 1 call, with a spread that can only ever be worth 20.
The backspread would be the reverse of this- sell 1x100 call and buy 2x120call- the most you can LOSE is 20 in this case.
You want a credit in both cases and vol skews can make this happen- and that is for another time.

Frozen

My current position means I am reluctant to take any more trades until I can get out for zero or a profit. Ill timed but I doubt too many other than US government insiders could have seen the monster rise on Tuesday.
I am loathe to take on any downside risk as the news can move the market down 5% in a flash.
The weather is tolerable so after a strenuous bike ride this morning, I'm feeling like I could take a long walk later with a Cuban- one of my Jose Piedra Cazadores (cigars). I have maybe one a week, and am prohibited from igniting these babies indoors!
There is nothing wrong with 'investing in yourself'* and the occasional reward is every trader's right. We do something extraordinary, and could not function if we wore a hair shirt constantly.
* I count exercise and the odd indulgence as an investment.

Market Action

Having been out on civic duties I was shocked to see the F had smashed up 100 points in a few minutes in morning trade, but closed below 3700. The language of the sales people (financial pundits) sickens me when they talk about the 'banking sector fighting back' and trotting out other belicose headlines. It's a market full of scam merchants, nothing more. Some claim to have a proven track record or clever way of predicting the market, but if they are so clever how come they have lost trillions?
Wealth has been destroyed on an epic scale and the idiots responsible are getting more of other people's money- it isn't going well and I really don't think we have seen the worst. With the Torygraph telling us that of the working age population 24% are economically inactive and 20% in government it doesn't bode well.
Yes my trade is underwater! Grrrrrrrrrrrrrrrrrrrrrrrrrr

Coincidence?

A cynic might say that mention of returning to the' up tic rule' coincided with a rather silly announcement from Citi (yes the banks are making fat profits) to inflict maximum damage to anyone short the market and with Citi under $1 it was not really a huge punt for anyone. It's one thing to trade markets but when governments stick their oar in, it's like your team playing against not only the opposing team, but also a crooked referee.
Aside from my trading I am involved with helping people with debt problems, and I can only foresee an avalanche of these-and not just the typical £16k on the plastic- fuel bills,food bills and rents have increased, and we do not have deflation, so poorer people are squeezed. My council tax is over £1800 or £34.60 in old money-that is a lot to get the bin emptied!
The banks mailshot me with offers of loans and credit cards all over 20% interest. As Warren Buffett said -I can't get rich borrowing money at 20%- for once I agree with him.

Imprudence

Decided to place a risk reversal today- sold 3800calls and bought 3300 puts for a credit of 4.
This was prior to the US open which is always hard to guage, but the Ftse looked like it was struggling to hold 3600.
Bang! As the advert says, and the indexes smash up to the moon. These things happen and I am now at the mercy of the markets.(which I would be even if I was currently winning).
What if it all goes wrong? Well if FTSE starts to hit the 3800 level, and with expiry just over a week away, I will look at various ways of not losing money.
Call premium was overpriced,time decay is my friend,so let's hope for a plummet- we know it's waiting to happen even though the US again is as exuberant as a 6 week old puppy.
I am today however imprudent, and should have waited 10 minutes for a real juicy trade.

Today's Action

Aside from tinkering with binary bets- which would have given me the princely profit of £9, at £1 per point based on 2 trades, one winner one loser, I have been watching a spread trade I want to try for real. It amounts to buying a 'Box' and for the 'F' the strikes would be 3550 and 3600. The aim is to buy both the put and calls spread so wherever the market is at expiry you have locked in the value of the spread which is 50. My aim is to buy one side for less than 20, wait for a market move and then buy the other for 20- 25. Thus you pay 40-45 for a trade guaranteed to be worth 50 in 2 weeks time. The trade is further financed by selling much further out puts and calls, and if the market does shoot dramatically one way or t'other you have the cushion of the spread's 50 point value.
Let's put this in real money terms- today in theory could have sold Mar3100 puts at 24 x 4= £960
Buy the 3550/3600 call spread for 17 x10 =£1700
Sell 3750 calls at 36x4= £1440
Buy the rest of the box- the put spread 3550/3600 puts at 26x 10= £2,600.
Cost = 2,600+1700= 4,300
minus 1440+ 960(proceeds of sold options)= 2,400
Thus a cost of £4,300 minus £2,400 = £,1900, to give you a locked in £5000.
All the above assumes your short naked options expire worthless, or you are able to sell more and move strikes out further.
Your risk comes if F exceeds 3850, or 3000. These are not precise numbers, but you get the picture I hope.
I'll explain why I love this strategy at some point and if I can get it to work with real money.
Meanwhile rabbits need some attention and our sick guinea pig needs something tempting.

Optimism

I get quite  a few trading emails and one British one has video clips from various pundits. I like David Linton's TA but most of the other stuff is worth a quick look.The latest was about the low oil price giving a shot in the arm to the world's economy and it would be the equivalent of  +2.7% of global gdp. This assumes a great many things- not least of which that demand will be as high as in the past. With plummeting orders, manufacturing is in the toilet retailers are struggling and just about everyone is scraping by, with little prospect of improvement. Most of these pundits are sales people and they don't have a well informed opinion, they just base it on a few favorable metrics.
However, if there are cheap opportunities to go long, with reward at least 5 x risk, then looking ahead to April I might even consider some call spreads. With that in mind- I'm watching 3850/3900 call spread and would consider a buy at 9-currently 7-12.

Very very long timeframe chart

Not sure how relevant any of these are but there's a fibonnaci level around 5500 on DOW

Old Dog New Tricks

Doh! Call me Homer. One thing I keep meaning to do is place a limit order with my broker to close out trades. I was out on thursday and my risk reversal- short 3850 calls long 3200 puts went into profit after looking ugly after wednesday's massive rise.
Anyway I closed out for a credit of 10 way below my target, but I could see the F scooting up, which it duly did.
Had I set a limit of 25 for thursday I might well have got it.
Lesson learned? I hope so, as it's getting expensive to be such a sloppy trader.

Some Basics

A few old chums have said that they didn't know what the hell I was on about- so a few pointers.
I trade FTSE index options. These are priced in pence but relate to FTSE at £10 per point- so a 3200 put trading at 20 is worth £200. A 3850 call trading at 43 is worth £430. Options do not move 1 for 1 with the index like a future does. for detailed explanations of the Greeks- the metrics of how options are priced, and how they move, there are many explanations on the 'net. For terrific free education there is 21stcenturyinvestor.com. Which has a 12 week course with Q&A.
FTSE index options are European style which means there is no early exercise-unlike share options which can bite yer bum in a moment.
I have a great many stats and charts so if anyone has a specific query I may be able to help with data. I'm always happy to talk about options trading however.

The Ugly

I felt a bit under pressure to trade and waited for what I thought was resistance at 3600 *on the F. On this basis my trade was a long combo or risk reversal- selling 3850 calls to buy 3200 puts. The market decided to smash upwards at the end of the day and closed 40 points above where I traded. I am looking at a cost of 23 to close having opened for a credit of 4. Annoying, and of course it is simplistic to expect these to work every time. Time decay and volatility work in one's favour when wrong. Having a plan is also key to exiting a losing trade.
Will the market describe a 'V' bottom or will we have a retest or is this just some silliness from 'quantative easing' where they subtley leak money into the market? I'm hoping for a drop, but need to be cautious if this gets out of hand.
* 3625 was the pivot level R1, and the F was wobbling around central pivot for a long time,

F in Hell

FTSE struggled to stay above 3500, and without the puppy like enthusiasm of the US market I think it'd be down around 3300 which would pique my interest for a long. Not happy to sell puts currently and annoyed that I missed the obvious trade- a long combo or risk reversal- sell calls to buy puts. The move on FTSE was massive- 150 points so the rewards for tiny risk were massive. Calls are overpriced still, so it was a gift of a trade just wasn't thinking.
On a sidenote- I get trades from John Piper who is a mentor and his binary suggestions are sometimes huge fun. Tonight's is for the DOW to be lower by more than 200 which IG index wrongly express as wall street cash low to be <200. Buy price of 4 recommended. (They have a terminal value of 0 or 100 hence binary)
John started a scheme to get traders to punt his own money, and the idea was to double your pot each month. Mine is up 40p and the scheme was about 18 months ago- I may be a slow learner. I like binaries and they are a great low risk trade. Would love to meet fellow binary 'traders'.

Caught out

Well I decided to stop looking at the market around 9 this morning, and get on my bike, as the scales are telling me that stomach bulge is not a trick of the light. I have been trying to evaluate a system from one of the minor trading Gods- John Carter. A friend actually copied out the system which is HOLP and LOHP- high of the low period and low of the high period. This morning on F there were about 5 examples of the HOLP as the market tried to rise(against the prevailing trend) and hit 3675 on cash- which is a bit above the central pivot, but may have some relevance somewhere! So a drop was on the cards- I just didn't see such weakness this morning I thought at least it would do us the courtesy of waiting for the US to open. The drop below the central pivot was a big clue. Hope no-one is suffering from wrong plays.

No Deal

Well I started to look at a combo with a twist- buying a call spread as I don't buy naked calls.

I was watching the 3300 Mar put to sell at 48, and 3850/3900 call spread to buy at 12- and only selling a tiny amount of puts, to make this a small debit trade of a few hundred Quid.

The risk is if the market goes off a cliff, and frankly I would not be surprised to see this-the F broke it's 12 month low and then dropped through the next possible support level at 3650.

3600 is next, but ...........

There will be a bounce, and short covering will make it a big one, but right now we have no buyers.

Oddly the Vix hit 50 and then dropped back a bit- fear is not at the kind of level that options traders like to see when the market is behaving so horribly.

Preservation of capital is paramount right now, and when in doubt do nothing -as Price Headley says " I've made more money sitting on my hands than from trading". Getting good at doing nothing is hard, but I am learning.

I don't make predicitions

And I never will! Thus goes the football managerspeak.

F has now penetrated the last low and I have no idea where support may be- possibly 3600, but with the US not showing signs of shrugging off the dire AIG news, I don't want to trade in size. Might have a small half trade or so.

Not blowing up is the order of the day. Hope no-one is suffering too much currently.

Back later if anything looks interesting.

VIX latest

Just thought I'd share this- hard to say which way it's going to go next week.

Aims of this Blog

The key aims- a place for me to get feedback from fellow traders about my trades- the good bad and ugly (not you traders, the trades I mean). It is rewarding for me to be able to explain what I do and why I do it, and it's a lonely old business so any feedback is welcome, it keeps me on my toes.

I would like to establish a small group of traders at all levels, and this is a less time consuming way of newbies getting a 5 year 'fast-forward' in trading options-if that sounds arrogant I humbly apologize, but I genuinely believe I can show where there are shortcuts. I have been doing this for a while and have evolved my own style, which is what  all traders must come to. I want people to get rich slow, and not get taken in by the rubbish in the financial media. Trading is about the individual, options trading is about the smarter individual.

I will post a few charts in time but for now the markets seem poised to do the most damage to the most people. Thousands of seasoned traders have been wiped out, private equity and hedge funds have dropped a bundle and long only funds are in dire straits. Good traders are thriving.

Closed out

Closed out my risk reversal for a credit of 22. This was (and I always aim for this) a credit trade when opened-so a total of 27 per lot minus trading costs of course.

The above 22 was a 'best guess' knowing the deltas of the options- it is not the optimum price, but  I placed this as a pre-market order as I took the chance that the F might not allow me any profit, so this was a very comfortable outcome. I can now go off to my civic duties with no trades, and the prospect of watching some good rugby on the telly this weekend. unfettered by thoughts of trading. (Nah, I never really switch off).

Fingers Crossed

Nasdaq has turned negative and FTSE futures have dropped well below the 3900 key level -the cash is still 6 points above. I have to think that LLOY up 30% today will mean profit taking tomorrow as people probably don't want to be holding bank shares over the weekend. Funny though how the £multi billion losses at RBS caused the market to scoot up-the city really believes that's a good result!

Incidentally my reasons for the trade- DOW hit pivot level R1 and prompttly retraced, and the F hit R2 for the second time- curious coincidence that R1 is at 3900 on my chart.

Trade placed

combo (risk reversal) sold 4200 call @ 33.5 bought 3500 put @ 28.5 thus a credit of 5.

Now we wait for drop. 100 or so  would make my week!

Caution

The binary trade is not worth doing now as F looks quite strong-and the risk reversal-might look for better price or 4200 call buys 4500 put for zero. The DOW is 'owed' an up day, but the F has put in 3 consecutive up days about twice in a year-the last one however was a run of 6 up days and a 9% rise in the index-swiftly followed by a 14% drop I should add.

Missed the third F rise to 3925 due to er natural causes. Looks like more upside to come.

trade watch

Currently watching risk reversal -sell 4200 call to buy 3450 put- FTSE March,at zero or small credit on expectation of down move of 60 points+

also binary bet-FTSE to close down on IG at 10 or so to buy.

Musings

It's impossible to share feelings about trading with people who don't trade. Trading is about oneself and the journey towards being comfortable with being uncomfortable. Methods are highly individual and I'm sure we have all experienced the vehement support a fellow trader has for a system that we simply 'don't get'.  A bit like music I guess.

I hope to be able to discuss fresh ideas, old ideas revisited, the frustrations and joys and REAL trades, which I have shared to some degree on Motley Fool.

Gentlemen NEVER discuss size, but nothing wrong with %ages.

Today is another frustrating day as I missed a good short entry earlier-the FTSE(always referred to as the 'F') may well oblige later. For me 3969 is a key level and the F hit 3960 and I had to miss a great down move. There may be more of those......