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..............
Saturday 30 May 2009
Wednesday 27 May 2009
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?
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?
Tuesday 26 May 2009
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.
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.
Saturday 23 May 2009
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.
Thursday 21 May 2009
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.
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.
Wednesday 20 May 2009
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.
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.
Tuesday 19 May 2009
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....
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....
Monday 18 May 2009
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.
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.
Saturday 16 May 2009
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.
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.
Thursday 14 May 2009
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.
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.
Wednesday 13 May 2009
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.
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.
Tuesday 12 May 2009
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.
Monday 11 May 2009
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.
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.
Friday 8 May 2009
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)
Thursday 7 May 2009
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
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
Tuesday 5 May 2009
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!)
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!)
Saturday 2 May 2009
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.
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.
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