Poor Old George . . .

 . . Osborne, our benighted Chancellor of the Exchequer. In his Autumn Statement last Wednesday (4th. December) he gamely tried to convince us the "the economy" (whatever that means) was coming out of recession, with growth forecasts ever rising.  A glance at the FTSE 100 shares Index suggests the wheels of industry and commerce don't believe him, because the Index is 200 points off its recent highs of only a month ago.  The reasons . . they know that recent growth is largely down to increased consumer spending (i.e. borrowing on the plastic) as the insane Christmas season cranks up again.  FTSE bosses are not investing in plant and staff, the real engines of growth.  But enough of this. What do I know?  I'm just a humble option trader.

This week I redeemed my 4 short Puts in Morrisons Supermarkets, December expiry, Puts struck at 280, Morrisons shares languishing below 260p. So, to avoid having to buy 4000 shares on a Put assignment, I bought back the contracts and sold 4 Puts at 280 (again) for the June expiry, pocketing £424 in the process, an amount that surprised me. These new contracts expire on 20th.June 2014.  Little chance that anyone will assign such long contracts at the moment.

Missing Month

Hello Readers!   I haven't been updating my option trades in the FTSE Index for a couple of months.

Briefly, my November trades resulted in a profit of only £856.00p - lower than my usual target of £1,000 plus. The FTSE was gaining ground, so  on 11th. November I closed 8 x 6700 November Calls, left the 8 x 6050 Puts to waste away and opened a spread for the December expiry by selling 8 x 6750 Calls and 8 x 6050 Puts.  The total receipts for this trade was £6,704.00p: note, receipt not profit.  Then, to bring you up to date, just this morning I bought back the above position for a total of £1,976.00p - a profit on the December contracts of £4728.00p, which made up for the below average result in November.  With the December contracts out of the way and the profit safely banked, I opened for the January 2014 contracts by selling 8 x 6750 Calls and 8 x 6050 Puts - the same as my opening position in December.  The net receipt (again, not profit) for this trade was £4,664.00p.  If you want to play why not consider joining the White Knuckle Riders (W.K.R) Investment Club, email wkr.inv.club@gmail.com.

Bhoona Lamb, Anyone?

Today the BBC News website has a story about a naughty butcher.  He has avoided being sent to jail even though he used Y-front underpants as wiping cloths in his shop.  Well, he's got to use something to wipe his slabs etc, hasn't he?  And provided the underpants were well laundered I can't see much wrong with using them for this task. Wouldn't mind betting that wiping down the meat counter is a lot more hygienic that much of what goes on in most underpants in daily use. What do you think?

It's That Man Again!

Today I woke to the news that Prince Charles is fulminating against the pensions industry.  Good to know that I have something in common with the heir to the UK throne!  His outburst is reported in the "Daily Mail", one of the organs of the British press that comes (fairly) close to being a real newspaper.  You can read the article on-line for free so I won't weary you by quoting it here.  You can also read it on-line in the "Times", which is a real newspaper - but you'll have to pay for the privilege.

I noticed one particular phrase, though.  The Prince, who will be 65 next month, says "the pensions industry is unfit for purpose"  Well now, that depends on what he thinks its purpose is!  He means, I guess, that the industry doesn't provide us (you, me, Princes etc) with adequate pensions when we reach retirement age.  The industry thinks its purpose is to screw as much money as it can out of its unsuspecting and financially ignorant customers during their working lives and to hand them much less than they were expecting when they do retire.  Fund managers have to behave this way, or how would they afford to pay themselves 7 figure salaries, buy their Porsches, yachts, second homes in France, pay to join the right golf clubs and order their pinot noir a dozen crates at a time.

Wake up folks!  The pensions industry does not exist to make money for you.  It exists to make money for itself.  Schimples.

(Like his Dad, isn't he!!?)

November Comes Early

Hello, People!  When trading options in the FTSE 100 Index I don't use guesswork, crystal balls, goat entrails, tea leaves or the stars.  I use a set of Rules.  I won't bore you by explaining and/or justifying them except to say - my Rules do not use the past to predict the future. If this were possible there would be no Stock Market and there would certainly be no such activity as "derivative trading" i.e trading options and futures. I'll leave you to work out why.  No, my Rules serve two purposes. They tell me when it's time to trade. They stop me having to think. They have been very successful and have enriched me considerably over the years.

And yesterday, October 1st, my Rules told me "Doctor, 'tis time to redeem your October position and open November."  The diligent reader will remember that I opened my October position as recently as 10th. September, so that was quick, eh? A phone call to the brokers and I, or rather he on my behalf "bought to close" 7 x 6150 October Puts and 7 x 6750 October Calls, and "sold to open" 8 x 6050 November Puts and 8 x 6700 November Calls.  Note that this trade widened the "spread" between the November Put and Call strikes by 50 points over the October spread.  The whole trade bolstered cash at the bank by £2785.00. This is not profit unless/until the November contracts expire with the FTSE 100 Index between the Put and Call levels at 10.30 a.m on 15th. November. The trade resulted in a net profit on the October options of £3577.00

One day I shall fall flat on my face and you can all larf and say "When it sounds to good to be true it probably is."

Beans, Beans are good for the heart . . .

The post below this one informs us that  the BBC thinks "poor numeracy blights the economy and ruins lives."

Consider then this cameo pricing model that I grabbed from a well-known supermarket's on-line shopping site this morning when I sent in my weekly order.

I'll leave you to figure out which is the best buy and then to decide whether buying the wrong pack will ruin the economy.  Buying the wrong pack certainly helps the store's economy; whether it will blight your life is for you to say.  You might also think about why the store describes the six-pack as "Special Value." (Note "Add" above is not an arithmetic opertor. It means "Put the item into your on-line shopping trolley.)

Oops . . . I almost forgot!  Today I redeemed my open FTSE options position by buying 7 x September 6200 Puts and 7 x September 6750 Calls.  This position was originally opened on 8th. August 2013. The FTSE 100 Index did not stray outside this 550 point range while the contracts were in place.  Here's another little numeracy conumdrum.  If I had chosen to invest all my September profit in the better of the two offers above I could have ordered 2,222 packs with a few beans left over.  THAT'S how profitable option trading can be!

Having bought back the September contracts, I "sold to open" 7 x 6150 FTSE Index October Puts and 7 x 6750 October Calls.  The net of these trades (buying September/selling October) is not guaranteed profit yet - but it has temporarily stored a lot more tins of beans in the bank.  Listen out for more . . .

Fun With Figures

Today the BBC is telling us that "Poor numeracy blights the economy and ruins lives"  That's as maybe. (See examples below) What annoys me is how articles like this refer to "maths" when they mean "arithmetic."  Arithmetic is to maths as paintbrushes are to a J.M.W.Turner sunset. Now FTSE dismounts hobbyhorse to ask . . .

. . . 3 questions.  Do they test your ability at maths, your ability at arithmetic or simply your ability to think?

1.  If I tell you the average of two numbers and one of the numbers, can you work out the second number?  (Example:  Average of two numbers is 12.  One of them is 8. What is the other number?)

2.  The National Lottery asks you to choose 6 numbers from 49. What's the chance you choose the first number  i) correctly, ii) incorrectly? And the second number . . . and so on down to your 6th. choice.

3. How many different four digit PIN numbers are there -
    i)  If duplicated digits are allowed?
    ii) If duplicated digits are not allowed?