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THE WEEK AHEAD: ROKU EARNINGS; USO, SMH, EWZ, GDXJEARNINGS: ROKU (64/83) announces earnings on the 13th (Thursday) after market close and looks to be the best play out of earnings announcements occurring next week from a volatility contraction standpoint. Pictured here is a fairly straightforward short strangle camped out around the 17 delta in the March cycle, paying 5.62 on buying power effect of around 12.50 (45% credit received/effect ratio) on margin. For those looking to define their risk, consider the 90/100/150/160 iron condor, paying 3.37 on buying power effect of 6.63 (50.8% credit received/effect ratio) or some iteration of that where you look to receive one-third the width of the widest wing in credit. There is some call side skew here which you may to consider accommodating via a ratio'd short strangle or a "double double."* EXCHANGE-TRADED FUNDS WITH EXPIRY IN WHICH AT-THE-MONEY SHORT STRADDLE IS PAYING GREATER THAN 10% OF STOCK PRICE: XLE (59/22), July FXI (54/24), August SMH (51/27), May USO (48/39), April XOP (45/36), June EWW (43/19), September EWZ (33/27), May GDXJ (15/27), May GDX (10/24), June My general tendency here has been to go with the shortest duration that's paying first (assuming that I'm not already in a play), and then consider longer-dated thereafter. Here, the shortest duration that's paying is in USO (April), followed by SMH, EWZ, and GDXJ (May), and then XOP and GDX (June). BROAD MARKET FUNDS WITH EXPIRY IN WHICH THE AT-THE-MONEY SHORT STRADDLE IS PAYING GREATER THAN 10% OF STOCK PRICE: EFA (45/13), December EEM (42/20), September QQQ (37/19), September IWM (34/18), September SPY (30/15), November I've been working SPY longer-dated for quite some time now just to have something on in a constant state of theta burn where shorter duration isn't paying. Just for comparison's sake, the EEM September 37/49 is paying 1.14 on a buying power effect of 4.35 (26.2%); the QQQ September 195/257, 5.77 on a buying power effect of 22.94 (25.2%); and the IWM September 142/183, 3.78 on a buying power effect of 16.50 (22.9%) versus the SPY November 280/367, 8.23 on a buying power effect of 33.24 (24.8%). FUTURES (EXCLUDING CURRENCY/TREASURIES): /CL (52/40) /ES (51/16) /NG (30/39) /SI (30/18) /ZC (29/18) /GC (24/11) /ZS (15/18) /ZW (8/37) VIX/VIX DERIVATIVES: VIX finished the week at 15.47, with the February, March, and April /VX contracts going for 16.07, 16.27, and 16.70, respectively. The term structure has lost a good deal of the steepness we were enjoying just a few weeks ago when M1-2 contango was at a whopping 19.16% and M4-7 at 6.24% (it's currently 1.25 and 3.45%, respectively) and my tendency would be to probably wait until the February contract drops off to see if a term structure trade is in the offing. They're not exactly paying me huge to go, for example, with an April setup over a March one, with the differential being a scant .43. * -- E.g., the 2x90/2x95/155/165 iron condor paying 2.91.
NASDAQ:ROKU
by NaughtyPines
XAUUSD: Quarterly trend updateGold almost hit the first target in the quarterly timeframe here. If it doesn't go back under this quarter's open it may keep rallying. Upside target #1 is not far, 1615.28, but it could go higher until Q2 2021 at least, reaching prices between 2094 and 2714. The technical pattern that formed while #Gold was under accumulation is called an 'explosion pattern'. This type of trend signal tends to hit targets #2 or #3 at times, so, at the very least it would imply breaking the all time high is possible, before going back down or sideways for a long time again. Note the RgMov proprietary trend analysis indicator is signaling a breakout of all time high values, ahead of price, and acting very strong, this is a good indication of the path of least resistance for #Gold. I bought back metals and miners yesterday, after the dip slowed down, I intend to let these positions run while the trend remains valid, else I would take on a moderate loss if this quarter's range is erased. Otherwise, prospect is very good in the long run for both #GDXJ and #XAUUSD. #XAGUSD is probably bullish as well, but I was a bit worried by the #XAUXAG ratio lately. Although if the trend in stocks grinds to a halt, the ratio is likely to reverse back down. Cheers, Ivan Labrie.
OANDA:XAUUSDLong
by IvanLabrie
AAPL: Puts might pay off...I'm posting this one as an update to my broad stock positions outlook. For now I've moved to cash in all positions, and bought some energy, gold/mining/oil and added to my #Bitcoin holdings with proceeds. I also have some bearish bets in #AAPL, might be a good idea to reduce risk. My bullish posts for stocks might end up resulting in a failed signal, or maybe they endure a large drop before going back up over time. Be safe out there! Cheers, Ivan Labrie.
NASDAQ:AAPLShort
by IvanLabrie
THE WEEK AHEAD: NFLX EARNINGS; XME, GDXJ/GDX, XBI; VIXEARNINGS: NFLX (46/41) (Tuesday After Market Close). The metrics aren't ideal here, with the rank below 70%, the 30-day below 50% and the at-the-money short straddle paying less than 10% of the value of the underlying in the February cycle, but this is the best of the bunch announcing next week in terms of both liquidity and implied volatility. Pictured here is a February cycle 305/385 delta neutral short strangle paying 7.00 with delta/theta metrics of .84/27.72. Alternatively, go defined risk, shooting to collect one-third the width of the wings with a 305/310/380/385 iron condor paying 1.88 with delta/theta of .70/3.48. I will consider going out farther In time to March to get paid, but the trade-off is that any volatility crush gets muted if you do that. That being said, you do get wider break evens for a similarly delta'd short strangle, so get more room to be wrong. For instance, the similarly delta'd March setup is the 295/395 paying 8.13 at the mid price with delta/theta metrics of -.91/18.54, with break evens of 286.87/403.13 versus the shorter duration's 298/392. EXCHANGE-TRADED FUNDS: ... ordered by rank and showing the month in which the at-the-money short straddle pays greater than 10% of the value of the underlying. I've culled out funds that aren't paying that in 180 days' duration or less, since no one likes to wait that long for their candy. XME (30/21), June GDXJ (17/28), May XBI (12/24), June GDX (11/25), April USO (11/29), April XLE (6/16), July SMH (4/21), May EWZ (3/24), June XOP (2/28), April* I've already got GDX, EWZ, XBI, and XOP on, so may look at getting into some XME, even though there is some overlap with miner holdings, and/or redipping my stick into some SMH, since that pays in a shorter duration. BROAD MARKET: Nothing is paying in <180 day duration .... . FUTURES (EXCLUDING TREASURIES AND CURRENCIES): /NG (39/42) /GC (29/11) /ZC (29/24) /SI (28/18) /CL (23/28) /ES (10/12) /ZW (8/23) Natty is juiced with last week's sell-off, with some understandable trade-related friskiness in the ag complex. Oil's still paying, but only in durations of April or longer. VIX/VIX DERIVATIVES: VIX finished the week levitating a dime above the 12 handle with only the April, May, and June /VX contracts paying greater than 16 (16.05, 16.33, and 16.75, respectively). My general preference for term structure trades is to short only in expiries where the correspondent /VX future is trading above 16 and ordinarily in <90 day duration (e.g., the VIX April 15th 16/18, 87 days 'til expiry, .55 at the mid price with a break even of 16.55 versus the the /VX April contract of 16.05), so would probably only pull the trigger on an April setup. For UVXY and VXX, my short volatility go-to's, I'm patiently waiting for a pop to add and/or to roll what I've got into strength, of which we've had very little. VXX was down 5.67% for the week; UVXY, 8.37%. * -- There isn't an April expiry as of the writing of this post, but January fell off last week, so one will likely be opened and populate this week.
NASDAQ:NFLX
by NaughtyPines
Gold Miners Setting Up for a Great 2020!My followers and readers know my fascination and excitement about Gold and Silver. Being well versed in economic history, one cannot avoid Gold. Human history is cycles of hard money and soft money, and come 2021, we will be in the 50th year of this soft/fiat money cycle. Interestingly enough, Neil Howe and William Strauss in their book “The Fourth Turning”, predict that there will be a historical cycle which will be ending between the years 2020-2025. On this blog, and with my work on Gold, I have mentioned how it is a confidence crisis asset. There are 3 reasons why Gold will be going higher in the very near future (can read in link below). Gold rises when people lose confidence in government, banks and the fiat money. You can see a lot of this occurring now. Trump impeachments and passing government spending bills to avoid shutdowns, piling up the debt. The Federal Reserve doing repo which is over the tune of 300 billion a day and Jim Bianco saying this will just increase in size. Central banks racing to the bottom by cutting interest rates to devalue their currencies. The macroenvironment is there for Gold to shine. Just a reminder that Gold and the US Dollar can move up together due to being safe havens. I have outlined why I expect the US Dollar to move higher, and how this will cause the problems in the world to exacerbate. Also, remember that Gold priced against other major currencies (the Pound, Canadian Dollar, Australian Dollar, New Zealand Dollar, the Yen, the Yuan, and the Euro is very close) has already broken out into all time new highs in 2019. This is a sign regarding where these fiat currencies will be going. With central banks likely to continue their easing and stimulus, calling it something else other than QE to avoid a confidence crisis, real rates (nominal rates and inflation) will be negative yielding. Another reason to hold Gold. However Gold does well in both inflationary and deflationary environments, and really boils down to it being a confidence crisis asset. Billionaire Ray Dalio and Paul Tudor Jones have recently spoken about Gold and how one should own it. Dalio’s words on Gold and his “paradigm shift” environment may very well have lead to large institutions and hedge funds to increase their positions in Gold. These larger funds will be playing Gold in 3 ways: buying physical bullion, buying the GLD ETF, and buying positions in Gold royalty and streaming companies, which is one of the best business models invented. Let’s get to the chart of note, and perhaps the chart of 2020. The fundamental reasons for Gold are there as described above. The chart of Gold also has given us a nice signal and we are awaiting for a higher low for Gold, which could occur as early as January if the Fed does cut rates again. Currently, the market believes there will be no rate cuts until Fall 2020, but this can be tested and would impact Gold once more cuts become priced in. GLD is the ETF for the Gold Miners. Our market structure analysis shows us a very exciting market. On the weekly chart, Gold has had a downtrend with lower highs and lower lows, and then we began to base and consolidate. This consolidation has occurred for 7 years and the resistance level has been tested 4 times in these 7 years. This is a very important level to watch. As you learn in my course, all markets only move in 3 ways, and we are very likely to be breaking out into an uptrend to validate this claim. From the break I expect higher lows and higher highs. For those dubious about this pattern, take a look at the Gold weekly chart which had this same pattern. We are still awaiting the first swing on the weekly after the break and run up to a new flip zone level: Forecasting a great 2020 for the precious metals, and I think it is worth considering positioning yourself for this now.
AMEX:GDXLong
by Uncharted-FX
ridethepig | Gold Miners Breaking Out!After months of choppy waters, finally bulls are emerging from beneath the woodwork right on time to position for 2020 flows. For all those tracking the current leg in Gold by now it should be crystal clear: Those momentum traders will know the highs will be eclipsed over the next few sessions, generally prefer buying dips. What I am most impressed by is the opportunity found with my long candidate for mining companies in 2020: For those tracking the end of year positioning flows for 2020 Q1, sit tight reflationary risks are around the corner. Thanks for keeping the support coming with likes, comments, charts and etc. And as usual the comments are open for all.
AMEX:GDXLong
by ridethepig
2
THE WEEK AHEAD: NFLX EARNINGS, GDXJ, QQQ, /CLEARNINGS: Pictured here is a delta neutral, ratio'd NFLX (47/54) short strangle paying 5.07 at the mid price with 222.46/350.07 break evens. This put side is doubled up to accommodate call side skew. A defined risk alternative: The November 15th, put side "double double" 2 x 225/2 x 230/335/345 iron condor, paying 1.84 with break evens wide of the 1 standard deviation line at 229.08/336.84. Since it's been a bit of a mover in the past, I'm inclined to go wider and avoid side test as opposed to going tighter and collecting more credit up front. NFLX announces tomorrow, presumably after market close, so look to put on a play in the waning hours of the New York session, adjusting strikes as necessary to accommodate any intraday movement. EXCHANGE-TRADED FUNDS SLV (71/27) GLD (68/16) GDXJ (62/37) GDX (58/32) TLT (49/14) USO (40/41) XOP (35/40) Freaky how precious metal volatility is hanging in there; it's almost becoming the premium selling trade of the year. GDXJ offers the most favorable rank/implied metrics of the complex. BROAD MARKET IWM (20/20) SPY (14/15) QQQ (13/19) DIA (11/15) EFA (24/14) First Expiry In Which At-The-Money Short Straddle Pays >10%: IWM: May -- 17.05 versus 149.67 spot (11.4%) SPY: June -- 31.71 versus 295.95 spot (10.7%) QQQ: March -- 19.41 versus 191.09 spot (10.1%) DIA: June -- 27.93 versus 267.86 spot (10.4%) EFA: June -- 6.57 versus 65.28 spot (10.1%) The basic message here is that short duration premium selling in broad market probably isn't worth it at the moment. The QQQ March 15th (158 days) 163/2 x 220 ratio'd short strangle is paying 3.60 and taking that off at >25% max (.90/$90 profit) might be compelling to some, however. FUTURES (Excluding the Treasury Complex) /6B (81/31) /SI (71/25) /GC (68/15) /ZW (54/30) /ZS (50/23) /ZC (45/34) /CL (40/41) Cable pops to the top of the list, followed by precious metals, ags, and oil. I continue to work a /CL core position, as well as some /GC here. Truth be told, I'm not sure that there's much of a risk premium edge to /GC here in light of its low background implied, so am putzing with it more as an engagement trade than anything else. VIX/VIX DERIVATIVES Crushed back to sub-15. Wait for another pop to VIX >20 to add bearish assumption in VXX/UVXY or 2019 lows to add VIX bullish assumption spreads.
NASDAQ:NFLX
by NaughtyPines