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OIH

OIH VS. XLE- They are "Twins" in long term. - In short term, since last high on MAY 17, 2018, OIH is weaker than XLE. - Lower lows and lower highs for OIH - OIH is on the supportive price formed by last two reversing points - XLE does not hit the lower, instead it has a higher low which looks like it has reversed the downtrend If XLE is the right, it means OIH has found or is close to its support too. Then the twins will climb up in the next weeks. If OIH is the right one, XLE will fall down from its supportive neck line which remains effective in the past 3 months. If this time is not typical, then who knows. Personally I prefer the former one, there is not much room for OIH to go down according to the historical low in JAN 2016.
AMEX:OIHLong
by tonyqs87
OPENING: OIH AUG 17TH 26 SHORT STRADDLE (LATE POST)... for a 2.36/contract credit. Metrics: Probability of Profit: 55% Max Profit: $236/contact Max Loss/Buying Power Effect On Margin: Undefined/$525/contract Break Evens: 23.64/28.36 Delta: -9.37 Theta: 2.1 Notes: Did this from my phone on Friday ... . Although I like to see >35% background implied volatility when pulling the trigger on these, at 30.3%, this isn't horrible. Will shoot for 25% max/roll at 24 DTE or on side approaching worthless.
AMEX:OIH
by NaughtyPines
THE WEEK AHEAD: MU, OIH, EWZ, XOP, GDXJThe only earnings play coming up next week that currently interests me from a premium selling/volatility contraction standpoint is MU -- with a background implied volatility in the 60's -- which announces earnings on Thursday after market close. Neither ORCL nor FDX -- which announce Monday and Tuesday respectively -- have sub-30 implied volatility, although they're probably worth watching to see if their implied's bump up closer to the announcement or, depending on price movement post announcement, whether there is an opportunity to take advantage of earnings announcement "afterglow." Preliminarily, the MU March 29th 20 delta 55/69 is paying 1.89/contract (off hours) with break evens at 53.11/70.89. The defined risk iron condor would require slightly more aggressive strikes to get one-third the width out of the longs -- the 53.5/56.5/67.5/69.5 (30 delta) in the March 29th pays 1.03 with break evens at 55.47 and 68.53. For short put/acquire/cover cycle traders who are looking to potentially get into MU lower than current market prices, the April 20th 25 delta 55 short put is paying 1.88 at the mid, yielding a break even of 53.14, a 12.28% discount over where the underlying is currently trading. Alternatively, you can look at going out to May here where the 55 is at the 30 delta, bring in 2.87 at the door and get a break even of 52.13 (a nearly 14% discount). As far as non-earnings is concerned, we're kind of in "the dead zone" between the April and May monthlies; for me, the April month is too short in duration (33 days to go) and the May, a bit too long (61 days). Nevertheless, here are the top four exchange-traded funds ranked by implied volatility -- OIH (29), EWZ (29), XOP (29), GDXJ (28) -- and by implied volatility rank/percentile: XHB, FXI, XLF, and XLB, all of which are at the upper end of their 52-week ranges. Unfortunately, that isn't saying much, since background implied in all of these is sub-25, with the preferred metric for background implied being >35%. It may be time to scrounge around for something directional to keep me engaged in "the dead zone" -- for example, this GE play (See Post below) ... .
NASDAQ:MU
by NaughtyPines
THE WEEK AHEAD: ADBE, OIH, XOP, GDXJ, EWZ, VIXWith the VIX dropping hard below 15, some of the juice has poured out of the cup ... . Even so, there remain a few plays in the market. ADBE announces earnings on the 15th (Thursday) after market close. The volatility metrics don't quite meet my criteria for a volatility contraction play (56/32), but the March 23rd 210/323.5 short strangle is paying 3.80 at the mid with that setup's defined risk counterpart, the 205/210/232.5/237.5 iron condor, paying 1.69, just a smidge over one-third the width of the wings. These are off hours quotes, so neither of these may look as attractive during regular market hours when things tighten up. Nevertheless, worth keeping an eyeball on. The remainder of earnings announcements on tap for next week either involve poor liquidity underlyings or have implied volatility in the lower half of their 52-week range, making them singularly unattractive for the standard play. In the exchange-traded fund neck of the woods, OIH and XOP retain fairly decent background implied volatility at 31, as does the junior gold miners fund, GDXJ. My preference is to pull the trigger on these underlyings directionally. With GDXJ, I would like slightly lower (sub-30 would be great). A touch of caution is warranted, however, since there is a bit of divergence between gold spot prices and both GDX and GDXJ, implying that if gold goes lower here (it's got room), the miners will weaken even further, so trade these small in the event that support terms out to be meaningless (i.e., you're dead ass wrong as to direction). As far as "the Brazilian" (EWZ) is concerned, the April 20th 43/49 (40 days until expiry) short strangle is paying 1.25 at the mid; it isn't hugely compelling, but it's a sub-$50 underlying after all. If you're going to pull the trigger on that setup, however, I'd do it soon, since we're quickly getting outside the 45-day sweet spot. VIX futures term structure has finally returned to a modest degree of normalcy, with contracts in contango front to back. I'm still waiting for a few UVXY short call verts to pull off here that I put on in the hot and heavy of early Feb, so am going to hand sit until I'm able to quit sweating over those. The forecast, however, is for contango erosion/beta slippage to resume (it already has) in UVXY and VXX, implying that they will continue to pretty much go down from here over time (naturally, in the absence of another pop).
NASDAQ:ADBE
by NaughtyPines
TRADE IDEA: OIH JULY 20TH 19 LONG/APRIL 20TH 26 SHORT CALLThis is a Poor Man's Covered Call, with the 90 delta July long call standing in as your stock, and the April 20th 26 short call functioning as it would in a covered call situation. Your max loss is the difference between what you paid for the long (currently 6.28 at the mid) minus what you received for the short call (currently .69 at the mid). Consequently, you pay a debit for this setup: 6.28 minus .69 or 5.59/contract. 5.59 is the max you can lose if you (a) do nothing with the setup; and (b) both the short and longs go to worthless on a finish of the underlying below the long strike at 19. 5.59 is also your cost basis in the long option. Look to exit the trade at 10-20% of what you put it on for (i.e., for a $56-$112 profit). This will occur along a neutral to bullish spectrum if either (a) price doesn't move much from here such that the intrinsic value in the long does not change appreciably over time and the short call value dwindles to worthless to (b) price shooting up and through your short call, at which point further increases in value of the long are offset by further increases in the value of the short, thus capping out further gains in the same fashion as would occur with a covered call. On break of the short call, wait toward expiry for the most of the extrinsic to bleed out of the short and then exit the trade as opposed to attempting to roll out the short call and/or strike improve. If the setup still has a "good look," re-up with a totally new Poor Man's. Intratrade, generally roll the short call out for duration and "as is" or to a similarly delta'd strike as the original short call on significant decrease in value (ordinarily, at 50% max). In the unfortunate event that this is no longer productive because price has pulled away from the short call too much, consider rolling the short call down to a reasonably delta'd strike (i.e., between the 20 and 30) while keeping an eye on your cost basis in the long in an attempt to ensure that it is always less than its current value.
AMEX:OIHLong
by NaughtyPines
THE WEEK AHEAD: M, BBY, OIH, VIXEARNINGS ANNOUNCEMENT/VOL CONTRACTION PLAYS: M announces earnings on 2/27 before market open. Preliminarily, the March 24/30 short strangle is paying .84 at the mid, which isn't very juicy. Given the size of the underlying, it may be more amenable to a short straddle or iron fly, with the March 9th 27 short straddle paying 2.95 and the 23/27/27/31 iron fly paying 2.13 with the longs camped out around the 16 delta strikes. I would shoot for 25% max profit or .74 in the case of the short straddle; .54 for the fly. BBY announces on the 1st of March before market open. The March 9th 20-delta 66.5/81 short strangle is paying 2.05 at the mid, with the defined risk variant 63.5/66.5/81/84 iron condor paying just a smidge short of one-third the width of the wings -- .92/contract. HIGH IMPLIED VOLATILITY EXCHANGE-TRADED FUNDS: The exchange-traded funds screened for percentile greater than 70% and ranked by percentile are IYR (background 20%); XLI (background 20%); FXI (background 26%); EEM (background 22%); and XLU (background 18%). Ranked by background implied: GDXJ (33%; 33rd percentile); XOP (32%; 64th percentile); OIH (32%; 80th percentile); GDX (28%; 42nd percentile); and EWZ (28%; 19th percentile). Generally speaking, I like to pull the trigger on a premium selling trade when the percentile is greater than 70% and the background implied is greater than 35%, so I would pull the trigger on an OIH setup here, even though it's slightly short of that 35% background metric. Here are a couple of possible plays: Neutral Assumption/Undefined: OIH April 20th 25 short straddle Probability of Profit: 54% Max Profit: $224/contract Max Loss: Undefined Break Evens: 22.76/27.24 Notes: Look to take profit at 25% max or .25 x 2.24 or .56/contract. Intratrade defenses: roll of untested side toward current price, delta hedging. Neutral Assumption/Defined: OIH April 20th 22/25/25/28 iron fly Probability of Profit: 44% Max Profit: $176/contract Max Loss: $122/contract Break Evens: 23.22/26.78 Notes: As with the short straddle, look to take profit at 25% max or .25 x 1.76 or .44/contract. Intratrade defenses: Delta hedging. THE VIX After this recent pop, I'm still watching the VIX and VIX futures term structure to return to its ordinary "contango look." While the structure has returned to contango if you look at the March, April, and May expiries, May is in backwardation relative to June, June in contango relative to July, July in backwardation relative to August, with the remainder of the structure in contango.
NYSE:M
by NaughtyPines
OPENING: OIH MARCH 16TH 24 SHORT PUTS... for a .97/contract credit. Metrics: Probability of Profit: 62% Max Profit: $97/contract Max Loss: $2303 Break Even: 23.03 * -- Assuming price goes to zero and you do no rolls or take other loss mitigation measures (e.g., sell short call verts against, etc.). Notes: With background implied volatility greater than 35% and with the recent sell-off in both oil and the broad market, I'm getting into this underlying at a price extreme, but will work it a little differently than I ordinary do. Here, the goal will be to reduce cost basis over time, with each roll taken being for a credit .... .
AMEX:OIH
by NaughtyPines
3
THE WEEK AHEAD: OIH AND XLV PLAYSAlthough earnings season continues to drag on here, a small financial media theme has emerged in this sell-off and that's that "Earnings don't matter" ... at least, at the moment. In keeping with that mini-theme, I'm looking at putting on plays in sector exchange-traded funds, and two of the ones that have been battered the most in this market have been OIH and XLV. My tendency with petro in the past is to play it directionally, although I have dabbled with nondirectional setups like iron flies, short straddles/strangles as well. Both types of setups could be productive here due to the underlying's high implied volatility metrics, which were above 45% as of Friday close. Here are two plays -- one directionally, one non- in OIH: OIH Synthetic Covered Call March 29th 26 short put Probability of Profit: 53% Max Profit: $271/contract Max Loss: Undefined Break Even: 23.29 Notes: Shoot for 50% max of the credit received. OIH Short Strangle March 29th 22/26 short strangle Probability of Profit: 64% Max Profit: $125/contract Max Loss: Undefined Break Evens: 20.75 put side/27.25 call Notes: Also go for 50% max of the credit received. The XLV Plays: March 29th 75/87 short strangle Probability of Profit: 57% Max Profit: $250/contract Max Loss: Undefined Break Evens: 72.50/89.50 Notes: Go for 50% of credit received. The spreads are showing wide after hours, so you'll have to run this setup to see if it's worthwhile during regular market hours. My guess: it won't pay 2.50 at market open ... . Synthetic Covered Call March 29th 86 short put Probability of Profit: 52% Max Profit: $505/contract Max Loss: Undefined Break Even: 80.95 Note: As with the short strangle, showing bid 2.81/mid 5.05/ask 7.30, so the metrics will change at open.
AMEX:OIH
by NaughtyPines
67% Probability trade on OIH (Put Ratio+Call)With over 20% move to the upside in the last 29 days, I think is time for OIH to have some sort of pullback or correction. The last 5 candles couldn't close outside of the Upper Bollinger Band, so it looks like is losing momentum and most likely retrace at least to the midline. Implied Volatility Rank is at 54 so I sold the 28/27 Put Ratio Spread (2 Short Puts at 27 Strike Price for each Long Put at 28). And also added some juice with a Short Call at the 30 Strike. In total I ended up with $0.40 credit for each contract. I did 5 of those, so it would be 5x10 Put Ratio + 5 Calls. Between $30 and $28 I would be making $200, and my max profit of $700 would be at the $27 price (around where the 20MA is). This trade will make profits between the $25.60-$30.40 Price, this gives us a 67% chance to make money. The trade: Long (1) 28 Put Short (2) 27 Put Short (1) 30 Call Total Credit was $0.40 per contract Probability of Profit 67%
AMEX:OIH
by AlexanderGotay
CLOSED: OIH Aug credit spreadThe bear call credit spread strategy gives a decent probability of profit, defined risk, and expresses a bearish opinion that the underlying will move lower. The IVR on OIH reached above 70% and July 12 with a bearish opinion I sold the 25/26 call spread, 2 contracts @ 36 credit ea. The $25.36 break even was quickly tested the following days, but eventually I closed a week early at 5c. In hind sight I should have just closed the short option at 5c and let worthless long call expire to avoid the broker fee.
AMEX:OIH
by dime
THE WEEK AHEAD: XOP/OIH/XLE, COSTPremium Selling For the umpteenth week in a row, there is little in the market for high quality premium selling plays. Screening for 52-week >70 implied volatility rank, you'll basically get one quality hit at the moment, and that is COST, which has dipped significantly on AMZN/WFM merger news. A few names are approaching that 70 mark, but they have earnings three to four weeks out; you might as well wait to put on volatility contraction plays around earnings announcements in those cases. I previously set out a nondirectional play in COST (see Post below) that I didn't enter, having been distracted by something or other; I may reconsider that play now that the market's had an opportunity to digest the AMZN news. Other names, such as NBR (petro, part of whose operations are deep water),* RAD (pharmacy in merger and acquisition with WBA), and BBRY (a kind of WTF, why are they still around) are too small in dollar value to be worth playing unless you dive in and go straight-on covered call or near-to-the-money short put. Directionals I've been waiting for several weeks to put on a bullish XOP, OIH, and XLE play. Each time I look at them, it appears that oil has trundled lower on rising rig count, total stock build, lackluster inventory draw, or a combination thereof. I've been primarily watching oil prices around the supposed average shale production break even at $40 to go long in one of these underlyings. We may be close enough for me to make a play, but I'll probably continue watching. Lower is better for either a net credit put diagonal or a Poor Man's Covered Call in these guys. Low Volatility Plays With VIX continuing on its sub-12 bender, there probably isn't a better time to go put-side low volatility strategy in broad index underlyings (SPY, IWM, QQQ, DIA) using either calendars, net credit put diagonals, or debit diagonals. These capitalize on volatility expansion and movement of the underlying toward the put side, ideally allowing you to exit the short put aspect of the setup at worthless and recapture any value left in the long at the expiry of the front-month short. Heck, the dam has to break at some point ... . * -- I regard most companies that rely substantially on deep water operations as largely doomed here. Most deep water operations require high per barrel prices that we haven't seen for a substantial period of time and aren't going to see in the short- to medium-term.
AMEX:XLE
by NaughtyPines
OPENING: OIH JUNE 16TH 24/27/27/28 BROKEN WING BUTTERFLYA slight variation on a Super Bull (short put vertical financing a long put vertical; bullish assumption). Metrics: POP%: 71% Max Profit: 1.12/contract Max Loss/BPE: 1.88/contract Break Even: 25.88 Notes: There are a couple of different ways to work this intratrade: (a) take the long put vert off in profit, leave the short put vert to ride; (b) the inverse of that; or (c) look to take it off as a unit. Here, I'll be shooting for 50% max and to take the entire thing off as a unit, but will also watch for opportunities. Filled for a .12 credit, by the way ... . Generally, this isn't my go-to instrument (XOP is more liquid), but I'm working a trade in XOP and don't want to step on that setup.
AMEX:OIHLong
by NaughtyPines
1
THE WEEK AHEAD: EWY, FEZ, FXE, AND OIH/XOP/XLEWith VIX in another ebb and a paucity of high quality premium selling earnings plays in the making for next week with both high implied volatility rank and high implied volatility, I'm looking at exchange traded funds instead for potential plays. For instance, EWY, the South Korea exchange traded fund, makes sense in the current geopolitical environment, and its implied volatility rank and implied volatility reflect this, coming in at 55/22. It doesn't meet my usually standards of >70 and >35, but sometimes the market doesn't allow you to be picky. The June 16th 56/59/65/68 iron condor brings in .81 at the mid (not quite up to my usual 1/3rd the width of the wings snuff); alternatively, the June 16th 57/62/62/67 iron fly brings in 2.76. A drawback is that this instrument only has monthlies, a situation I'm not fond of ... . With French election finals on the horizon on May 7th, another play that makes sense against the backdrop of "news," is FEZ (Euro Stoxx 50) (49/21). However, I previously attempted to get a fill of an iron fly before the primaries, and it was quite pesky, particularly on the call side. Currently, I'm unable to get a mid price quote for the June 9th 34.5/37.5/37.5/40.5 iron fly or a similar setup in the June 16th expiry due to the fact that the long calls where I want to set up are no bid. With FXE (the Euro proxy), which I tend to play as I would play EURUSD, I would go directionally short. The background implied volatility is so low that it just doesn't make sense as a straightforward premium selling play since the contraction that's usually a feature of these plays is likely to be minor; moreover, I have a directional assumption in a tightening Fed environment versus a loose to easing ECB environment (bearish). There are a couple of ways to play it: (a) ATM short call verts where the break even is around 106 (e.g., the June 16th 105/108 short call vert; 1.20 cr; BPE 1.80; BE at 106.20), legging in small in the event it rips higher on a Macron win (currently, the likely outcome); (b) a call diagonal that gives you some flexibility on the short call side of things (e.g., a June 16th 107 short call; Sept 15th 110 long call; .07 cr; 2.93 BPE) without exposing you to downside risk in the event that the Euro caves in at some point on dollar strength or Euro weakness. Lastly, I've got eyeballs on oil. It's dipped somewhat dramatically off highs, so I'm looking at various bullish plays in OIH, XOP, and/or XLE, all of which track oil prices somewhat religiously. Currently, I'm still working an XOP put diagonal, but am amenable to getting into another XOP play. (Put diagonal: XOP June 16th 33 short put; Dec 15th 27 long put; .10 credit at the mid; 5.90/contract BPE; PMCC: XOP June 16th 37 short call/Dec 15th 24 long call; 10.82 db).
AMEX:EWY
by NaughtyPines