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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
ROKU - Iron Condor, short 3 day expirationROKU options are selling at a very high premium (time value) due to very high IV%. To take advantage of the high premium I opened an Iron Condor. I chose an iron condor because I don't have a strong bias (bull/bear). This strategy provides a little more cushion whether it moves one direction or the other. I would have chosen a credit spread strategy if I did have a strong bias. 3 Days till expiration. 56/66 Calls & 45/35 Puts. Premium $3.58 per spread. ROKU price at order execution $50.02 Break even $59.58 & 41.42 GREEKS D G T V Net Spread: .0034 .0400 -.0514 .0048 IV% on each contract is between 219% - 260% (versus 61%)
NASDAQ:ROKU
by JLJ002500
3
COP - Feb.'18 Exp. Put Vertical Debit SpreadTrade details: 57.5/50 Put Vertical Debit Spread @ $3.01 Prob. of Max Profit = 10.86% Prob. of Max Loss = 34.02% Break-even @ $54.49 50 D.T.E. Trade plan: Entry by overbought status + indication of correction/mean reversion analysis. Expecting pullback to moving average (VWMA) before earnings report in Feb.'18 for profit on weakening uptrend as seen in both Daily + Weekly charts. Expecting to take quick profit at $53.70 level + will re-establish position if quick profit is possible. Expecting to hold spread through earnings + allow spread to expire worthless if reversal is strong. Adjustment will be made if the position goes strongly opposite past $56.40 resistance level.
NYSE:COPShort
by AtoHoward
GOOG - Cautious Buy - Played via Selling Put Credit Spread GOOG has closed upwards of $1,054, forming a nice bullish candlestick! So, despite the great candlestick formation, there are some worrisome signs brewing in the Bond & Gold Markets, as well as in the Volatility Index. This means that if investors start heading towards safe havens like these, the stock market should take a pause and/or pull back. As a result, the way I decided to play this bullish to neutral stance of mine on GOOG, is by selling the $1,012.5 / $1,010 Dec. 15 Put Credit Spread (18 Days out) for $0.27 credit, or $27 per contract ($2,700 for a 100 lot). This means that based on the ThinkorSwim platform, this is a Delta 15 put spread, which simply implies that the options market assigns JUST a 15% chance that this option spread will be ITM (In The Money) by its expiration. In simple terms, it is highly unlikely that we will get our options assigned to us. To summarize, being long GOOG by selling this put spread, we stand to make more than 10% Return On Our Risked Amount in 18 Days and having an 85% chance that we will be right doing so! Pretty good odds for a really good return, in a short period of time! This way, we are allowing GOOG to drop MORE THAN $30 from its current levels and STILL be able to keep ALL of our premium. Close your position when GOOG hits $1,080 (Profit Target), or Exit the trade, if the spread increases to $0.40 (Stop Loss), for a 2R. Happy Trading Lindosskier
NASDAQ:GOOGLong
by lindosskier
OPENING: VIX JUNE 21ST 10/15/15/20 IRON FLY... for a 3.00 credit. I'm not seeing much else in the markets that meet my refined sense of pickiness, so putting on some VIX fly here using the June VIX futures price (14.73 at the time of this writing) to tell me where to sell the short straddle body of this setup. Metrics: Max Profit: $300/contract Max Loss: $200/contract Break Evens: 12.0/18.0 Theta: 1.39 Delta: 18.16 Notes: Like a short straddle, I'll shoot to take this off at 25% max.
TVC:VIX
by NaughtyPines
XOP: THREE BULLISH ASSUMPTION PLAYS IN ADVANCE OF OPEC TALKSWith XOP hanging around horizontal support here and with OPEC output cut extension talks and jawboning on the near-term horizon, it only makes sense to talk about petro plays with a bullish assumption, particularly due to XOP implied volatility rank (in the 74th percentile over the past six months) with background implied volatility at 34. Here are three: LADDERED SHORT PUTS/SHORT PUT VERTICALS The most straightforward of the strategies with a neutral to bullish assumption. Example: June 16th 33 short put July 21st 32 short put .97 credit at the mid These are currently setup at the 20 delta strike. Look to take profit at 50% max, either one at a time, or for the setup as a unit. Generally, no intratrade defense. Toward expiry, look to roll out for duration and credit on test. A defined risk variation on the nakeds, laddered short put verticals: Example: June 16th 30/33 short put vert July 21st 29/32 short put vert .64 credit at the mid As with the naked short puts, look to take profit at 50% max, either individually or for the setup as a unit. Generally, no intratrade defense. Toward expiry, look to roll out for duration and credit on test. POOR MAN'S COVERED CALL Example: Sept 15th 90 delta 28 long call/June 30th 30 delta 37.5 short call 7.28 db at the mid Here, you're looking to reduce cost basis in your back month, long-dated option over time by rolling your short call out for duration and credit. With these, look to take profit at 10-20% of what you put it on for, taking into account any credits you received for rolls. Intratrade, look to roll out the short call when it's lost 50% of its value. LIZARDS There are several variations, all of which involve receiving credit for the entire setup that exceeds the max loss that could be experienced by the short call side. Example (Naked Short Put + Short Call Vert): June 30th 34/37.5/38.5 Jade Lizard 1.10 credit at the mid BE at 32.90 (below expected move) Example (Short Put Vert + Short Call Vert): June 30th 31/34.5/37/38 1.02 credit at the mid BE at 33.48 (above expected move) Max Loss/Buying Power Effect: 2.48 Look to take these off at 50% max. Intratrade defense can be done by rolling the untested side toward current price to the extent it's productive. Toward expiry, look to roll the tested side out for duration and credit and to sell an oppositional side against for a credit that exceeds what you paid to roll, although it's generally just a walkaway trade if price blows through your short call side, since the max loss that can be experienced by that side will be less than what you collected in credit up front (i.e., all the risk associated with these is on the put side).
AMEX:XOPLong
by NaughtyPines
THE WEEK AHEAD: HPQ, LOW, BBY, GME EARNINGS; XOP, EWZ (NON)EARNINGS HPQ, LOW, BBY, and GME are all up for earnings announcements. Out of these, BBY and GME appear to be the best candidates for premium selling, given their implied volatility rank and background implied volatility metrics, although virtually every liquid underlying with an earnings announcement bears watching; implied volatility can pop at the last moment, making them ripe for a play. BBY announces on 5/25 before market open, so look to put on a play on the 24th before session close. Preliminary Setups: June 2nd 51.5 short straddle; 4.18 at the mid with break evens wide of the expected move at 47.32/55.68. June 2nd 44.5/51.5/51.5/58.5 iron fly: 3.69 at the mid with break evens at 47.31/54.69; 3.81 max loss/buying power effect. June 2nd 47/56 20 delta short strangle: 1.17 at the mid; BE's at or wide of the 1 SD at 45.83/57.17. June 2nd 46/48.5/54.5/57 30 delta iron condor: 1.03 at the mid; BE's wide of the expected move at 47.47/55.53; 1.47 max loss/buying power effect. GME announces on 5/25 after market close, so look to put on a play on the 25th before session close. Preliminary Setups: June 2nd 24 short straddle: 2.21 at the mid with break evens wide of the expected move at 21.79/26.21. June 2nd 21/24/24/27.5 iron fly: 1.88 at the mid with break evens wide of the expected move on the put side, slightly short of the expected on the call at 22.12/25.88; 1.62 max loss/buying power effect. June 2nd 22/26.5 20 delta short strangle: .65 at the mid with break evens wide of the expected move at 21.35/27.15. June 2nd 20/22.5/26/28.5 iron condor: .72 at the mid with break evens wide of the expected move at 21.78/26.72; 1.72 max loss/buying power effect. Due to the credits received for the short strangle/iron condor, would probably short straddle or iron fly. NON-EARNINGS The two exchange-traded funds with the metrics I generally look for: XOP and EWZ. I already have a non directional, defined risk EWZ setup on (an iron condor), so could look to add. With XOP, I'm looking at directional stuff (laddered short puts, laddered short put verticals, Poor Man's, or a setup with no upside risk, the concern being that OPEC will extend output cuts, causing this to rip skyward).
AMEX:XOP
by NaughtyPines
OPENING: VIX MAY 17TH 11/14/14/17 IRON FLY... for a 2.05 credit. This particular setup involves examining where the /VX futures price lies in the corresponding expiry to that of the VIX. Here, the May /VX price is closest to the VIX 14 strike, so that is where the body of the fly is set up. You then proceed to buy a .05 long put in the same expiry, and buy the long so that the wings are of equal length. Metrics: Max Profit: $205 Max Loss/Buying Power Effect: $95 Break Evens: 11.95/16.05 Notes: I'll look to manage at 25% max profit, as I would with any other short straddle or iron fly.
TVC:VIX
by NaughtyPines
OPENING: TLT JUNE 16TH 117/MAY 19TH 119.5 PUT DIAGONALGetting long bonds here via a net credit diagonal that I filled for a .01 credit. For diagonals and calendars, there aren't much in metrics to look at, since how much you make will depend on a wide variety of factors (i.e., IV, underlying price movement, etc.): Theta: 1.02 Delta: 7.24 Notes: The idea here is basically to reduce your cost basis in the long option with the short one. Here, the long cost .50 to contract to put on ... .
NASDAQ:TLTLong
by NaughtyPines
1
JUNE SPY CORE POSITIONThis post collates all my current SPY positions in the June expiry including (a) the legs noted as 2x (which were from a setup rolled out to avoid call-side assignment risk around March ex-divvy); (b) a Jade Lizard addition that was intended to add in long delta with no upside risk; and (c) my most current short put vertical credit spread, which was also intended to add in long delta to move the net delta of the entire she-bang back to neutral/slightly short (as of Friday market close, the net delta of the SPY position is -4.51). Its scratch point is 5.40.* Naturally, it looks like something of a mess in the manner in which it is graphically depicted, but there is a method to the madness. First, the notion is keep the entire setup at near net delta neutral to slightly short from this point until about 25 DTE, after which I generally don't tweak or add to the position, since there is generally too little time for it to be worthwhile after that point. This "tweakage" can be done in a variety of ways -- adding in short put verts/naked short puts for long delta, short call verts/naked short calls for short, skewed iron condors/short strangles that are slightly one way or the other, or by peeling off sides to get the same result. As you can see, however, things can get quite crowded where you may want to set up your tent, so it sometimes requires a little bit of creativity and fiddling to squeeze setups in where you want them (e.g., going with a 2x 2-wide versus a 1 x 4 wide or vice versa). As time progresses, you will want to start peeling stuff off, particularly as it becomes worthless (and therefore of little protective use). As you can see, rolling things in toward current price becomes problematic with such an arrangement, because you'll potentially be stepping on other legs, and you don't want to inadvertently close legs out by rolling. You can either peel off things as they were originally set up or look to mix and match individual legs. For example, I could peel off the 222/228 short put vert, the 222/226 short put vertical, or the 225/226 short put vertical to subtract long delta from the setup, that is, assuming it was profitable to do so. Similarly, I can mix and match sides that were put on at different times: for example, pulling off the 2x 238/242 short call vert with the 222/226 and 225/228 short put verts, again assuming that was profitable. Alternatively, I can treat the entire position as a single unit and look to take everything off at the same time when it becomes profitable to do so. * -- I previously calculated the scratch point for the entire position at 3.46, overlooking the fact that the rolled out 231/234/238/242 had twice as many contracts as the other legs.
AMEX:SPY
by NaughtyPines
FXE: TWO BEARISH OPTIONS SETUPSFXE JUNE 16TH 105/108 SHORT CALL VERTICAL The first of the two setups is a "static" short call vertical with a break even around 106 resistance. Metrics: Probability of Profit: 58% Max Profit: $120/contract Max Loss: $180/contract BE: 106.20 Notes: Look to manage at 50% profit. FXE JUNE 16TH 107 SHORT CALL/SEPT 15TH 110 LONG CALL DIAGONAL This particular setup gives you some more flexibility in the event we do get some bullish movement in the short term, since you have opportunities to roll the short call for duration and credit during the life of the setup. Unfortunately, the vast majority of metrics for a diagonal are indeterminable from the outset, although the short call here, standing alone, has a probability of profit of 67%. This gives you a fairly high probability that you can completely finance the cost of the long in short order. Metrics: POP%: -- Max Profit: -- Max Loss/Buying Power Effect: $293/contract Notes: Look to roll the short call out for duration when it approaches 50% max profit to the next expiry in which you can receive credit for the roll.
AMEX:FXEShort
by NaughtyPines
Implied Volatility Rank Indicator (IVR)When trading future options, you dont have built in implied volatility. You need to calculate the IV by calculating (volaCloseToday - volaLowest-52weeks)/(volaHighest-52weeks - volaLowest-52weeks). If the IVR is above 40%, then you should think about checking options premium, since premium is currently higher as in former days. In order to see, whether the Volatility Rank is above 40, the color of the line is green when over 40 or red if IVR is under 40.
E
by Delta10
7
OPENING: SPY JUNE 16 222/226/240/241 IRON CONDOR... for a 1.00 credit. I'm doing this little fella as an adjustment trade to pick up a little long delta in a current SPY position. However, it could also be a fairly decent standalone trade if you're slightly bullish to neutral on SPY above 226. The additional feature of the setup is the lack of call side risk on setup because the credit received equals the max loss that could be experienced if the call side is broken -- 1.00, the width of the call side spread. Put another way, max loss occurs only if the downside break even is broken; if the upside break even is broken at 241, you basically make nothing on the trade.* Metrics: Max Profit: $100/contract Max Loss: $300/contract Break Evens: 225/241 Theta: .50 Delta: 2.55 Notes: As a standalone trade, I would look to manage the setup at 50% max. * -- Both of these scenarios contemplate you're doing absolutely nothing during the life of the setup, such as rolling the untested side toward current price.
AMEX:SPY
by NaughtyPines
THE WEEK AHEAD: FRENCH ELECTIONS AND THE VIX; AA, X, and UAWith the French primaries in the rear view mirror and some market unease abated due to the result, VIX futures are caving hard as of the writing of this post (the May contract is down 8% to 13.15). This, unfortunately, changes the potential complexion of next week's market for me, since it is likely that implied volatility will dry up somewhat in SPY/SPX and RUT/IWM, making selling premium in them less productive than it would have been at Friday close. Oh, well. You take what the market gives you ... . With earnings season in full swing, we've got a lot of stuff announcing next week, but not everything is playable or worthwhile from a premium selling standpoint. Right now, I'm focused on three underlyings which have something approaching the right metrics I'm looking for in these plays (>70 implied volatility rank/>50 implied volatility): AA, which announces on Monday after market close; X, which announces Tuesday after market; and UA, which announces Thursday before market. As we get closer to those announcements (and I've got live market data to work with), I'll post setups for those if they look good enough for plays from a dollar and cents and liquidity standpoint. Last time I looked at a AA setup, for example, I wasn't happy with what I saw for a bid/ask in the expiry I wanted to use for the play ... . With exchange traded funds, nothing is looking particularly "sexy" here, and it's likely to look even less sexy at NY open, since a low VIX invariably permeates the entire market. That being said, XOP does approach my metrics for a play, although I'm already in a put diagonal that will require some attention and may lead me to beg off putting on some more, since I don't want to have a new setup get in the way of any rolls I need to do.
TVC:VIX
by NaughtyPines
TRADE IDEA: RAD APRIL 21ST 6 LONG CALLSI do these lotto trades once in a while ... . I won't take credit for it, and I'm not the only "genius" who's thought of it given open interest in the March, April 6 and 7 calls ... . Here's the low-down, courtesy of Motley Fool: www.fool.com Because I'm paying a debit for this up front (the mid price for the April 21st 6 call is currently .37), I'll need price to finish above 6.37 to make any money ... . If you're more of a gambling sort, consider the 7 calls; they're going for .04 at the mid ... .
R
by NaughtyPines