how I am playing ETFC earningsStraddle, well not exactly since the put is 50 cents lower than the call, but you get it. Pretty cheap with the expected move just a smidgen over $2. Normally I prefer to short options for the IV crush.
Straddle
Yet another triangle OCO tradeIF PRICE REACHES GREEN= BUY
IF PRICE REACHES RED= SELL
Triangle forming in the BTC/USD price, much like the other one the other day (which would've been a very successful trade as predicted)
However this one is spending alot of time in the lower half of the triangle, suggesting it should break out lower. However it could break out either way. I'm guessing it will trigger the red (sell) mark and shoot lower but the good thing about this straddle (oco) order is that you profit off volatility rather than predicting direction- You make money either way.
Roku (ROKU) priced for a move of 16.5%Roku (ROKU) August weekly 101 straddle priced for a move of 16.5% into the expected release of quarterly results after the bell on August 7th 2019.
What is a straddle:
A straddle entails buying a call and put of the same strike that allows the holder to profit based on how much the price of the underlying security moves, regardless of the direction of price movement.
*Trading a stock after earnings is less risky, and could prove to be a great idea to buy dips. / Instead of buying pre-earnings.
Beyond Meat is dangerous I am not playing BYND, there are far too many people who lost money shorting this. They might be coming back for some more beating...
On the other hand, do you actually believe BYND shares are worth more than $200 ?
The option straddle is pricing a 20% move on earnings reported today (Monday 29th) after close. I think it might change even more. Specially on a downside.
* Set your limits and know how much you are willing to lose if this don't go your way!
Also remember, your limits will NOT apply on the price changing outside regular hours.
Long ATM Straddle John Deere with LOW IVR = CHEAPWe purchased an at the money straddle for a small debit of only 3.22. This trade is notably cheap because the IVR is extremely low: 2%. Being a long straddle (buying the calls and puts at 165), we are giving ourself unlimited profit, risking a limited $322 per contract.
We take our neutral position because of the positive characteristics of the trade itself, but the fundamental conditions further our thought. With an equity value of over 51 billion, John Deere is a company with significantly large exposure to China, and Chinese trade tensions. Also, interest rates have a somewhat direct effect on the profitability of this corporation. Financial Services comprises 9.2% of Deere's market cap, so as cuts in July become more of a reality, the profitability of the Financial Services division will be affected, possibly drastically. Lower rates mean lower borrowing costs for Deere, and could cause the stock to move outside of the breakevens to lead to profits.
Also, the technicals indicate the high possibility of large movements prior to maturity. The RSI, MFI and Stochastics all indicate an overbought sentiment, and the DMI DI+ and DI- indicate change in direction. The PSaR also has recently switched direction.
Aug 9 45 Short Straddle Weibo FOR WHOPPING 5.50 CREDITWith a moderate IVR of 32.3, it makes sense to enter into a short strangle, where we are writing both the 45 calls and puts with the August 9th expiry. This trade does have unlimited risk, but does earn a profit of 550 per contract when the underlying security, Weibo, a Chinese Internet Technology firm, stays exactly at the k of 45. Because of the priced-in volatility, it is possible to execute this trade for a whopping credit of 5.50 per contract, which allows there to be a large range of values the security can take for which the trade can be profitable.
This trade is driven by the ability to get such a wide profit margin, and is supported by the channel in which the security has traded since May 22nd. Indicators further the neutral but slightly bullish notion, and the short strangle is likely to be profitable. Seeing that the RSI and CCI both indicate it is slightly overbought and the ADX indicates growing slight bullish momentum, we choose to execute this at the 45 instead of the 40 (there are no strikes for the aug 9th expiry actively traded in between, and closer-to-the-money).
Also, by using the August 9th expiry, we are able to get out of the position before the earnings announcement, which could move the stock dramatically. Going out another week would've only given us .18 more credit, which is not needed. With Weibo being Chinese, there is obviously exposure to trade war tensions, but following the G20 summit, things seem to have stabilized. With an $11-wide area in which profit can be attained, this trade makes a lot of sense, even considering the possible changes to and budding instability in the macro environment.
$SLV Short Straddle OpportunityRight now one of the few places to find high IV across the market is in precious metals - gold, silver, and their corresponding miners. I'm still currently short IV and technically Delta short in $GDXJ, but I think IV will join the market overall and will fall in this sector over the coming weeks. The AUG-23 14 Short Straddle on $SLV has breakevens above recent highs and below recent lows, making it an attractive neutral trade.
$COTY Short Straddle OpportunityWhile implied volatility percentile (IVP) is modest at around 41 for $COTY, implied volatility itself is around 35%, meaning that option premiums are still attractive for selling. Yellow lines represent breakeven points for the AUG19 13 short straddle, which are beyond the current 30 day expected range.
ACB Long ATM StraddleCannabis stocks have the possibility to move a lot in a short period of time, as regulatory changes on whims have huge impact on the market size to which Cannabis companies can sell their products. Although our stance is that the cannabis industry is likely to become even more volatile as more regulatory developments and sector-wide shake-outs leave only the leading firms, the reason we are particularly interested in the ACB long straddle is because of the low IVR.
We are entering into a near-the-money straddle on $ACB by longing the July calls and puts with a strike of $7.50, for a $.70 debit. The breakevens are below 6.80 and above 8.20. As a long straddle, the maximum loss occurs if the stock price S is at the strike k of 7.50 at maturity in July. Taking long positions on both of these options is very cheap because the implied volatility is subdued -- with an Implied Volatility Rank of 4.3.
Also, Aurora in particular has not joined big partnerships, contrasting the alignments with Canopy Growth ($CGC) and Constellation Brands ($STZ), Cronos Group ($CRON) and Altria ($MO), Tilray ($TLRY) with Anheuser-Busch InBev (BUD) and Novatris ($NVS), and HEXO($HEXO) with Molson Coors ($TAP). Announcement of any partnership, which is likely as billionaire private equity specialist Nelson Peltz recently joined with the intent to line up possible partners, would have a huge impact on the stock price. In January, Aurora Chief Corporate Officer Cam Battley told Business Insider that he would be looking to release “hemp-derived CBD strategy” into the U.S. market in the “next few months” in January. Five months later, we still don’t know what the surprise is. It could come within the next few months.
Long July CY straddle @ 22 due to subdued volatility (IVR of 4)We are entering into a near-the-money straddle on $CY by longing the July calls and puts with a strike of $22, for a $.60 debit. The breakevens are below 21.40 and above 22.60. As a long straddle, the maximum loss occurs if the stock price S is at the strike k of $22 at maturity. Taking long positions on both of these options was very cheap because the implied volatility is incredibly subdued -- with a mere IVR of 4. The current IV30 is 11.6, compared to the historical 20 day volatility of 31.6 and rolling year volatility of 34.5.
Cypress Semiconductors has agreed on a buyout offer from German chip maker Infineon Technologies for $23.85 per share. Before this deal can be completed, however, it has to be approved by regulators from both the U.S. and China. The deal is expected to close by the end of 2019 or early 2020, but heightened trade war tensions could interfere with the deal execution and final approval procedures. Cyrpess' CEO T.J. Rodgers, stated in an interview with CNBC: “Cypress makes some fairly exotic military stuff that could give CFIUS problems, and China, of course, is looking for ways to get even with us on the trade war thing.” Chinese approval of the merger is needed for the combined entity to trade there. Combined, they make the world’s number-one automotive chip maker, so losing the significant Chinese market would be catastrophic for either company. Cypress also has large exposure to China, like many others in the semiconductor space, so growing trade uncertainty is detrimental.
This straddle play benefits from movement away from the current price of roughly $22 -- which seems to be a likely consequence of brewing trade tensions.
Risky Trade of the Month Short Straddle in ZWith the market tanking last week Zillow's IVR and IV are at 2 year highs with price in a weekly support zone of 37.75 to 40.
Weekly Linear Regression Slope(LRS) looks to be hitting a bottom with the Daily LRS showing divergence. Obvious risky play due to market conditions
As of Friday selling price of $5.50 on the 33d 40 p/c straddle leaves room for error and a quick profit taking if IV and VIX drop this week.
Tasty Stats POP 52% P50 52% Delta 10 Theta 7.50
QQQThe indexes are down quite a bit from last week. Yesterday the Dow Jones lost 831 points, Nasdaq 315 points, Nasdaq 100 327 points, and the S&P500 94 points. Across the board we are seeing carnage in the markets. This shows the downturn is broad based and not specific to certain industries or one index.
For this post I will focus on the QQQ which is an ETF that tracks the Nasdaq 100.
We saw the market peak back in January around the $170.83 level and found its bottom at $153.47. Then the QQQ peaked again close to the $170.83 level in February and reached its bottom close to $153.47 for the second time in April. This created a range that the market bounced between. In March the QQQ briefly made a breakout above the $170.83 level only to fall back down ten days later back into the range.
How do we explain the downturn we are seeing from this week? If you look at the $187.52 levels you will notice that the market turned down where I marked the first arrow. From there price fell down from $187.52 to as low as $180.44 which is a change of -3.77%. The peak was in August and found its bottom in September. The market revisits this level once again making a peak in October at $187.53 and as of now it is down 8.42%.
The key takeaways from analyzing this chart is that the market has memory. Peaks it reached in the past are often respected and so are the bottoms. The longer the market stays in a range so do the probabilities of a big move go up as each day passes. At this point if the QQQ goes below $170.83 it will break a key market structure that has been in place since July. Watch out below if that happens for more downside that we have seen this past week.
If I did not hedge then instead of having gains I would have massive losses. Risk management is key for a portfolio.
Portfolio: Holding on to the straddle for hedging and added on puts for the SPY(S&P500 ETF).
Market action: I am waiting to see how far this drop will take us. Hedging and adding puts on will take precedence for the time being.
open 4 pbr 12 oct straddlesell 4 pbr 12 oct 11 call
sell 4 pbr 12 oct 11 put
credit received 7.83
theta 11.17
delta -0.41
probability of profit 57%
initial margin 872.14
looking to manage at 25 credit received
open 4 pbr 12 oct straddlesell 4 pbr 3.86% 12 oct 11 call
sell 4 pbr 3.86% 12 oct 11 put
credit received 7.83
theta 11.17
delta -0.41
probability of profit 57%
initial margin 872.14
looking to manage at 25 credit received
XLI - IndustrialsEarnings season is imminent here for most companies. A few of the industrials have been reporting recently too. I decided I'd throw a little premium on in here.
-1 Sep21 $75 straddle for $3.43 cr.
Risk: 1.5-2x credit received
Profit: 25-30% of credit received.
If we get a down move, I may just take the call off and then roll out the put. We'll see how this trade works out.
Straddle into EarningsNo clue where SNAP is heading, but it is going to be a big move either way. Even with high IV the move will likely be great enough to be worth the straddle.
open 1 XLI 21 sep 76 straddlesell 1 XLI 21 sep 76 call
sell 1 XLI 21 sep 76 put
credit received 3.19
theta 3.16
delta 0.41
probability of profit 53%
initial margin 1,519.18
looking to manage at 25% credit received
EWZ - (Short Premium) Selling straddle into high IVRThere is no real clear price action direction, this chart has even room to run in both directions, and the 'IVR is high which makes it a good candidate for a short premium trade. I am selling a straddle as I can collect 10% of the underlying in premium in just 46 days.
Break out or Break down - $C - CitigroupShort-term call?
After a quick drop and sharp earnings reversal, Citigroup seems to be ready to break out of the "Head and Shoulders" pattern it has been setting for a year. In the past two years especially, the second half of the year has typically been a boon to the Financial Sector. Due to the lack of resistance, if Citigroup does resume it's trend, it's clear skies until $73 or 8 strikes from it's Monday (7/16/18) close of $69.47. MACD & RSI divergence, higher lows & highs, hint it's break out time; although $C tends to test support when closing below a mid-dollar strike (e.g. $68.5, $69.5 ... ) many signs seem bullish.
Short-term Put?
Since the 100-day MA hasn't been traversed quite yet and dimming global outlook for a very globally diverse financial institution are pertinent concerns: a resumption of $C's breakdown toward $67.50 is still plausible; Less likely after $66.50 was touched and multiple lines of support drawn there after during the post-earnings fire-sell, but still plausible all the same. Having a complete collapse like the "Head & Shoulders" suggests, and a fall straight through $66 is more of a longer term trend that is unlikely, but still possible. Caution would be to start with a strangle or straddle around the $69.50 strike, with the call focusing on the resistance-turn-support of $69 (firmly in the money) and roll the dice with the put's placement, with one's choice on potential gains.
At the end of the day:
Financial deregulation, tactical global divestment, Citigroup's 10% share buyback, increase in dividend payouts and a solid beat on it's Q2 earnings (despite the sell-off) all point toward a brighter future. Old allies and Old foes becoming the opposite, nationalistic rhetoric and new Middle-Eastern oil deals all are obstacles, but whether they are insurmountable is up to your short-term hypothesis because only time tells; and time is always money.
NVDA - play the run up to earningsNvidia has seen massive growth in the past year. They will be announcing Q1 earnings next Thursday (May 10) after close. Expectations are very, very high, and the run up to the earnings call can be explosive, as well.
However, with expectations so high, it also becomes more risky to hold a position through earnings (EPS estimate is almost double that of Q1 2017, and that was back when NVDA was trading for about $100). With how volatile this earnings season has been so far and how volatile post-earnings has been for NVDA in the past year, I would expect a big jump on Friday (May 11).
The play:
Long - close positions before earnings on May 10, or when it hits $245 to lock in profits, whichever comes first. If you love living life dangerously, you can optionally (no pun intended) buy a straddle/strangle that expires the next day and hope that a big price swing happens.
Disclaimer:
I am long NVDA (June calls)
FTSE100 UKX StraddleA test trade using a very short term options contract (Expires this Friday) and a neutral straddle strategy.
Last week saw the return of the Trump jitters, as the world braced for a new trade war. Rising interest rate prospects were also raining on the parade in the UK and US as it looks like the easy money party was ending and the Federal Reserve (as well as BoE) would have to keep rates going higher to stop the economy from overheating (or stop the yield curve from inverting as we slowly approach the end of this economic cycle).
However, it seems the trade war threats might have been a bluff to try and get a better deal out of China. Therefore, all is well and stocks can reach for those all time highs... Right?
At this point, I think the market is wary. Investors have one foot out of the door ready to run to safety, and that makes predicting the direction a lot more difficult. More news about Trump "not being happy with China during trade negotiations" could easily see any recovery wiped out - unless the market stops caring or finds something else to worry about. But that's another story.
From a technical perspective , the price action found support on the blue line; however, that has since been broken. A small re-test of the support was followed by a further collapse. This could potentially see the price head back up to the support line, and bounce off as support becomes resistance (a reversal of polarity).
So I have bought two short term options contracts that expire at the end of this week. The strike and expiration are the same, making this a straddle. The main risk being that the price does not move that much, which would see this trade fail.
Target for the call is the vicinity of the prior support. Target for put is the vicinity of 6730, a previous area of support late last year.
BX - Looking for yield? Covered short straddle on Blackstone!THE DAWN OF ASSET MANAGERS
As discussed towards the end of last year, 2018 should be the year of the brokers and asset managers (please watch related ideas below). In this context, and with a dividend yield of 6.36%, BX is probably one of the best asset management pure-plays out there. The trend has been strong on all time frames and the stock is attempting a breakout as we speak. But how to play it in the current top-ish market environment? There is a smarter way than a simple outright buy.
LOOK FOR YIELD AND ENHANCE IT WITH OPTIONS
1. Buy the stock in a half size which makes sense to your strategy or portfolio at $34.91 (last close)
2. Sell one-year $40 OTM CALL and pocket $1.39 (indicative)
3. Sell one-year $32 OTM PUT and pocket $2.66 (indicative)
COMPELLING RISK AND YIELD ANALYSIS
At expiration of the options, in one year, one of the below should happen.
1. The stock is range-bound ($32-40): Stay long the stock and pocket (call premium + put premium + dividend yield) = 3.98% + 7.62% + 6.36% = 17.96%
2. The stock breaks out and trades above $40: Deliver the shares at $40 and pocket (capital gain + dividend yield + call premium + put premium) = 14.58% + 6.36% +3.98% + 7.62% = 32.54%
3. The stock breaks down and trades below $32: Receive the shares and end up with a full position at an average price of $33.45 while you pocket (dividend yield + call premium + put premium) = 6.36% + 3.98% + 7.62% = 17.96% . All the while, you become long one of the best asset managers in the world with an improved dividend yield >10%.
THIS STRATEGY CAN BE ROLLED OUT WITH ANY TIME HORIZON (MONTHLY, QUARTERLY, SEMI-ANUALLY).
COMMENTS WELCOME.
