Get started

USO

THE WEEK AHEAD: ADBE, ORCL EARNINGS; GDX/GDXJ, USO/XOP/XLE, EWZEARNINGS: ADBE (89/65) and ORCL (77/60) both announce earnings on Thursday after market close and have the metrics I look for in earnings-related volatility contraction plays (>70% rank; >50% 30-day implied). Pictured here: a short strangle paying 11.65 at the mid price camped out around the 16 delta. Its defined risk counterpart: the 265/275/395/405 ten-wide iron condor pays 2.46. Off hours markets are showing wide, so look to price setups out during the regular session. The delta neutral ORCL April 17th 40/55 short strangle pays 1.45. EXCHANGE-TRADED FUNDS WITH EXPIRY IN WHICH THE AT-THE-MONEY SHORT STRADDLE PAYS >10% OF THE STOCK PRICE: GDX (99/51), April USO (97/66), April GDXJ (96/58), April XLE (97/75), April EWZ (92/52), April XOP (92/51), April TLT (91/41), May EWW (91/48), April XLU (90/43), June SMH (84/56), April FXI (65/33), June BROAD MARKET WITH EXPIRY IN WHICH THE AT-THE-MONEY SHORT STRADDLE PAYS >10% OF THE STOCK PRICE: EFA (87/37), June QQQ (83/43), April IWM (82/46), May SPY (78/41), May EEM (70/37), June FUTURES: /CL (97/65) /GC (84/25) /SI (70/30) /NG (65/48) /ZS (30/19) /ZC (21/22) /ZW (13/27) VIX/VIX DERIVATIVES: VIX finished the week at 41.94, so it has been a rough ride for shorters who were in plays before this volatility expansion (points to self). The basic watch word is "patience"; volatility will abate at some point in time ... .
NASDAQ:ADBE
by NaughtyPines
The CHK perspectiveI like Chesapeake energy for the longer term investment. Energy has been lagging compared to other sectors over the last few years and there is tremendous potential in good energy companies. CHK is historically cheap and could do very well if energy takes off. However, I suspect more pain ahead for oil with the potential for an enormous flush.. perhaps below 2016 levels.. Regardless of that, I think oil goes bonkers high over the next 6-7 years. I'm looking at holding some longer term USO call options (if we see a deep oil flush) as well as a few good oil/energy companies.. CHK is one of those in my opinion. CHK could disappear.. there's always risk in investing but I'm accumulating shares of CHK sub .48 but I wouldn't be surprised to see .20 either. We have some chart history that demonstrates these exact type of moves- From current levels, a $20/share run would equate to a 45x (4500%).. a move back to the 2008 ($69 per share) high would be 16000+% (160x). It can go to $70+ or it can go to 0.. This is a long term trade that has some risks so I'm only willing to put in what I'm willing to lose.
C
by gghsusa
33
Crude/oil going further down"Oil prices plunged to one-year lows, with WTI back below $50 for the first time since Jan 2019 as global demand concerns trumped OPEC+ jawboning that they could do something to stall the decline." Due to weak oil demand from china with the aftereffect of the corona virus. We could see oil go down further as this is just the beginning of the outbreak. Opec said they will try to stop it but if anything, we will use the previous support as the new resistance. Short position Entry $50.60 Target $42 Stoploss $51.60
NYMEX:CL1!Short
by WallSt007
THE WEEK AHEAD: DBX, TECK EARNINGS; USO, GDXJ; VIX, VXX, UVXYEARNINGS: The earnings that are best metrically for earnings-related volatility contraction plays are DISH (87/59), TECK (87/52), and DBX (82/57). Unfortunately, strike availability in DISH is limited to two-and-a-half wides, making it an unattractive play given its stock price (39.97 as of Friday close). Pictured here is a DBX (82/57) skinny short strangle in the March cycle paying 1.98 on a buying power effect of about 3.25 (60.9%), break evens wide of the expected move, and delta/theta of 3.32/-7.44. Given its near-straddle narrowness, I would look to take profit at 25% max. Announcing on Thursday after market close, look to put on something in the waning hours of Thursday's session. The other one of interest is also small: TECK (87/52), which finished the week at 13.46. A play similar to that in DBX -- a March 20th 13/14 skinny short strangle -- pays 1.15 at the mid price on a buying power effect of about 2.25 (51.1%) with break evens greater than the expected move and delta/theta metrics of -4.21/2.17. As with the DBX skinny, look to take profit at 25% max. EXCHANGE-TRADED FUNDS WITH EXPIRY IN WHICH AT-THE-MONEY SHORT STRADDLE IS PAYING GREATER THAN 10% OF STOCK PRICE: XLE (46/20), July USO (42/35), April FXI (35/21), August XOP (34/34), June XBI (34/27), June SMH (30/25), June EWZ (14/25), June GDXJ (5/28), May GDX (4/23), June The paying plays of shortest duration are in USO (April) and GDXJ (May). Take your pick in June between XOP, XBI, SMH, and EWZ. BROAD MARKET FUNDS WITH EXPIRY IN WHICH THE AT-THE-MONEY SHORT STRADDLE IS PAYING GREATER THAN 10% OF STOCK PRICE: EEM (38/12), December QQQ (26/18), September EEM (23/18), September IWM (19/16), October SPY (16/13), November FUTURES (EXCLUDING CURRENCY/TREASURIES): /NG (52/39) /CL (41/35) /GC (26/11) /ZS (23/17) /ZW (20/21) /ZC (16/14) /ES (16/14) /SI (5/24) VIX/VIX DERIVATIVES: VIX finished the week at 13.68, so there are probably some happy campers out there who shorted the January-end volatility pop to nearly 20. The March, April, and May /VX contracts are trading at 15.40, 16.11, and 16.30, respectively. I could see going small with an April term structure trade if you haven't already got one on, but May isn't going for a ginormous premium over April, so there probably isn't much benefit to going out farther in time: the April 16/18 is paying .60 at the mid with a break even of 16.60 versus the /VX contract of 16.11; the May 16/20, virtually the same price. With the VXX short call verticals I already have on, I'm basically looking for a VIX low (it was around 12) to consider pulling some units off in profit. On the other end of the stick, I'm waiting for another pop in VIX to potentially add. VIX at 20 is a nice place to look to do that ... .
NASDAQ:DBX
by NaughtyPines
Oil: Daily Continuation or 4 Hour Exhaustion?My opinion on Oil has stayed the same: I am bearish because there is a supply glut and also the world is slowing down. However, there are many reasons for oil to be propped up, due to the fact that US banks were forced to lend to oil/shale companies when oil dropped last time in order to prevent lay offs. Oil being propped for not just oil companies but also for banks who now have a large exposure to energy. Ironically, the oil markets seem to be the only markets currently that are adhering to fundamental analysis and have true price discovery. Of course calculations of future Chinese oil demand is being factored in the price as the CCP have shut down cities and also highways which of course impacts oil demand. The daily charts shows the break and close below he 52 zone and now we have had the retest. Once again, yes you can enter now with a better risk vs reward to the downside BUT the probability will not favour you as much. The real retest signal is when we form a lower low which CONFIRMS the lower high which would mean a break below 49.40. We could very well go to 45.00. On the bullish case, oil downtrend has been extended and it seems we may be making a pattern perhaps a double bottom. What it is telling us is that it may be difficult to make another lower high (with a lower low). A break above 52 would be the key trigger. On the fundamental side, we must factor in yield. Funds are in a position where they need to make yield and both stocks and bonds are at or near all time highs. This is when looking for "value" comes in. Funds may think this energy sell off is over extended, and just to make yield, oil and energy look attractive at these levels compared to everything else in the market. This is the type of crazy macro environment we are in, and can boost energy.
TVC:USOIL
by Uncharted-FX
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
THE WEEK AHEAD: TWTR EARNINGS; FXI, USO, XOP; VIX, VXX, UVXYEARNINGS: TWTR (66/54) announces earnings on Thursday before market open, so look to put on a play in the waning hours of Wednesday's New York session to take advantage of post-announcement volatility crush. Pictured here is a 16 delta short strangle in the March cycle with -2.88/2.95 delta/theta metrics and break evens wide of the expected move paying 1.10. There are naturally a number of other earnings announcing next week (i.e., DIS, SNAP), but TWTR has the best implied volatility rank/30-day implied metrics to set up for a volatility contraction play. EXCHANGE-TRADED FUNDS ORDERED BY IMPLIED VOLATILITY RANK WITH FIRST MONTH IN WHICH THE AT-THE-MONEY SHORT STRADDLE PAYS GREATER THAN 10% OF THE STOCK PRICE: FXI (86/30), June USO (72/41), March XLE (72/33), May SMH (68/29), May XOP (56/38), March IBB (56/25), June EWZ (50/30), April GDX (30/31), May GDX (27/27), May BROAD MARKET FUNDS ORDERED BY IMPLIED VOLATILITY RANK WITH THE FIRST MONTH IN WHICH THE AT-THE-MONEY SHORT STRADDLE PAYS GREATER THAN 10% OF THE STOCK PRICE: EEM (62/23), September EFA (60/15), December IWM (54/20), August QQQ (51/22), September SPY (50/18), October FUTURES (EXCLUDING CURRENCIES AND TREASURIES) ORDERED BY IMPLIED VOLATILITY RANK: /CL (64/42) /GC (47/13) /SI (38/21) /ZC (32/20) /NG (29/40) /ZS (18/18) /ZW (7/24) VIX/VIX DERIVATIVES: VIX finished the week at 18.84 with months 1-3 in backwardation; February finished at 18.30, March at 17.80, and April at 17.83. Here, I would add short volatility spreads in either VXX or UVXY, looking to collect one-third the width of the spread in credit (for short call verticals) or not pay more than one-third the width of the spread in debit (for long put verticals) (e.g., the VXX March 20th 16/17 short call vertical, paying .34).
NYSE:TWTR
by NaughtyPines