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USO

THE WEEK AHEAD: USO, EWZ, XLF; VIX/VIX DERIVATIVESEARNINGS: Earnings kick off in earnest this week with a bevy of financials (WFC, GS, JPM, C, BAC, MS). Generally speaking, I haven't played these in the past due to low background implied, and nothing has changed in that regard this go-around from a premium selling standpoint: WFC (30/21), GS (27/24), JPM (20/21), C (16/23), BAC (0/22), MS (0/24). That being said, it looks like the financial sector exchange-traded fund XLF (5/16) has put in a multi-year double-top, so I could see taking a bearish assumption directional shot on the notion that earnings in this sector may disappoint in a low interest rate environment. For example, the XLF February 21st 30/32 long put vertical costs 1.04/contract to put on, has a max loss metric of .96 and a break even of 30.96 versus a Friday close of 30.69, which are the kind of the risk one to make one/break even at/near where the underlying is currently trading metrics I like to see out of these. EXCHANGE-TRADED FUNDS WITH THE FIRST EXPIRY IN WHICH THE AT-THE-MONEY SHORT STRADDLE PAYS >10% OF STOCK PRICE: UNG (36/40), February SLV (33/20), July USO (32/32), April EWZ (29/26), June GLD (26/12), January '21 Pictured here is an EWZ 20-delta short strangle set up in the first expiry in which the at-the-money short straddle is paying greater than 10% of the stock price, 1.91 credit, delta/theta 0/1.41. Although I would ordinarily go with the underlying paying in the shortest duration, we will start to run into seasonality issues with UNG in the February or March cycles (depending, of course, on Mother Nature), so would rather not hit that underlying non directionally here. And USO can be somewhat of a pain to trade due to its smallness. BROAD MARKET WITH THE FIRST EXPIRY IN WHICH THE AT-THE-MONEY SHORT STRADDLE PAYS >10% OF STOCK PRICE: EEM (66/16), September EFA (20/11), December SPY (14/12), November QQQ (9/17), September IWM (0/15), September Well, we're in a volatility lull here, so this comes as no surprise that shorter duration isn't paying. VIX/VIX DERIVATIVES: VIX finished the week at 12.56, with the March, April, and May /VX contracts trading at 16.04, 16.56, and 16.80, respectively, so term structure trades remain viable in those months. VXX and UVXY -- my go-to derivatives instruments -- both hit new 52 week lows last week, and VXX finished the week at 14.12, UVXY at 11.59. Although VIX has room to trundle lower from here, it probably wouldn't be a bad thing to pull off a few units in profit put on higher up the ladder and then wait for the next >25% pop in VIX (which would be a modest pop at 16 or so) to start legging back in.
AMEX:EWZ
by NaughtyPines
2
Long Term Bear, do not hold 3x futures based productsI enjoy trading DRIP and I believe long term, oil is worth less than today. ESG is a movement that will continue, especially when it comes to China and India's eventual and inevitable higher participating in the space. Day trade DRIP, but do not hold. The issue arises from the cost to roll the futures and the cost to leverage the future or ETF into a swap that returns the 3x. The cost is high, the slippage is insurmountable, and the product will deteriorate even if you chose the correct trade. Examples of this are everywhere. Trade events and noise, it is a risk / reward play. Saudi oil field was the last great play for this product, any large move up in CL1 would be a short term long DRIP. If you chose to trade the technicals, do not use the ETF, but CL1. This includes USO, this will also deteriorate away from CL1. **no position, but always waiting **happy to share further details on this topic and how these products function
AMEX:DRIP
by RCB1229
THE WEEK AHEAD: UBER, BIDU, ROKU EARNINGS; USO, XOP, /CL, VIXHIGH RANK/IMPLIED EARNINGS: UBER (--/74):* Monday, After Market Close. BIDU (59/42): Wednesday, After Market Close. ROKU (72/85): Wednesday, After Market Close. The Plain Jane ROKU December 20th 120/190 short strangle camped out at the 20 delta pays 8.55, but there is some call side skew there that you may want to accommodate in some fashion, for example, via ratio (the December 20th 2 x 105/185, 8.79 credit, -1.64/26.15 delta theta) or by going half as wide on the call side as on the put with a defined risk iron condor (e.g., the December 20th 110/120/185/190 pays 2.09). The BIDU December 20th 90/120 short strangle pays 2.33 and the UBER December 20th 25/39 pays 1.45. Naturally, you'll probably want to adjust strikes a smidge running into earnings, depending on how much these move between now and their respective announcements. EXCHANGE-TRADED FUNDS: SLV (51/24) GDXJ (40/31) GLD (40/12) GDX (38/27) TLT (34/11) USO (29/35) XOP (24/34) First Expiries In Which At-the-Money Short Straddle Pays >10% of Stock Price: SLV: April (165 Days), 2.10 versus 16.92 spot (12.4%) GDXJ: January (75 Days), 4.75 versus 39.40 spot (12.1%) GLD: January '21 (439 Days), 17.48 versus 142.56 (12.3%) GDX: January (75 Days), 2.91 versus 28.01 (10.4%) TLT: January '21 (439 Days), 15.43 versus 140.56 (11.0%) USO: January (75 Days), 1.38 versus 11.69 (11.8%) XOP: December (47 Days), 2.25 versus 21.85 (10.3%) I'm naturally not going to go out 439 days in either TLT or GLD to sell premium, but set them out there to show where the best "buck bang" is. If anywhere, it's shorter duration in GDXJ, GDX, USO, or XOP. BROAD MARKET: As with last week, <45 Day duration broad market (SPY, QQQ, IWM) isn't paying here. The shortest duration in which the at the money short straddle pays greater than 10% of where the underlying is trading is out in June (228 Days) in either IWM or QQQ. I reluctantly put on some QQQ last week (see Post Below), with the intent to manage these longer-dated setups far more aggressively than I would a shorter-dated one, taking profit at 25% max as opposed to waiting for a full 50 or more. Pictured here is an IWM June 19th 135/2 x 185 ratio'd short strangle with the short put around the 16 delta, the short calls doubled up at the 8's to accommodate skew. It pays 3.77 with break evens at 131.23/186.89 and delta/theta of 2.55/.73. FUTURES: The premium selling picture is basically the same as last week and mirrors that in the exchange-traded funds, with /CL paying in shorter duration, but not much else. VIX/VIX DERIVATIVES: There are viable term structure trades in VIX in the December, January, and February expiries where the correspondent /VX contracts are trading at 16.16, 17.37, and 18.02 as of Friday close. It is otherwise one of those rare moments where it might be worthwhile to consider a bullish assumption play in VXX or UVXY with VIX approaching 2019 lows around 12 (See Post Below). * -- UBER hasn't been around for 52 weeks yet, so there is no percentile/rank for where the 30-day lies.
AMEX:IWM
by NaughtyPines
USOIL Price Action Analysis | A Relative Long Term IdeaCrude Oil has found a support on the Equilibrium Zone of the Trading Range, again. This accumulation in the upper range seems like it will coming to an end. On the other hand, it needs to reclaim the Pivot first and then the Range High. Entry: 54.6 SL: 49.9 TP-1: 62.4 TP-2: 66.4 TP-3: 72.4 TP-4: 81.4 R/R: 5.7 ‪Please let me know if you have any suggestions or any ideas to add. I can also give you more detailed explanation for this specific trade setup.‬ ‪The ideas published here are not financial advices.‬
TVC:USOILLong
by CompositeTrader