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EWZ trade ideas

OPENING: EWZ JUNE 19TH 39/54 SHORT STRANGLE... for a 1.46 credit. Notes: Going out to the first expiry in which the at-the-money short straddle pays greater than 10% of the stock price and selling the 16's with the intent to potentially do additive delta adjustments over time. From a portfolio-wide perspective, I have a good sprinkling of longer-dated core exchange-traded fund positions to start out the year: some SPY, SMH, XBI, and XOP, around which I'll play single name from time to time, as well as my standard short volatility stuff in VIX, VXX, and UVXY.
AMEX:EWZ
by NaughtyPines
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
THE WEEK AHEAD: GDX, EWZ, EEMEARNINGS: You can literally count the number of announcements next week on one had, and they aren't in options liquid underlyings. EXCHANGE-TRADED FUNDS: GLD (36/12) SLV (30/19) GDX (30/25) TLT (29/11) GDXJ (28/29) EWZ (25/26) First Expiry in Which At-The-Money Short Straddle Pays Greater than 10% of Share Price: GLD: January '21 SLV: July GDX: March TLT: January '22 GDXJ: May EWZ: June Pictured here is an EWZ short strangle in the June expiry paying 1.43 (.71 at 50% max) with break evens wide of one standard deviation for that expiry and delta/theta of .05/1.16. Of shorter duration, the GDX March 20th 26/33 short strangle is paying .78 (.39 at 50% max; not very compelling) with the shorts camped out around the 18's; the 29 short straddle, 3.00 (.75 at 25% max). BROAD MARKET: EEM (24/16) IWM (11/16) QQQ (10/16) SPY (3/13) First Expiry in Which At-The-Money Short Straddle Pays Greater than 10% of Share Price: EEM: September IWM: August QQQ: September SPY: September The EEM September 18th 39/51 short strangle is paying 1.48 at the mid (.74 at 50% max). As before, I'm somewhat reluctant to go that far out in time to get paid, but have been putting on some longer-dated setups and managing them somewhat short of 50% max as I wait for shorter duration expiries to be more productive. FUTURES: /NG (43/48) /GC (36/11) /SI (30/25) /6C (28/6) /6B (25/8) Natural gas remains frisky due to seasonality, but I was hoping for more of a seasonal bounce to pull on the short end of the stick; Mother Nature hasn't cooperated on that end of things, unfortunately.
AMEX:EWZ
by NaughtyPines
Brazil ETF Trying to Break Multiyear ResistanceEmerging markets and global stocks have roared to life at the end of 2019. The reasons are a dovish Federal Reserve , which drives buyers away from the U.S. dollar , and calming tensions between the U.S. and China. Brexit clarity has helped too. Along with China, Brazil is the most actively traded emerging market. Its iShares MSCI Brazil ETF has even stronger technicals than the iShares China ETF . Unlike the China fund, EWZ's 50-day simple moving average (SMA) is above its 200-day day. EWZ is also pushing a longer-term resistance level around $48 running back to early last year. The breakout hasn't been confirmed yet, but traders may want to keep an eye on it. Global stocks have been neglected for so long that there could be a rush of money back into them if this change in sentiment continues. Similar turns from "hated" to "loved" recently occurred in stocks like CVS Health and UnitedHealth . Brazil has two other things potentially in its favor. First is its reliance on commodities, which have started to outperform and got a bullish call from Goldman Sachs this week. Second, Brazil has passed a key pension overhaul that's expected to help fix its chronic budget problems.
AMEX:EWZLong
by TradeStation
THE WEEK AHEAD: CRON, TLRY, CGC EARNINGS; EWZ; VIXHIGH RANK/IMPLIED EARNINGS: CRON (32/82) (Tuesday Before Open) TLRY (50/97) (Tuesday After Close) CSCO (44/27) (Tuesday After Close) WMT (48/23) (Thursday Before Open) NVDA (24/43) (Thursday After Close) AMAT (17/34) (Thursday After Close) CGC (95/87) (Thursday Before Open) JC (30/43) (Friday Before Open) Notes: Looks like it's the "Week of Weed" with CRON, TLRY, CGC announcing and all in states of high implied/high rank ... . If you're hesitant to go into single name here, MJ (47/51) has decent rank/implied metrics, although it's less liquid than I would like. EXCHANGE-TRADED FUNDS: TLT (56/12) EWZ (47/28) SLV (44/22) GDXJ (37/31) GLD (34/11) EEM (33/16) First Expiries In Which At-the-Money Short Straddle Pays >10% of Stock Price: TLT: January of '21 EWZ: March: 5.64 verus 43.02 (13.11%) SLV: April: 1.72 versus 15.70 (11.0%) GDXJ: January: 3.99 versus 36.33 (11.0%) GLD: January of '21 EEM: June: 4.97 versus 43.68 (11.4%) Notes: Pictured here is an EWZ delta-neutral short strangle camped out at the 20 delta in the first expiry in which the at-the-money short straddle pays greater than 10% of the value of the underlying. Paying 1.61, it has break evens of 35.39/50.61 with delta/theta metrics of -.36/1.49; .40 at 25% maximum; .80 at 50%. BROAD MARKET: Broad market premium selling simply isn't paying here in short duration (an understatement). FUTURES: /6B (72/9) /NG (74/60) /SI (44/21) /GC (34/12) /ZS (32/20) Notes: Natty is frisking up, which should be no surprise. Having put on a bullish assumption seasonality play in UNG way back in August at lows, I'm just waiting for things to top out in January or February before doing something in the other direction. VIX/VIX DERIVATIVES: Term structure trades* in VIX remain viable for the December, January, and February expiries with the correspondent futures contracts trading at 16.05, 17.33, and 18.07 respectively. On the other end of the stick, continue to consider a VXX Super Bull or similar setup to potentially catch a modest volatility expansion running into the end of the year without sticking your entire pickle in the grinder, particularly if VIX continues to trundle along at 2019 lows: the December 20th 16P/-18P/18C/-20C pays a small credit (.17), has a 17.83 break even versus spot of 18.64, and max profit/max loss metrics of 2.17/1.87, with max being realized on a finish above 20, which does not exactly require a massive pop from here. * -- Generally short call verticals with break even near where the correspondent /VX futures contract is trading (e.g., the December 20th 15/18, paying .90, with a 15.90 break even versus the December /VX contract trading at 16.05; the January 22nd 16/19, 1.00, with a 17.00 break even versus 17.33; February 19th 17/20, with an 18.00 break even versus 18.07).
AMEX:EWZ
by NaughtyPines