NaughtyPines

THE WEEK AHEAD: BBBY EARNINGS; XOP, XLE, EWW PREMIUM SELLING

NASDAQ:BBBY   BED BATH AND BEYOND
EARNINGS:

Next week's earnings announcements are light, with options liquid underlying to play for volatility contract even lighter.

BBBY (52/119/18.8%*) announces on Wednesday after market close, so look to put on a play before the end of Wednesday's session. Pictured here is a July 17th (12 days) 11 short straddle, paying 2.03 as of Friday close, 18.8% of where the stock was trading at 10.81. Look to take profit at 25% max or otherwise manage the trade by rolling out to August if it doesn't work out fairly immediately.

DAL (43/89/12.3%*) also announces this week on Thursday. A July setup isn't paying much, so I'd be inclined to go out to August to make it more compelling, where the 23/36 short strangle paid 1.83 as of Friday close.


EXCHANGE-TRADED FUNDS ORDERED BY RANK/PERCENTILE AND SCREENED FOR >35% IMPLIED:

EWW (37/37/15.0%**)
EWZ (37/56/10.5%)
GDXJ (34/53/14.6%)
XLE (33/45/14.6%)
GDX (28/39/12.7%)
XOP (22/57/16.3%)
USO (9/51/13.2%)

The most bang for your buying power buck appears to lie in XOP , followed by EWW , XLE , and GDXJ .


BROAD MARKET:

IWM (41/36/10.0%)

IWM is the only broad market exchange-traded fund where the background implied remains greater than 35.


IRA DIVIDEND GENERATORS:

EWZ (37/56/10.5%)

... and EWZ the only dividend generator with a 30-day greater than 35.


* * *

Broad market volatility has come in quite a bit here, but SPY 30-day implied at 27.2% isn't exactly a "low volatility environment" either. Nevertheless, it's not a bad thing to sit back, let powder dry out a little bit in preparation for the next volatility wave and/or more productive earnings announcements, particularly with underlyings like NFLX , MSFT , and IBM announcing next week, along with a number of financials: C (36/55), WFC (45/54), BAC (33/48), JPM (32/43), MS (30/45), and GS (27/41).


* -- Percentage of stock price the July 17th short straddle was paying as of Friday close.
** -- Percentage of stock price the August 21st short straddle was paying as of Friday close.
Comment: As a defined risk alternative to the BBBY naked 11 short straddle in July: the August 17th 6/11/11/16 iron fly, paying 2.64 at the mid (.64 at 25% max) with a max loss metric of 2.36 -- basically a bet that price stays within the expected move.

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