I'm not seeing much on the front for contraction plays or premium plays in high implied around that are giving me that "come hither" look. I did look at DAL (65/40; on Thursday), but it's got goofy two-and-a-halfs on the call side in the Feb expiry where I'd want to set up my tent, which could make call side trade management problematic. The very last type of headache I want to have with a trade is being forced to roll to a goofy strike or do something whacky because of strike unavailability. That being said, the February 15th 45 short put is paying 1.26 (30 delta) with a break even of 43.74 (8.5% discount over current price; divvy yield is 2.80%; 1.40 annualized) should that type of play strike your fancy.
Exchange-Traded Funds Ordered by Implied Rank:
... And Ordered by 30-Day Implied:
As usual, petro ( , OIH , XOP ) is sticking out for , which is kind of why I like to be in some kind of play with a premium selling component on a virtually constant basis. OIH and XOP continue to dribble along at the low end of their ranges, so my preference would be for assumption setups there with no or limited upside risk (short puts, upward call diagonals, lizards) in the short to medium term. Having gotten out of an XOP upward call diagonal last week, I'll probably re-up with something in the February cycle and will post that trade here separately later in the week.
I've thrown XLK (technology) in here because of its close correlation with SPY ( of .86). In comparison, it's got slightly better metrics, but is also one-fourth the price, so you can potentially proxy a broad market play without hanging as much buying power out there as you would with one of the majors.
Trade of the Week:
Pictured here is an FCX (62/57) upward call diagonal ( assumption) setup (with an overlay of copper futures ). Although it's got in 18, I'm just looking to get in on weakness and in a fairly high environment. Moreover, I can get in fairly cheaply with a greater than 180 day back month, which will give me plenty of time to reduce cost basis in the diagonal. I went with the March 12 short call strike for the front month because the Feb 11 was "too close," and the Feb 12 was "too far away" (not enough collected for the short call). Metrics: Max Loss on Setup: $278; Max Profit on Setup: $122; Break Even: 10.78 versus 10.82 spot; Debit Paid to Spread Width Ratio: 69.5%.