EARNINGS
FAST (41/31), PEP (19/18) and DAL (15/26) announce earnings next week, but the rank/implied metrics aren't there for me (>70 rank; >50 implied) for an earnings-related volatility contraction play.
BROAD MARKET
TLT (21/10)
IWM (12/16)
SPY (11/13)
QQQ (10/17)
EEM (7/17)
EFA (5/10)
Weak sauce.
SECTOR EXCHANGE-TRADED FUNDS
Premium selling opportunities remain in gold and the miners, with some decent background implied in the oil and gas sector and semicons:
Top 5 By Rank: GDXJ (86/37), GLD (75/15), GDX (62/32), XLU (61/14), and SLV (56/19). USO (30/36), SMH (27/25), and XOP (21/31) follow thereafter ... .
Pictured here, remarkably, is the exact same setup strike-wise that I posted last week in GDXJ in the August cycle -- the nearest the 20 delta 32/39 short strangle, paying 1.06 at the mid price with break evens at 30.94/40.06 and delta/theta metrics of 2.82/2.92.
IRA TRADES
XLU (61/14) is on my IRA shopping list with a current yield of 3.05%, but as a rate sensitive, it's ripped way higher on all this talk of cutting, cutting, cutting.* You'd think with that rank (61), it would be paying something, but the background's only at 14, so it's really no surprise that it isn't. I can either man up and sell something closer to at-the-money if I want in, and then manage the short put from there, wait for lower, sell a "Not a Penny More" at a price I'm comfortable with and then whittle away at cost basis from that point forward before taking on shares if I'm not happy with my cost basis (e.g., the Jan '20 18 delta 55),** or do something a little funkier like a 90/30 call diagonal with the long leg far out in time at a strike I'd be willing to exercise at.***
With the possibility of a no cut looming in the July cycle, I'm opting for waiting for lower. If that December "sell everything" dip is evidence of anything, it's that we'll probably have opportunities at some point going forward.
* -- So have all the other rate sensitives -- IYR, XLP, TLT, HYG.
** -- I generally do that anyways as long as it's productive.
*** -- I looked at a Jan '21 (no, that's not a typo) 50 long/Aug 16th 62 short call diagonal, but it's hard to price out in off hours with the setup being bid 7.78/ask 13.05. I'd be fine with the right to exercise at $50/share, but would need a Dick to sell me the setup for a price that results in a break even at or below where the underlying is currently trading to even consider that setup (i.e., not more 60.68 minus the 50 long strike or 10.68; the broker's saying the mid price for that setup is 10.42 with a resulting break even of 60.42 versus spot at 60.68). The additional benefit of that particular setup is that it's far more buying power efficient in a cash secured environment than short putting: the buying power effect of a 50 short put is the strike (50.00) minus any credit received with no right of exercise/assignment if the short put stays out of the money. It kind of begs the question of: "Why the hell don't I do that setup in the IRA more often as an acquisition strategy versus short putting?"
FAST (41/31), PEP (19/18) and DAL (15/26) announce earnings next week, but the rank/implied metrics aren't there for me (>70 rank; >50 implied) for an earnings-related volatility contraction play.
BROAD MARKET
TLT (21/10)
IWM (12/16)
SPY (11/13)
QQQ (10/17)
EEM (7/17)
EFA (5/10)
Weak sauce.
SECTOR EXCHANGE-TRADED FUNDS
Premium selling opportunities remain in gold and the miners, with some decent background implied in the oil and gas sector and semicons:
Top 5 By Rank: GDXJ (86/37), GLD (75/15), GDX (62/32), XLU (61/14), and SLV (56/19). USO (30/36), SMH (27/25), and XOP (21/31) follow thereafter ... .
Pictured here, remarkably, is the exact same setup strike-wise that I posted last week in GDXJ in the August cycle -- the nearest the 20 delta 32/39 short strangle, paying 1.06 at the mid price with break evens at 30.94/40.06 and delta/theta metrics of 2.82/2.92.
IRA TRADES
XLU (61/14) is on my IRA shopping list with a current yield of 3.05%, but as a rate sensitive, it's ripped way higher on all this talk of cutting, cutting, cutting.* You'd think with that rank (61), it would be paying something, but the background's only at 14, so it's really no surprise that it isn't. I can either man up and sell something closer to at-the-money if I want in, and then manage the short put from there, wait for lower, sell a "Not a Penny More" at a price I'm comfortable with and then whittle away at cost basis from that point forward before taking on shares if I'm not happy with my cost basis (e.g., the Jan '20 18 delta 55),** or do something a little funkier like a 90/30 call diagonal with the long leg far out in time at a strike I'd be willing to exercise at.***
With the possibility of a no cut looming in the July cycle, I'm opting for waiting for lower. If that December "sell everything" dip is evidence of anything, it's that we'll probably have opportunities at some point going forward.
* -- So have all the other rate sensitives -- IYR, XLP, TLT, HYG.
** -- I generally do that anyways as long as it's productive.
*** -- I looked at a Jan '21 (no, that's not a typo) 50 long/Aug 16th 62 short call diagonal, but it's hard to price out in off hours with the setup being bid 7.78/ask 13.05. I'd be fine with the right to exercise at $50/share, but would need a Dick to sell me the setup for a price that results in a break even at or below where the underlying is currently trading to even consider that setup (i.e., not more 60.68 minus the 50 long strike or 10.68; the broker's saying the mid price for that setup is 10.42 with a resulting break even of 60.42 versus spot at 60.68). The additional benefit of that particular setup is that it's far more buying power efficient in a cash secured environment than short putting: the buying power effect of a 50 short put is the strike (50.00) minus any credit received with no right of exercise/assignment if the short put stays out of the money. It kind of begs the question of: "Why the hell don't I do that setup in the IRA more often as an acquisition strategy versus short putting?"