NaughtyPines

THE WEEK AHEAD: NFLX, EBAY, IBM, XOP, EWZ, TLT/TBT

NASDAQ:NFLX   NETFLIX INC
We're back into the thick of earnings season again ... .

NFLX (rank 64/implied 52) pops the top on Monday after market close, so you're going to want to slap anything you want to do on before session end to take maximum advantage of a volatility contraction play.

Pictured here is a 20 delta iron condor in the weekly with a buying power effect of 6.59 per contract, and a max of 3.41 (a smidge greater than one-third the width of the wings). Naturally, you'll have to adjust the strikes shortly before fill, since it's a mover. Look to take profit at 50% max ... .

EBAY hits the bricks on Wednesday after market close. I'd rather have background implied at >50% (it's currently at ~33%), but it may be worth watching to see if it ramps up in the Monday through Wednesday sessions.

IBM gets its party on on Wednesday after market close, too, but that background implied of 25% doesn't exactly get my motor running.

On the exchange-traded fund front, there isn't much premium to be had, and what there is to be taken is to be found in the places where it's been over the past several weeks: Brazil ( EWZ -- 33.5% background), and petro ( XOP / OIH -- 30%). Me personally, I'm hand sitting on those until I can see the whites of September's eyes (it's still 68 days out). That being said, if you're willing to go a little more long-dated here: the XOP Sept 21st 43 short straddle is paying 4.36 with break evens at 38.64/47.36, theta of 3.12, and -7.82 delta; the EWZ Sept 21st 34 short straddle: 4.06 credit, 29.94/38.06 break evens, 2.9 theta, -6.74 delta.

Other "Major Food Group" Directionals: TLT continues to bop annoyingly along horizontal support/resistance near 122.50 like a toddler kicking the back of your seat in economy class. My tendency has been to short on retrace in a tightening rate environment, with the preference being for more flexible, longer-dated setups like diagonals where I've got time to reduce cost basis, as opposed to using static one-off spreads where you could find yourself in the middle of a short-term risk off event that ruins your day.

Inversely, TBT is holding on by its fingernails to 35.25. I could see pulling the trigger on either here -- a long-dated TLT downward put diagonal or covered short combo/a TBT upward call diagonal/covered long combo. (See TBT Upward Call Diagonal Post, below).

Comments

Thanks you :) helped make some money.
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NaughtyPines harishrao82
@harishrao82, Awesome. Bit of a roller coaster, though ... . :-)
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harishrao82 NaughtyPines
@NaughtyPines, Sure was ! the stock stayed in the profitable zone just long enough :). Any more earnings play ?
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NaughtyPines harishrao82
@harishrao82, Looks like FB, AMZN, SBUX, TWTR up next week. I'll look at what may be attractive over the weekend.
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