THE WEEK AHEAD: XOP, EWZ, EEM, QQQ, AND VIX
Even though earnings season is winding down to a few names (BB, GME) next week, there's stuff to play in sectors or broad market, with the May expiry (54 days until expiry) coming into view for plays.
The XOP May 18th 31/39 short strangle (19 delta) is paying .98 at the mid with the slightly more aggressive 25 delta 32/38 paying 1.38. If you're looking to go defined risk, you'll probably have to go wide iron fly (e.g., the May 18th 29/35/35/41 iron fly is paying 3.05 with a max loss metric of 2.95).
The EWZ May 18th 40/48 short strangle (22 delta) is paying 1.38; the more aggressive 29 delta 41/47, 1.86. The 38/41/47/49 delta neutral iron condor is paying just a smidge over a buck at 1.01.
The EEM May 18th 44/50 short strangle (25 delta) is paying 1.18. If you aggress in toward the 30's, a 42/45/49/51 delta neutral iron condor will pay just over a buck with break evens around the expected move for the expiry.
QQQ: one word -- juicy, particularly if you can "go naked." The May 18th 145/170 20 delta short strangle is paying 3.62 at the mid. The 142/145/170/172 delta neutral iron condor is showing .86 at the mid after hours, but the bid/ask is wide. I wouldn't bother with a defined risk play for less than 1.00/contract ... .
Lastly, the VIX. Futures term structure is in backwardation which sets up a rare and interesting play, which I've described in a separate post (see below).
The XOP May 18th 31/39 short strangle (19 delta) is paying .98 at the mid with the slightly more aggressive 25 delta 32/38 paying 1.38. If you're looking to go defined risk, you'll probably have to go wide iron fly (e.g., the May 18th 29/35/35/41 iron fly is paying 3.05 with a max loss metric of 2.95).
The EWZ May 18th 40/48 short strangle (22 delta) is paying 1.38; the more aggressive 29 delta 41/47, 1.86. The 38/41/47/49 delta neutral iron condor is paying just a smidge over a buck at 1.01.
The EEM May 18th 44/50 short strangle (25 delta) is paying 1.18. If you aggress in toward the 30's, a 42/45/49/51 delta neutral iron condor will pay just over a buck with break evens around the expected move for the expiry.
QQQ: one word -- juicy, particularly if you can "go naked." The May 18th 145/170 20 delta short strangle is paying 3.62 at the mid. The 142/145/170/172 delta neutral iron condor is showing .86 at the mid after hours, but the bid/ask is wide. I wouldn't bother with a defined risk play for less than 1.00/contract ... .
Lastly, the VIX. Futures term structure is in backwardation which sets up a rare and interesting play, which I've described in a separate post (see below).
