The only earnings play coming up next week that currently interests me from a premium selling/volatility contraction standpoint is MU -- with a background implied volatility in the 60's -- which announces earnings on Thursday after market close. Neither ORCL nor FDX -- which announce Monday and Tuesday respectively -- have sub-30 implied volatility, although...
With the VIX dropping hard below 15, some of the juice has poured out of the cup ... . Even so, there remain a few plays in the market. ADBE announces earnings on the 15th (Thursday) after market close. The volatility metrics don't quite meet my criteria for a volatility contraction play (56/32), but the March 23rd 210/323.5 short strangle is paying 3.80 at the...
This is a Poor Man's Covered Call, with the 90 delta July long call standing in as your stock, and the April 20th 26 short call functioning as it would in a covered call situation. Your max loss is the difference between what you paid for the long (currently 6.28 at the mid) minus what you received for the short call (currently .69 at the mid). Consequently, you...
EARNINGS ANNOUNCEMENT/VOL CONTRACTION PLAYS: M announces earnings on 2/27 before market open. Preliminarily, the March 24/30 short strangle is paying .84 at the mid, which isn't very juicy. Given the size of the underlying, it may be more amenable to a short straddle or iron fly, with the March 9th 27 short straddle paying 2.95 and the 23/27/27/31 iron fly...
... for a .97/contract credit. Metrics: Probability of Profit: 62% Max Profit: $97/contract Max Loss: $2303 Break Even: 23.03 * -- Assuming price goes to zero and you do no rolls or take other loss mitigation measures (e.g., sell short call verts against, etc.). Notes: With background implied volatility greater than 35% and with the recent sell-off in both oil...
Although earnings season continues to drag on here, a small financial media theme has emerged in this sell-off and that's that "Earnings don't matter" ... at least, at the moment. In keeping with that mini-theme, I'm looking at putting on plays in sector exchange-traded funds, and two of the ones that have been battered the most in this market have been OIH and...
With over 20% move to the upside in the last 29 days, I think is time for OIH to have some sort of pullback or correction. The last 5 candles couldn't close outside of the Upper Bollinger Band, so it looks like is losing momentum and most likely retrace at least to the midline. Implied Volatility Rank is at 54 so I sold the 28/27 Put Ratio Spread (2 Short Puts...
Looking at a recovery over the next year or so. Oil recovering and breaking out over 55. Higher interest rates will dampen the response from debt-laden shale producers. Saudi's consolidation of power should add more stability to their production. TVC:USOIL
The bear call credit spread strategy gives a decent probability of profit, defined risk, and expresses a bearish opinion that the underlying will move lower. The IVR on OIH reached above 70% and July 12 with a bearish opinion I sold the 25/26 call spread, 2 contracts @ 36 credit ea. The $25.36 break even was quickly tested the following days, but...
After a couple of down days in oil OIH have been affected. Now with an Implied Volatility rank of 27 it gives us a chance to sell some premium. A big lizard (Straddle with no upside risk) is a nice probability trade to do in case it decides to bounce back up. Trade price $1.24 per contract The trade: Sellthe Jul21 24.5 Call Sell the Jul21 24.5 Put Buy the...
Premium Selling For the umpteenth week in a row, there is little in the market for high quality premium selling plays. Screening for 52-week >70 implied volatility rank, you'll basically get one quality hit at the moment, and that is COST, which has dipped significantly on AMZN/WFM merger news. A few names are approaching that 70 mark, but they have earnings...
A slight variation on a Super Bull (short put vertical financing a long put vertical; bullish assumption). Metrics: POP%: 71% Max Profit: 1.12/contract Max Loss/BPE: 1.88/contract Break Even: 25.88 Notes: There are a couple of different ways to work this intratrade: (a) take the long put vert off in profit, leave the short put vert to ride; (b) the inverse of...
With VIX in another ebb and a paucity of high quality premium selling earnings plays in the making for next week with both high implied volatility rank and high implied volatility, I'm looking at exchange traded funds instead for potential plays. For instance, EWY, the South Korea exchange traded fund, makes sense in the current geopolitical environment, and its...