Okay, so my long UNG play didn't work out; after I entered the trade, NGAS continued to tank -- horribly, as forecasts for a mild winter came to the forefront and natty gas reserves continued to build to record levels. Ugh. Nevertheless, i still want a natty gas long play. CHK is the most beaten down price-wise of the top ten nat gas producers, so it makes for...
Buy 100 Shares P @ 11.64 Sell 1 Feb 19th 12 Call Entire Package: 10.36 debit (10.36/share) Max Profit: $164/contract (if called away at 12/15.8% ROC)
A good, fundamental rule-of-thumb for options setups (and here I am generally talking about premium selling setups such as short strangles, iron condors, and credit spreads) is that you should limit the buying power involved in each trade to approximately 5% of your total available buying power. Naturally, some folks have more buying power than others, and there...
With an implied volatility rank of 70, an implied of 63, and a 10%+ return for the nearest out of the money short call, S meets my criteria for a decent covered call play (plus the darn thing's so cheap). Buy 100 Shares S at 3.85 Sell 1 Feb 19 4 short call Entire Package: $358/contract Max Profit: (If Called Away at 4) $42/contact
I previously described this setup in the post below. I would ordinarily do it in SPY, but I have SPY iron condor setups on and IWM is a good instrument to play with this strategy, since it is the index ETF with the smallest value among SPY, IWM, QQQ, and DIA. Here's the setup: Aug 19th 97 long call Feb 19th 115 short call Entire Package: 16.83 debit...
When we had our first rate hike in umpteen million years in December, I had a play like this on for a GTC fill to fade any volatility spike we might have in response to that. Of course, it never came ... . But thanks in large part to Chinese markets, I've now got that spike and will fade it here if I get the chance. Here's the setup: VXX Feb 19th 16/17 long...
With an implied volatility rank of 98 and an implied volatility of 79, MRO presents a good covered call opportunity here with a return on capital of greater than 10% if called away at the nearest short call strike (13). Here's the setup (which, as always, may require tweaking after NY open, since these off hours quotes have a tendency to have wide bid/asks): Buy...
After its split and shortly post-earnings, NKE still enjoys a fairly high level of volatility such that it offers a 1.00 credit plus premium setup (rank 53/implied 24). Here's a setup: NKE 58/67 Feb 12th short strangle POP%: 74% Max Profit: 1.07 credit ($107/contract) BPE: Undefined Break Evens: 56.93/68.07 Notes: I ordinarily only want to enter a short...
For the longest time, my go-to to play gold is GLD, which is intended to emulate the price of gold bullion. However, this can tie up a disproportionate percentage of buying power due to the price of the underlying. Naturally, there are alternatives out there to GLD that are either ETF's (like GDXJ and GDX) or outright securities in companies that acquire,...
As an alternative to the IWM play (posted below), here's a QQQ setup: Feb 12 103.5/116.5 short strangle POP%: 75% Max Profit: 1.55/contract BPE: Undefined Break Evens: 101.95/118.05
I have not played AA for it seems like eons. This is because my go-to, premium selling play for earnings is the short strangle, and you won't get sufficient premium out of a low priced underlying like AA via short strangle for the life of you. The other option, naturally, is a short straddle , but even then it's a slog to squeeze sufficient premium out of the...
Although I traditionally see earnings season as beginning with the first play in the alphabet (AA), there are some that occur before AA that I've frequently played. Next week, it's MON, BBBY, and WBA. MON announces earnings on 1/6 before market open (look to put on that play before Tuesday NY close); WBA, 1/7 before market open (put on Wednesday before market...
I recently set up a covered call in UNG, with the short call strike at 8.00 (Feb 19 expiry). Price has hurriedly broken my short call strike and is "in the money." What do I do now? One option is to do absolutely nothing. After all, my expectation when I put on the setup was to get called away at 8.00 at expiry or take the whole setup off in profit prior to...
Several days ago (before we had this downmove/volatility pop), I set up a long-term SPY iron condor, my intent being to manage it "dynamically" over time, rolling my options intratrade as price moved either toward my short put wing or toward my short call wing. The original setup was a March 18th 166/169/219/222 SPY iron condor, for which I originally received a...
CNX has been totally hammered and with an IVR of 100 and an IV of 119, I can't resist a play. 100 Shares CNX at 6.61 1 Jan 15 7 short call Total Package: 6.00 debit ($600) Max Profit: (If Called Away at 7 -- $100, excluding fees/commissions).
With an implied volatility rank of 96 and favorable break even metrics for the setup, JCP presents a fairly decent covered call opportunity here. Buy 100 shares JCP at 6.63 Sell 1 Jan 29th 7 short call Entire Package: 5.94 debit ($594) (which will be your per share break even -- $5.94, which is slightly above the 52-week low) Max Profit: $106 (if called away at...
HUN (basic materials) currently has an implied volatility rank of 64 and an implied volatility of 60, and the premium to the call side for slightly out of the money calls is sufficiently rich to lower the cost basis in a long stock position to a favorable break even metric (Feb 19 12 short calls currently .77 at the mid price). Here's the basic setup: 100 HUN...
MW (retail/clothing) has had an absolutely brutal year, with its price-per-share shirt literally ripped off its back, plummeting from a high of $66.18 in June down to its current value just north of $15. With $1.00+ in premium to be had on the call side for the Feb 19th 16 call, it may be worth initiating a covered call here. 100 Shares MW at $15.05 1 Feb 19th...