With my broad index ETF (SPY, IWM, DIA, QQQ) queue kind of full, I've been looking at other high volatility plays to keep capital in play. One of the sector ETF's that has reappeared on my radar is IYR (iShares U.S. Real Estate ETF). With an IVR of 85, it is ripe for a premium selling play. Traditionally, I look for a setup that is around 45 DTE, which would be...
Several weeks ago, I began to set up laddered short call verts in FXE (the EURUSD proxy). My original idea was to set up short call verts at 112/115 at varying expiration from here through December or January based upon the notion that the Fed was poised to tighten and, now, it appears, based upon the possibility that the ECB may initiate additional easing. As I...
It is entirely possible that I may have jumped the gun slightly with my UNG seasonality play, as prices continue to hover around the range low that has been in place since late April. However, this may provide an additional opportunity to add to my Jan expiration 12/13 debit spread position at more favorable prices. I am, though, going to continue to watch...
Ordinarily, if you're a price action kind of trader, you are generally looking for a series of lower highs/lower lows (in a downtrend) or the converse in an uptrend ... Or price's adherence to previously tested areas of support and resistance within a range. With SPY (SPX500 shown here), long term anything (i.e., up, down, or sideways) is unclear since the 8/20...
Depending on where you live, you wouldn't think that winter is fast approaching, but it will come at some point, and with winter comes cold, and with cold comes increased heating of homes ... . Hence, a seasonality play in UNG comes to mind, particularly with UNG trading at or near range lows (it's been between 12.25 and 15.25 since late January). Moreover,...
The more IV, the merrier if you're a premium seller. This week's earnings play in COST (Costco; announcing on 9/2 after market close), needs to be "merrier" if I'm going to make a play in it. Although it's IVR is currently 67 (52-Week TOS), I generally prefer to sell premium in an individual, non-ETF underlying if the IVR is above 70, and I would generally...
To me, there's no reason to resort to trading in individual underlyings when IV is high enough in the index ETF's to play with. But I can understand why some traders might be dissatisfied with just trading SPY, IWM, DIA, and QQQ. Quite frankly, pretty boring stuff, since it involves some waiting until IV is high enough to be worthwhile, and the droughts can last...
For several months, we enjoyed 100-point range-bound trading between 204 and 214, but 204 has now been blown, so now where is this thing likely going to go? As a premium seller, I don't in fact care all that much, as long as price stays between my short strikes for the duration of the contract. That being said, it was awfully nice to trade the top at 214 with...
This past week's been a busy one, occupied with managing the delta in index ETF trades with price gyrating all over the place (in breach, out of breach, in breach ... . Yeesh.) Now that things have calmed down a bit (and I've got most of my setups as delta neutral as practicable), I'm looking to put on some more trades while the indices sort themselves out. A...
As a bread-and-butter, premium selling, index ETF trader (SPY/IWM/DIA/QQQ), low volatility environments are not favorable for my type of trading. My alternatives are to either just sit on my hands and wait for volatility to return or do something else, such as earnings plays or VIX trades. For some reason, I have taken a liking to shorting SVXY as compared to...
We're still here ... . Locked in the same range we've been in since mid-March between 2040 and 2137 and basically, smack dab in the middle of that. Unfortunately, the volatility here in SPY at this moment is less than awe-inspiring (TOS 52-week at 22), with other index ETF's but modestly better (DIA, 36; QQQ, 33; IWM, 34). Assuming a measure of volatility...
Let's face it. No one really likes to roll their options positions to a later expiry, but sometimes you just have to, whether it is to give the trade a bit of additional time to work out or to mitigate your loss. Here are some basic guidelines I use regarding rolling where there has been a breach of a side of your iron condor or short strangle: 1. Always ...
The only earnings play on my radar for next week is BABA. Although there are others, I generally focus on those with good liquidity as evidenced by the bid/ask spread for the options I am looking for fills in (ideally, I'm looking for a <.05 spread, although I'm flexible with this, particularly with heavyweight underlyings like AMZN, GOOG, and the like). In...
TLT (or its inverse, TBT) is one of my bread and butter trades, and I have a trade on in it virtually continously, or so it seems. As with the index trades, I like to put one TLT trade on each week (I frankly prefer it to TBT, since it is a little "juicier" in terms of credit received), ideally as close to 45 DTE as possible. Although I do have an iron condor on...
The volatility in the index ETF's remains relatively high with QQQ topping the bunch at 84 IVR (6 Month Dough), followed by IWM (77), DIA (64), and SPY (53). Ordinarily, it is my habit to put on one index-based trade a week, assuming that sufficient volatility is there to make premium selling worthwhile (i.e., IVR >35). I like to look at expiries that are around...
As a seller of premium primarily in the index ETF's SPY, DIA, IWM, and QQQ, I look to enter setups 45 DTE when IVR exceeds 35 (Dough 6-Mo). Currently, all four index ETF's IVR's exceed that benchmark, with QQQ weighing in at 82, IWM -- 64, DIA -- 63, and SPY -- 54, making the selling of premium attractive. Since I am bearish on the indices, I am inclined toward...
UNG has been locked in a fairly tight range since February between 15.32 and 12.27. Virtually devoid of volatility and unworkable due to the price of the underlying using an iron condor or short strangle (both of which are best used in high volatility environments), it may be perfect for another option strategy that assumes that price will remain in a particular...
In a previous post regarding FXE, I described an options strategy called "laddering." Short laddering can be done both on the short put side, as well as on the short call side, and can be done using naked shorts or vertical credit spreads. It can be used for a number of purposes, such as reducing cost basis in an underlying stock you own, to work a directional...