The Option Block

Trading Block: Brexit provides a review of pitfalls for options and futures traders. Oil extends decline as Brexit fallout spurs market volatility. Could the Fed potentially reverse course and cut rates?

Odd Block: Calls trade in Crown Castle Inter. (CCI), puts trade in Starbucks Corporation (SBUX)

Strategy Block: Uncle Mike Tosaw discusses how to select the correct collar size.

Listener Mail: Listener questions and comments

• Question from David Shanabrook: Can you check the $AAPL weekly options for this week? Huge open interest (put and call) at $100, $105 accelerated repurchase by Apple? What is the effect?

Around the Block: Earnings!

• Tuesday: Nike, Inc.
• Wednesday: General Mills, Monsanto Company, Pier1 Imports
• Thursday: ConAgra Foods

Trading Block: Brexit, Brexit, Brexit! Results due late Thursday night. Tesla owner Elon Musk wants to acquire SolarCity, another company he owns. Gold. Oil.

Odd Block: Bull call spreads trade in RiteAid Corp. (RAD), bull call spreads trade in Vanguard FTSE Europe ETF (VGK)

Mail Block: Listener questions and comments

• Question from Robert K.: I would like to use strategy regarding naked puts. If the naked put is far out of money what strategy could I use to protect myself. Could I use some type of order in case it was getting close to naked put strike price. Thanks
• Question from Tor: Hello. I am (restarting) my options trading on a shoestring; any thoughts on mini-options? Thanks.
• Question from Cristoff: Do you guys only trade options, or do you trade futures too? How do you decide when to use which?
• Question from 777: Are you aware of any specific gold arb between Chinese gold derivatives and their U.S. equivalents?

Around the Block: Brexit, Brexit, Brexit!

Trading Block: Brexit: Much ado about nothing? Market rallies and VIX Cash sells off 2 handles, Dow jumps 200 points. Is that it for volatility? Goldman slashes stock demand estimates.

Odd Block: Puts trade in Newmont Mining Corp (NEM), calls trade in Credit Suisse Group AG (CS), and puts trade in Community Health Systems (CYH)

Strategy Block: Uncle Mike Tosaw discusses iron condors

Around the Block: Earnings!

• Tuesday: Adobe Systems Incorporated, CarMax, FedEx Corporation, La-Z-Boy
• Wednesday: Barnes & Noble, Bed, Bath & Beyond
• Thursday: Accenture, BlackBerry Limited, Sonic Corp.

RCM Alternatives Event: Beyond The Stock Market: Investing 2.0 Tuesday, June 28, 2016 6:00 pm - 8:00 pm 1871 Auditorium | 222 W. Merchandise Mart Plaza Fl 12 | Chicago, IL

The CBOE & Option Pit Professional Traders Summit Wednesday & Thursday July 20 & 21, 2016 (VIP session Friday morning July 22nd) 8:30 am to 5:30 pm Chicago Board Options Exchange | 400 South LaSalle Street | Chicago, IL

Trading Block: Fed keeps rates unchanged, lowering odds for future hikes. Weak Nonfarms number derailed any Fed plans to raise in June. Earnings today: (before the bell) Oracle Corporation; (after the bell) the Kroger Co, Rite Aid Corporation.

CME Fedwatch tool:

• July probability: 7%
• Sep: 29%
• Nov: 31%
• Dec: 47%

Options Question of the Week: $VIX surging ahead of FOMC, but for how long? Where will $VIX cash close Friday 6/17?

• 19% - 18-20 range
• 47% - 15-17.99 range (Winner)
• 25% - Above 20
• 09% - Below 15

Odd Block: Calls trade in Activision Blizzard Inc. (ATVI), calls trade in iShares Barclays 20+ year Treasury ETF (TLT) and calls roll in Wells Fargo & Co. (WFC).

Mail Block: Listener questions and comments

• Question from Vegan: For an options newbie, how would I construct a trade with most possibilities to win? I understand that the potential profit might be small. What time frame is good as well?
• Question from Jim Duggan: FOMC and Brexit are approaching. What are some good ways to use options to play Brexit or FOMC?
• Question from John Doe: Do you have any specific strategies near or on expiration to profit from theta decay.

Around the Block: Brexit coming up on 6/23. Fade it? Buy into it? Much ado about nothing?

Trading Block: Today we have a special guest co-host: Steve Claussen, Chief Investment Strategist, OptionsHouse.

What's going on:

• VIX/VVIX surging ahead of FOMC - VIX Cash over 20, VVIX: 117.
• Suspicious options activity in LNKD/MSFT ahead of deal
• A group from Silicon Valley has a serious plan for creating a totally new US stock exchange.

Options Question of the Week Results: How are you prepping your portfolio for #BREXIT:

• 23% Buying S&P / Index Puts
• 27% Buying Vol -VIX, VXX, etc
• 15% Moving to Cash
• 35% BREXIT will not happen was the winner, but down from 50% earlier in the week.

Odd Block: Calls trade in JPMorgan Alerian MLP (AMJ), calls trade in SunPower Corp. (SPWR), calls trade in Barclays PLC (BCS)

Strategy Block: Uncle Mike Tosaw discusses being a bull ahead to the FOMC and Brexit.

Around the Block: What are the all-stars thinking about?

• Earnings This Week: The Kroger Co, Rite Aid Corporation, Oracle Corporation.
• Federal Reserve Meeting on Wednesday.

Trading Block: VIX remains somewhat muted heading into FOMC new week as well as Brexit the following week. Billionaire George Soros returns as a Brexit bear. He's also loading up on gold and GLD options, SPY puts.

Odd Block: Calls trade in Market Vectors Oil Services ETF (OIH), calls trade in AT&T (T), and calls trade in Marathon Petroleum Corp (MPC).

Mail Block: Listener questions and comments

• Question from JMFarrare: Do you guys have a service that alerts on unusual options activity in the mornings on a daily basis? If not can you direct me to someone that does? Thanks, your website is great!
• Question from 777: What adjustments should I make when trading options on expensive stocks vs. regular priced stocks vs. cheap stocks.
• Question from Eric: The last few days I have traded October OIX calls. I made money, but felt like I left a lot of money on the table due to the bid ask spread. How could I have improved on this?

Around the Block: Triple witching plus FOMC equals wild week ahead.

Trading Block: Market not spooked by Yellen today. Brexit worry has radiated around world as poll puts traders on edge.

Odd Block: Calls trade in Calpine Corp (CPN), calls trade in EI Dupont (DD), and calls trade Enterprise Products Partners (EPD)

Listener Questions: In which the listeners take over

• Question from Andy Noble: What do you guys think about this scandal over the super trader? Another black eye for options?
• Question from Andre Chiles: I am new to the market, but I was wondering if you could help me learn and make some money.
• Question from Mr. Niggles: Saw the headline link on Options Insider about the stock replacement strategy. What do you think of using this strategy in the current market conditions?

Around the Block: Earnings!

• Tuesday: Michaels, Dave & Busters
• Wednesday: Lululemon Athletica, Restoration Hardware
• Thursday: H&R Block

Trading Block featuring guest co-host Todd Rich, President of OM Media (an affiliate of OptionsHouse).

• Crude oil and energy stocks
• It is that time of the month - volume time.
• OCC announced that cleared contract volume in May reached 319,533,636 contracts, a four percent increase from the May 2015 volume of 308,639,215 contracts.
• YTD average daily cleared contract volume is also up four percent from 2015 with 16,734,689 contracts.

Odd Block: Calls trade in Xilinx Inc. (XLNX), calls trade in iShares MSCI UK (EWU), calls and puts trade in Macys Inc. (M), and calls trade in Marriott International Inc. (MAR).

Mail Block: Listener questions and comments

• Question from Niles - Are there any triple witching levels coming soon? If so, how do they influence the options market and expiration?
• Question from Fred - I kind of hit a wall in my options development. Maybe my focus was too split between learning about futures and learning about options. Are you familiar with the books by Jim Dalton? He wrote a book about options trading but he does not like the greeks and he does not like many conventional options trading strategies. He only uses them when necessary. I guess this is a long way to asking when I should use options vs. futures
• Question from Jack - Have you ever used the PREM indicator? It is for arbitrage traders. If so, how does it play out in the options market?

Around the Block: Non-Farms on Friday (to be released at 7:30 a.m. CDT Friday)

Trading Block Featuring guest co-host Nick Howard, Bantix

Soybean rundown: Is the collar skew still favorable? Gold rundown: GLD vs Futures options. The SEC has obtained a court order to freeze the profits of a trader who allegedly manipulated a technology stock through a false regulatory filing traced to a computer in Pakistan.

Odd Block: Calls trade in WisdomTree India Earnings (EPI); calls trade in CurrencyShares Euro Trust (FXE); puts trade in Royal Bank of Canada (RY)

Mail Block Question of the Week:

• How many US options exchanges will there be at the end of 2016?

1.) 14

2.) 15

3.) More than 15

4.) Less than 14

• Question from Ms Fidious: What the heck is a stupid?
• Question from MDavis82: Just started listening to the show. In one of the first few shows it was mentioned that you can use selling of options to in essence create a dividend on a non dividend stock. Is there more information about this laid out somewhere (puts, calls, how far out, what strike price, what if underlying goes up or down). Thank you and love the show!

Around the Block: What's coming up from the Fed? Holiday weekend. What's happening with the ag markets? Brexit and pound skew. Should we sell in May and go away?

Trading Block: Will anything useful come out of the Fed meeting? Will the United Kingdom leave the EU? Bayer offers to buy Monsanto for $62B

Odd Block: Calls trade in Comcast Corp (CMCSA), calls and puts trade in Bed Bath and Beyond (BBBY), calls trade in Corning Incorporated (GLW)

Strategy Block: Uncle Mike Tosaw discusses how not to force a trade.

Mail Block: Listener questions and comments

• Question from Trader Shawn - With the recent rise and fall of crude oil, is there an options tell that we can use intraday to see when these movements are setting up?
• Question from T. Nguyen - G'day Options Insider! Just wanted to know if the members of the Option Block panel ever make use of offline options position modeling software and if so, which would be their recommendations and why? What about tablet/phone apps that model option positions? I am frequently in transit and do not always have the luxury of an internet connection to access my brokerage account, but I love testing and modeling positions, hence the question. Cheers

Around the Block: Earnings: Retail Earnings Parade Continues

• Tuesday - Best Buy Co, Inc., DSW Inc., Hewlett Packard Enterprise Company, Intuit, Kirklands
• Wednesday - Costco, Express, Guess?, Lions Gate Entertainment, Popeyes Louisiana Kitchen, Tiffany & Co, Williams-Sonoma
• Thursday - Sears (before bell), Abercrombie & Fitch, Burlington Stores, Dollar General, Dollar Tree, GameStop, Movado, Ulta Salon
• Friday - Big Lots