The Option Block

Option Block 350: TWTR Risk Reversal Rundown

Trading Block: Interesting intra-day activity, but ended up closing basically unchanged. VIX cash back in the 11 handle range. A resurgence in Twitter. A banner day for Valero.

Odd Block: Calls trade in PowerSecure International, Inc (POWR), calls roll in Ashland Inc. (ASH), puts trade in SM Energy Co. (SM), put spreads roll in Tractor Supply Co. (TSCO), puts trade in MagicJack Volactec ltd. (CALL).

Mail Block: Listener questions and comments

Question from JG - Hi guys! Love the show(s), I like really really love the show(s). Last Option Block you mentioned us providing our trades and you dissecting them. Just happens to be a very opportune time because I am currently in a trade and I'll provide my analysis and would like to hear you guys discuss.

Question from Roger Edwards - Hi.

Unusual options activity has drawn my attention to company A, which led me to discover that it's a takeover target by company B. Of course takeover timing is the big challenge. I know that company A has an upcoming ex-div date. Is an ex-div date relevant (factored into takeover timing) at all? Is there any advantage in company B timing its takeover of company A before or after the ex-div date? I'm just trying to use whatever information I can to select the right option expiration. Thanks so much.

Question from Kaiserdog76 • - "The Dumbest Investor In the World" - Made good money on UA stupids and FB. Played for a bounce in IWM using options. As that one looks like it has the most room to run. Decent jobs numbers and the "Goldilocks" rally continues. - P.S. Rock Lobster would be proud of me. I even traded a couple Apple calls for a nice pop….Oh, Bita,bita,bita,bita........ Gotta love those China Tech stocks that Retail usually has no clue about. Excellent heads up. Maybe I will look for a bottom and get long again. I had bought 100 shares back when it was trading at $30. In less than a week I was up $600 and figured it could go down just as fast as it went up. Sold and never looked back. I might be breaking some rules here but I like to circle back to winning trades after I feel enough time has passed. Is that a bad habit? I do not have % stats or anything but I know that many have worked more than once. Thanks for refreshing my memory on BITA!

Around the Block: Andrew is amazed. Short trading week next week. Not expecting too much activity. Look out for early cash-settled indexes. Be prepared.

Option Block 349: A Bonafide Covered Strangle

Trading Block: Lululemon had a big move today, as did Facebook and Tesla. Is time once again for the Trading Patterns Guessing Game!.

Odd Block: Put butterflies trade in Dow Jones Industrial Average ETF (DJX), call sellers trade in AerCap Holidings NV (AER), call and put sellers (covered strangle?) trade in PG&E Corp. (PCG), and same month call rolls trade in Six Flags Entertainment Corp (SIX)

Xpress Block: What is your take of the covered strangle? Adding names to the IdeaHub.

Strategy Block: Tosaw discusses the enhanced collar strategy.

Around the Block: How long can the market continue to ignore what happens in Iraq, higher oil prices, etc.? Whoa to the complacent. Where’s the conviction?

Option Block 348: Rampant Insider Trading

The Trading Block: More of a micro, rather than a macro day today. Gold up on the day. Is VIX too low? Lululemon had a stealth rally last week. New Amazon Fire phone. Visa popped up the day. A study by professors at NYU and McGill University in Montreal shows insider options trades precede about a fourth of US M&A deals.

Odd Block:Call sales trade in Verso Paper Corp. (VRS), and bullish risk reversal/Combos trade in Exterran Holdings Inc. (EXH)

Xpress Block: New premium harvesting tools now available in IdeaHub. New features for the Walk Limit.

Mail Block: Listener Questions & Comments

Question from Shane Hamilton - Hey Mark, How about a new segment called the "Success Block" where listeners submit winning trades and your cohorts comment how it could have been improved, done differently or kudos exactly the way it was played. Just an idea that seems like that might be fun. Besides we all love to talk about our winners.

Question from ITrumpDoom - Hello. If I expect a stock to move significantly over the next six months, but I do not have a prediction for direction: Is it reasonable to sell a short put butterfly, and a short call butterfly on that stock, with all the long strikes at or very near the money? I think I would cover the risk in one of the flys, by the profit in the other, since it would be impossible for both of them to expire with maximum loss (not that I would hold to expiration). Is my logic sound on this? Is six months an unreasonable expiration to use on these given potential IV increases?

Around the Block: Weekly jobless claims and Regional manufacturing survey (Philly Fed). Keeping an eye on the Iraq situation, crude and Brent oil prices.

Option Block 347: Bringing Guns to the Trading Pit

Trading Block: A very mild day on the street. Everyone still loves Tesla. What is up with gold volatility?

Odd Block: Calls spreads trade in Fairchild Semiconductor Intl. (FCS), calls trade in Nexstar Broadcasting Group, Inc (NXST), calls trade in St Jude Medical, Inc. (STJ), puts roll trade in SPDR Barclays Capital High Yield (JNK).

Xpress Block: You could quality for a commission waiver on options trading if you belong to the Schwab Private Client Group. Idea Hub did very well in May. Premium harvesting now available for both securities options and futures options.

Strategy Block: Remember, this week is the ex-dividend date on SPY

Around the Block: Monday - NY Fed Empire Manu survey. Industrial production and capacity utilization for May and June. NAHHB Homebuilders survey.

Option Block 346: Say Hello to Exposure Fees

Trading Block: A sea of red on the broad street today. VIX: more fear than fear itself? A big day for energies. Lululemon missed their earnings mark.

Odd Block: An update of recent activity in Dollar General (DG), newsletter put seller trade in Galena BioPharma Inc (GALE), risk reversals/collar in Jet Blue Airways Corp (JBLU), and size put buyers trade in the iShares Dow Jones Transport (IYT)

Xpress Block: A lot of activity in portfolio margining. More news on the upcoming futures for IdeaHub.

Strategy Block: An update on the ratio-hedged risk reversal on Apple. Finding ways to finance the hedge.

Mail Block: Listener questions and comments.

Question from Ivan - I have heard some people say I should not sell naked short puts because of “gap risk”. I always respond that it is the same thing as working a limit order in the stock. Who is right - me or these worry warts?

Around the Block: Thursday: Import price index and business inventories are estimated to climb. The World Cup begins and the rest of the world will be on vacation for the next month.

Option Block 345: Beating the Street on Dollar General

Trading Block: A mild day on the street. Apple stock split. A possible Deutsche Bourse sale of ISE.

Odd Block: Activity review from last week: Carl Icahn disclosed a 9.4% stake in Dollar General (DG) and shares soared. We knew something was up last week. Call buyers in USG Corp (USG), puts rolls trade in Kodiak Oil and Gas Corp. (KOG), and crazy call buying in Clorox Group (CLX)

Xpress Block: Apple dominates the housekeeping, speculating on Lululemon earnings, and a stealth rally in Oil

Mail Block: Listener questions and comments

• Question from Alexander Soja - Love the program. I listen on my commute to and from work. I would like to know more about the broken wing butterfly. What is this strategy and why would it be useful?
• Question from MrTeenzy - All this talk about colocation for HFT firms. But do brokers like OX not also co-locate to speed up transaction times? In which case, is colocation not benefiting the retail guy like me?

Around the Block: S&P 500 edging toward the 2,000 mark. It could happen in the next few weeks. Lululemon earnings 6/12.

Option Block 344: Premium Palooza in Dollar General

Trading Block: A great day on the market. Amazon rises after announcing that they will be making an announcement. What is lurking under the low VIX? Complacency?

Odd Block: Unusual activity in Tesoro Corp (TSO), Target Corp. (TGT), Dollar General Corp. (DG), and NuStar (NS)

Xpress Block: Alex discusses about how a few select clients may be able to trade commission free. Enhanced capabilities in Schwab mobile, including Hub for Futures.

Around the Block: Friday = Unemployment Numbers and Non-Farms

Option Block 343: AAPL Ratio Spread Madness

Trading Block: A slow day on the street today. All Apple - all Amazon - nothing below the "A"s. OCC announces cleared contract volume declined in May, while 2014 volume remains up.

Odd Block: Call ratio spreads trade in Apple Inc. (AAPL), long-term closing call sale in Fortress Investment Group LLC (FIG), closing put buys before earnings trade in Ascena Retail Group Inc. (ASNA), and opening call seller in The Western Union Co (WU)

Xpress Block: Alex discusses Idea Hub for Schwab Mobile and possibly Futures Trading.

Strategy Block: Ratio Spreads: when and how to use them and why they teeter on the edge of dangerous.

Around the Block: ADP private-sector job growth & weekly jobless claims on the horizon.

Option Block 342: Mini Death Knell

Trading Block: A mild uptick on the street today. Apple rallies and the market follows. With the VIX moving closer to its 9.39 historic low, many commentators are now discussing it as a "complacency index," writes John Nyaradi of Wall Street Sector Selector

Odd Block: Risk Reversal trades in iShares MSCI Australia Fund (EWA), call buyers trade in Scientific Games Corp. (SGMS), and call buy-writes trade in Ambev SA (ABEV)

Xpress Block: Alex discusses the recent NASDAQ notice and the death of minis.

Mail Block: Listener questions and comments

Comment/Question from Kaiser Dog - Enjoyed todays podcasts. I felt the Viceroy came back with some very pertinent information. I myself have been using my iPad and even My iPhone a few times to initiate trades. The Mobile Trading option is gaining traction and I agree with Alex's sentiment that this has smoothed out trading flow. Especially in times that would be historically light volume. I myself prefer my Laptop trading station I have custom built. With that said the reality is that raising a 4 year old son takes a lot of time and attention. My Mobile App allows me to stay on top of things and still be a parent. The Mobile trading option is a huge success. The Polar Opposite of "Mini Options" in my opinion. I enjoyed the swing to a positive story from the depression that HFT and Minis cause me. lol.

Question from DeGaul - What does the OH/Monster merger mean for the options brokerage landscape going forward?

Question from Mr Teenzy - All this talk about colocation for HFT firms, but do brokers like OX not also co-locate to speed up transaction times? In which case, is colocation benefiting the retail guy like me?

Around the Block: Economic Data: First-quarter GDP revision (Thursday) and Personal Income and Spending, Chicago PMI and University of Michigan consumer sentiment (Friday).

Fed talk: Fed's Pianalto: 'Inflation and Monetary Policy'

Option Block 341: Weird Activity In Colgate-Palmolive

Trading Block: A surprising VIX given the upcoming holiday weekend. Record low levels in some beloved Option Block names. We saw a massive upside call going up in VIX early this week. The U.S. options exchanges are working jointly toward the development of a uniform obvious error rule to nullify or adjust transactions that meet the definition of an obvious or catastrophic error. OCC and US Options Exchange adopt pre and post-trading risk control principles.

Odd Block:

• Closing puts buyers trade in HMS Holdings Corp. (HMSY)
• Puts sellers trade in Big Lots, Inc (BIG)
• Call sellers trade in Colgate-Palmolive Co. (CL)
• Closing put sale in US Steel Corp (X)

Xpress/Mail Block: XpressMail….get it?

OX questions this week:

• Comment from CBarles - I agree with Mark and the Viceroy - OX needs a "caps lock" detector on the website login page. I am always forgetting that and having to log in twice - very annoying. Please save me from myself.
• Comments/Questions from Kaiser Dog - Mark, First let me thank you for using my post in the Mail Call. Made my day yesterday. If you liked that? I have a lot more where that came from. Just got done listening to "Talking Volatility" and enjoyed the show. I must confess I am not an "Option Pit" guy. Just a retail investor who has a big hunger for anything option related and A fan of the "MeatBall" and the Show in general. I bought Flash Boys the day it was released and have read it about 5 times. Thank you for your work on this front as well. Kudos to your unbiased reports. Please keep them coming. My question for the panel today is as follows: There has been allot of talk about Bubbles. I thought Hubba Bubba and Big League Chew were filling for IPO's there has been so much chatter on CNBC and other media sites. lol. The element that seems to be missing? Undue euphoria and enthusiasm. I do not see it. I do not see Retail participating in any big way. Volume is anemic and artificial (HFT) in my opinion. I would love to hear the panel's take on the topic of A Market Bubble. In addition I would like to hear every ones take on the "State" of the "Retail" investor. Thanks again! Cheers.

Around the Block: Initial Jobless Claims Data and Homes Sales Report on Thursday -- Claims are expected to be higher. Notes from the FOMC meeting.