The Option Block

Trading Block: Exchanges closed on Wednesday, December 5 in observance of a National Day of Mourning for the late George HW Bush.

Earnings Highlights:

• Tuesday - Dollar General, HP
• Wednesday - Five Below
• Thursday - The Kroger Co., Broadcom, Michaels, Ulta
• Friday - Big Lots

Also:

• Oil selling off - WTI Crude back in the $40 handle.
• Bitcoin crushed - BTC threatening 4000.

Odd Block: Tesla put summary, possible opening call sale in (GPOR), put love in (PVG), and put love in (BEL).

Strategy Block: Uncle Mike Tosaw discusses purchasing long delta in options.

Mail Block: Options question of the week

AAPL continues to take a beating - recently dropping below $175. We know many of you LOVE to trade $AAPL and this selloff creates opportunities. Looking ahead to Jan 2019 expiration- which trade would you prefer to make in AAPL right now?

• Sell Jan 150P for $1.65
• Buy Jan 150P for $1.65
• Sell Jan 200C for $1
• Buy Jan 200C for $1

Listener questions and comments:

• Comment from Mark Brant: Bot a million DOGE because it was cheaper than BTC. Spikes off lows take about 60 days to show up. For free on Robinhood! Short put spreads USO OIH came in nicely! Andrew and Mark miss a lot of VIX trades because their bias is down. My bias is up. Always looking at the 16 delta Calls! NG RR is on fire! Eurodollar HV much lower than IV as per usual.

Around the Block/This Week in the Markets

• Dec 3: Construction Spending
• Dec 5: Productivity and Costs, Beige Book
• Dec 6: Jobless Claims, Factory Orders
• Dec 7: Unemployment, Consumer Sentiment

Trading Block/Earnings highlights from the week:

• Tuesday - Salesforce
• Wednesday - Box
• Thursday - TD, GameStop, HP
• Clothing Retailers: Burlington, Chico's, J Jill, Guess, Express, Abercrombie & Fitch

Plus,

• Oil sells off - WTI Crude back in the $40 handle.
• Bitcoin getting crushed - BTC threatening 4000

Odd Block: Tesla put summary, Dec lifts puts in (VOD), opening put love in (AEO), and opening call love in (IQV)

Mail Block/Options question of the week

AAPL continues to take a beating - recently dropping below $175. We know many of you LOVE to trade AAPL and this selloff creates opportunities. Looking ahead to Jan 2019 expiration- which trade would you prefer to make in AAPL right now?

• Sell Jan 150P for $1.65
• Buy Jan 150P for $1.65
• Sell Jan 200C for $1
• Buy Jan 200C for $1

Listener questions and comments

• Question from Leot - Is Apple a good candidate for stock substitution here? If so how would you set it up?
• Question from Burns - Is buying a call actually the best way to get long stock in this market?

Around The Block/This Week in the Markets

• Nov 29: Jobless Claims, Personal Income and Outlays

Trading Block: Earnings!

• Tuesday – Salesforce
• Wednesday – box
• Thursday - TD, GameStop, HP
• Clothing Retailers: Burlington, Chico's, J Jill, Guess, Express, Abercrombie & Fitch

Also, Bitcoin (BTC) dropped to its lowest level since October 2017 on Monday, as losses are seen across the broader crypto market.

Odd Block: Tesla put summary, opening call sale in (ADI), opening put love in (CRC), and Jan call sale in (PAA)

Strategy Block: Tosaw discusses what a risk reversal is and how to use it.

Mail Block: listener questions and comments

• Question from Khabib - What do you think is the best use for unusual activity? Is it the best for trading or for an indicator?

Around the Block/This Week in the Markets

• Nov 27: Consumer Confidence
• Nov 28: GDP

Trading Block: Review of the last trading day of the year. VIX barely holding on to double digits. Big meh into the end of the year. Silver is on a tear. The highs and lows of Bitcoin. Cboe announces six Bitcoin ETFs. Uncle Mike creates a new product...Fitcoin.

2017 Year-in Review: The good, the bad, and the unexplicable.

Final Options Question of the Week for 2017: What is your enduring market memory/event/trend/etc of 2017? Have a suggestion of your own? We encourage you to choose "Other" and send in your thoughts.

• Death of Volatility/VIX
• Rise of Bitcoin
• The Unstoppable Bull
• Other: Reply/DM w/ ideas
  • Comment from OptionsAlliance: The surprise resurgence of #options volume in 2017.
  • Comment from OliveWanaBroker: The oats bull market. Very important.
• Uncle Mike's silver collar was not, in fact, the second coming of AAPL.
• All smoke, no fire
• Crypto fever

Odd Block: Crazy paper from the year

• TSLA options tracker: The explosion of interest in TSLA catastrophe puts. OI exploded in 2017. Interest also expanded to Jan 2020 50 puts.
• The 250,000 contract VIX three-way, rolled thrice
• Extended Stay America - giving up the ghost
• The way-out-of-the-money gold trade with a further out-of-the-money kicker.

Strategy Block: Uncle Mike waxes poetic about his trading strategy from 2017

Around the Block: Will the outlier trends continue? Andrew brings us down with debt talk. What would it take for volatility to return to normal?

Trading Block: Apple woes hitting the market again., Plus earnings.

• Target
• Best Buy
• Lowe's
• Kohl's

And growth in US corporate earnings expectations remains strong.

Odd Block: Tesla put summary; call love in JD.Com Inc. (JD); line in the sand puts in Mattel, Inc. (MAT); put love in ENSCO PLC (ESV).

Strategy Block: Uncle Mike Tosaw discusses premium selling

Mail Block: Options question of the week

You guys did great on last week's crystal ball so we've upped the ante. Where will VIX be at the end of Volatility Views in TWO WEEKS - aka Fri 11/30? Closest (within 1 pt) wins signed book from Option Pit Good Luck!

• Here: 18.5-20.99
• Higher: 21-23.5
• Lower: 16-18.49
• Crazy: Above 23.5

Listener questions and comments:

• Question from Steve Giannakopoulos - Seems right that you can write 1 put option when you already own 100 shares of the underlying stock. Brokerage can lock and keep the 100 shares as collateral instead of holding cash as collateral. It doesn't happen though. Why? You could have your long 100 shares forced sell at the put option strike price if it's ITM and you get assigned. I read you said I just don't understand it. Thank you.
• Question from Matthew Grabarczyk - First of all thank you for the programming and knowledge! Coming from the technical side of equities trading I need some help and I could not really find a direct answer in the archives. A trade I'm in went long at 149.05 with a target of 152.75. At 150.90 (midway) I legged into a diagonal spread long the Jan 151 calls, short the weekly 152.50 trying to optimize skew. It is currently at 152.20 and gamma is kicking my ass. If I wanted to be out completely by 152.75, how would you suggest adjusting this trade?

Around the Block/This Week in the Markets

• Nov 20: Housing Starts
• Nov 21: Jobless Claims, Durable Goods, Consumer Sentiment, Existing Home Sales
• Nov 23: Fed Balance Sheet

Trading Block: Vol creeping back in as Brexit woes. Bad numbers and Walmart spooking the market. Buffett likes financials. WMT, NVDA earnings.

Odd Block: TSLA Flash Poll

The top 10 TSLA options positions are DOMINATED by OTM puts. Only one Call position makes the list. Which one is it? No cheating - what does your gut tell you?

• Feb 450 Call
• Dec 365 Call
• Jan 2020 465 Call
• Jan 600 Call

Mail Block: It's crystal ball time! Where will $VIX bet at 1pm central - aka the end of the show - next Friday? See if you can beat the Volatility Views crew.

• Here: 17-18.50
• Higher: 18.51 – 20
• Even Higher: >20
• Lower: 15.50-16.99

Question from J3dingle - Hi Mark, Thought you might like this: https://www.youtube.com/watch?v=fQa-sx39Ltw. I wonder how he'd vote in March Madness! Joseph Around the Block/This Week in the Markets:

• Nov 16 - Industrial Production, Treasury International Capital

Trading Block: A look at the week in trading (so far).

• Selloff mode is back - somewhat.
• Apple iPhone XR slack demand spooking markets.
• GE continues to decline on power weakness.
• Vol creeping back in.
• Equities: Growth in US corporate earnings expectations remains strong.

Odd Block: Tesla put summary Opening call love in (ZNGA) - from 11/5. Opening call love in (ETM) - from 11/1. Put love in (BCS).

Strategy Block: Uncle Mike Tosaw discusses adjusting a short call and short put.

Around the Block: What do we think will shake the market this week?

Trading Block: A look back at the week in options trading

Goodbye backwardation!

Earnings Highlights for the Week

• Monday - Sysco, Mylan, Marriott
• Tuesday - Eli Lilly, CVS Health, Gogo, Etsy, Match, Papa John's
• Wednesday - Groupon, Roku, Square
• Thursday - Dropbox, Walt Disney
• Equities: Growth in US corporate earnings expectations remains strong.

Odd Block: TSLA put summary, calls trading in Ctrip.com Internation Ltd (CTRP), and call love in Cornerstone OnDemand, Inc. (CSOD)

Mail Block: Option block flash poll

All of these downgrades are crushing AAPL. It's back below $1T. Heresy! Are you part of the AAPL faithful or do you have your bear claws out? Quite simply - do you think AAPL will be above $200 one year from now?

• 72% - Yes: $Above $200
• 15% - No: Below $200
• 13% - I'm sick of $AAPL

Options question of the week - We always like to take the pulse of our audience. This week we're checking in on your favorite strategies. What is your go-to #options strategy?

• Butterflies
• Covered Call/Short Put
• Verticals, call or put
• Calendars/Diagonals

Listener questions and comments:

• Question from NVD2 - Are we now out of the danger zone? Where does the danger zone officially start?
• Question from Helio - Uncle Mike back in full bull mode? What's his biggest holding?
• Question from Ilya - Why is iron condor the iron fly for cowards? Don't get it.
• Question from Mark Brant - Sold SNAP 45d ATM Puts when it had the highest ATM IV of any stock! ATM IB is the one to watch for premium selling IMO.

Around the Block/This Week in the Markets:

• Nov 9: PPI, Consumer Sentiment

Trading Block: Earnings Highlights for the Week

• Monday - Sysco, Mylan, Marriott
• Tuesday - Eli Lilly, CVS Health, Gogo, Etsy, Match, Papa John's
• Wednesday - Groupon, Roku, Square,
• Thursday - Dropbox, Walt Disney
• Apple screwed the pooch:
• Apple tumbles 7% after earnings on light guidance.
• Market cap back below $1T

Plus, OCC Sets All Time Monthly Volume Record - OCC Clears Record Monthly Volume in October: Over 567 million contracts cleared in October, up 48.9 percent compared to 2017

Odd Block: Put summary in Tesla Inc (TSLA), line in the sand puts in (TRU), opening call love in (ZNGA) and call love in (ETM).

Strategy Block: Tosaw discusses the knockout collar strategy

Mail Block: Options question of the week We always like to take the pulse of our audience. This week we're checking in on your favorite strategies. What is your go-to options strategy?

• Butterflies
• Covered Call/Short Put
• Verticals -call or put
• Calendars/Diagonals

Around the Block: Midterms elections 2018 tomorrow!

Trading Block: Earnings Highlights for the Week

• Tuesday - GE, Sony, BP, FB, ebay, Pfizer, Coca-Cola
• Wednesday - GM
• Thursday - Apple, Starbucks, Weight Watchers, Spotify, Cigna, Dow/DuPont
• Friday - ExxonMobil, Cboe, Alibaba, Chevron, Berkshire Hathaway
• Equities: Growth in US corporate earnings expectations remains strong.

Odd Block: More puts in Tesla Motors Inc. (TSLA) and "Line in the sand" puts in Yelp Inc (YELP)

Mail Block: Options question of the week

Volatility is all over the place these days. Some say it's too cheap, others say it's too expensive. Either way they want to trade it. What's your weapon of choice when trading the wacky world of volatility?

• VIX options/futures
• VXX options/ shares
• TVIX shares
• SPX / $SPY options

Listener questions and comments:

• Question from Mark Davis: Hello, I have written in previously and got some great feedback on my question, so hoping you can help me out again.I am still playing (paper trading) with options while in my real account I purchase shares outright. After having quite a few good years, with the increase in volatility lately I have taken some pretty rough hits, so far for the YTD I lost about 16% of my portfolio. I should also mention I currently only deal with Index funds (S&P, International, & Small cap). I go in and out of these stocks based on various parameters that may have me holding a certain stock for less than a month to a little more than a month. Is your stock replacement strategy a good use for this or maybe not since time horizon is generally not long.

Example. Tomorrow I may buy 100 Shares of SPY @ 25 each, likely selling the shares in about 20 days. I am trying to figure a way to get the same (or close to same) movement as if I owned the shares outright while limiting the downside of at least setting a li e in the sand. I am having trouble wrapping my head around the right strategy or if what I want to do is even possible. So in the example above my portfolio had I bought outright and the stock is at 30 in 20 days I'm at $500 but what do I do to get close to this using Options. On the flip side if SPY was at 20, I am thinking there is a way that I would can protect myself from losing some of that $500.

Another thing I'm not sure of when doing this should I only be buying enough Contracts that I could afford it were I to exercise the options, i.e. if I have $200 in my account and the underlying is $1/share would I only want to buy 2 calls even though I would ideally have enough money to buy more contracts? Thanks for your feedback.

Around the Block/This Week in the Markets

• Nov 2 - Unemployment, International Trade, Factory Orders