The Option Block

Trading Block: The trade war scares no one???

Earnings:

• Tuesday - PepsiCo
• Thursday - Delta Airlines
• Friday - JPMorganChase, Citi, Wells Fargo, PNC Bank
• SPX is celebrating its 35-year anniversary.

Odd Block: Rolling put spread in iShares Russell 2000 Growth Index (IWO), vertical roll in Endo International PLC (ENDP) and small verticals in Amgen, Inc. (AMGN)

Mail Block: Listeners have their say

Options question of the week: Traders generally fade vlatility going into holidays (today notwithstanding). What's your favorite vehicle when you want to wager on the dark side of volatility? Short-term or Long-term - that's up to you.

• 27% - Short VIX Futures
• 17% - Long $VIX Puts/Spread
• 33% - Long $VXX Puts/Spread
• 23% - Short $VIX Calls/Spreads

Another options question of the week: Trading options during earnings season can be challenging. Some live for it while others avoid it. Do you hold options positions through earnings announcements? If so, what is your approach? Or do you prefer to trade just before/after the event? Or is it all too risky?

• Yes, Short Premium
• Yes, Long Premium
• No, Too Risky
• I trade around the event

Listener questions and comments:

• Question from Splitsville - Why is long put/covered call a "collar" while short put/long call is a "risk reversal." Never understood that one.
• Question from Alto - Which do you think has a better chance of happening - no more earnings calls or after hours options trading? And which do you think would be more impactful for options traders? Do you have a preference?

Around the Block/This Week in the Markets:

• Jul 10 - JOLTS
• Jul 11 - PPI
• Jul 12 - Jobless Claims
• Consumer Price Index, Treasury Budget
• Jul 13 - Import and Export Prices, Consumer Sentiment

Originally posted on July 7th, 2017

Trading Block: VIX ends near the top of the range. It was up to 13.05 at its highest. Tesla down 7.2% yesterday, due to concerns of slowing Model S and Model X sales. The numbers are out: OCC announced today that cleared contract volume in June reached 387,597,223 contracts, a 2% increase from the June 2016.

Odd Block: TSLA Jan 2019 50 puts and Jan 2018 20 puts continue to trade. Back and forth trading in Tesla Motors (TSLA). Puts trade in LG Display Company LTD. (LPL)

Strategy Block: Uncle Mike Tosaw discusses the recent silver environment.

Mail Block: Options question of the week

Blue Apron $APRN is down over 10% from its #IPO price. Assuming #Options were listed, what trade would you make?

• Buy Dec 10 Call for $1
• Buy Dec 9 Put for $1
• Sell Dec 10 Call for $1
• Not Touching $APRN

Listener Questions: What's on your mind?

• Question from Sal06 - Do you think AAPL $147 call for June 30th is a good idea?
• Question from Nelly2 - Just so I am clear on the spread assignment thing. If I am in SPX, then I just get cash if the index closes inside my spread. But if I am in a stock, then I get the stock?

Around the Block: WTH is happening in North Korea? VIX responds in kind. S&P 2400. Non-farm payrolls. Google fine.

Trading Block: Canadian revenge tariff are on the docket today. VIX cash sits above 17. OCC Cleared Contract Volume up 6% in June - the highest June for total options volume on record. It's SPX's 35-year anniversary.

Odd Block: July 4 calls in Limelight Networks, Inc. (LLNW), Funky multi-leg in BP Prudhoe Bay Royalty Trust (BPT), Rolling puts in (FLO).

Strategy Block: Uncle Mike Tosaw discusses trading short put spreads

Mail Block: Options question of the week

Traders generally fade volatility going into holidays (today notwithstanding). What's your favorite vehicle when you want to wager on the dark side of volatility? Short-term or Long-term - that's up to you.

• Short VIX Futures
• Long $VIX Puts/Spread
• Long $VXX Puts/Spread
• Short $VIX Calls/Spreads

Around the Block: 'Murica. Mired in tariff talk. Negotiating trade deals is tough!

Trading Block: A review of the week in trading

• VIX Cash - started at 18.99, ended at 16.70
• Earnings: Nike after the bell - $71.70, ATM straddle - $3.40, approx. 5%

Odd Block: Size money call roll in Devon Energy Corp (DVN). Call vertical in CVS Health Corp (CVS). Size puts in PowerShares DB US dollar Index (UUP)

Strategy Block: Uncle Mike discusses selling a call spread versus selling a call.

Mail Block:

• Question form Jack Daniels trades: Pump me up $WWE don't fade! Huge TV deal billionsss. Let's go.
• Question from BuddyBoy79: Can you please explain what relative strength and weakness mean as they pertain to options trading?

Around the Block/This Week in the Market

• Jun 28: Jobless Claims, GDP
• Jun 29: Personal Income, Consumer Sentiment

Trading Block: Trump's trade war spooks the market. Again. Bitcoin manipulation via tether. Who out there is trading or interested in Crypto? What are you trading?

Odd Block: Call writing frenzy in Campbell Soup Company (CPB). Call palooza in Market Vectors Oil Services ETF (OIH). Call love in Fiat Chrysler Automobiles (FCAU).

Mail Block: Listeners take over

Options question of the week. Let's have some fun. These "entertainment" stocks are pricing in big moves. Gun to your head: Which July ATM straddle would you rather own in your portfolio? $WWE $DIS $WYNN $SEAS #DegeneratePremiumBuyers #PalmsIn #FearNoTheta

• 17% - $WWE July ATM Strad: $7
• 37% - $WYNN July ATM Strad: $12
• 16% - $SEAS July ATM Strad: $2
• 30% - $DIS July ATM Strad: $5

Listener questions and comments:

• Comment from SecretlyPsyched: Is it possible to short-sell a campaign? Or how about an entire state party? Some sort of derivative strategy?
• Question from Nowledg3ispowerl: So turns out you guys are absolutely right. I have a very poor understanding of options. What's the best podcast episode for beginners?
• Comment from the chat room re: TSLA.
• Question from HeyBartenderman: Hi. I have a question for you. If I'm interested in buying options in a stock, what's the best way to go about finding the best strike/expiry?...Basically, if I sold a stock for a nice profit, but then wanted to participate in a move higher should it keep going up (for example $IQ). Or if I've been watching something, and think it's about to break out, but don't know exactly when, which options should I be looking at? Weeklies, monthlies, leaps, etc....When is it better to do one length of option over another, I think is basically the question I have. Thanks.

Around the Block: Will they or won't they re: trade wars.

Trading Block: Trump trade war spooks markets again. We are fully into zone two. Will vol explode, or is it just a bunch of nothing? Will there be a 50-handle move in the S&P within the next three days? Will this be another year of record volume? Which exchange is dominating the flow so far?

Odd Block: TSLA takes a drubbing. Returning to the Rent-A-Center trade from Tuesday. SBUX closing some locations. Is IQIY Inc. being impacted by the threat of trade war?

Strategy Block: Managing risk comes before sentiment. Going from a diagonal spread into a put spread.

Mail Block: Listener questions and comments

Options question of the week: Let's have some fun. These "entertainment" stocks are pricing in big moves. Gun to your head: Which July ATM straddle would you rather own in your portfolio? WWE? DIS? WYNN? SEAS? #DegeneratePremiumBuyers #PalmsIn #FearNoTheta

• WWE July ATM Strad: $7
• WYNN July ATM Strad: $12
• SEAS July ATM Strad: $2
• DIS July ATM Strad: $5
• @PatrickSnoke: Just pull the trigger so I don't have to choose the least worst option.

Listener questions:

• Question from Running Roger: Forgive me for asking but I need some help and have done something I didn't mean to. I bought ETSY puts at 40.00 strike and then wanted to sell to close. I accidentally sold a put contract, same strike price and same expiration date. Do they wash out? At this point I'm not even worried about the couple of hundred bucks I lost on the spread. I'm worried about selling the put contract. I used Robinhood on this one (instead of TOS) and I can't find a way to sell to close. Some help would be appreciated.
• Question from nowledg3ispower: I think I understand most things about calls. But I can't figure out and no one is able to give me an estimate if I have an option in the money. And I want to sell the option as opposed to letting the contract expire and buying the shares. What's my ballpark profit? I've been looking at this option for Twitter. If you have to provide an example.

Around the Block: What are we watching for the near future? Watching VIX. Andrew doubles down on a big move in the S&P.

Ttrading Block: Making up for lost ground. Weekend risk. Silver give up gains on tarriff talks.New low in the July VIX futures.Square up for no discernible reason. TWTR. TSLA. Put buyers. VIX zones. Fifty cent is back.Why are there so few market makers left? IL Rep takes it on. Where should regulators focus their attention?

Odd Block: Mystery TSLA puts. Rally-ho in Dropbox. Finding value in Rent-A-Center.

Mail Block: Listeners take over

Last week's question of the week: We've broken down the weekly ATM straddles expiring 6/22 for the follow popular names. Gun to your head, which ATM straddle would you reather buy? TSLA? FB? SPY? GLD?

• 42% - TSLA
• 25% - FB
• 15% - SPY
• 18% - GLD

This week's question of the week: : Let's have some fun. These "entertainment" stocks are pricing in big moves. Gun to your head: Which July ATM straddle would you rather own in your portfolio? WWE? DIS? WYNN? SEAS? #DegeneratePremiumBuyers #PalmsIn #FearNoTheta

• WWE July ATM Strad: $7
• WYNN July ATM Strad: $12
• SEAS July ATM Strad: $2
• DIS July ATM Strad: $5
• Comment from ThetaSeller: Can't we just sell an O.T.M. strangle instead? LOL
• Comment from traderjrae: I'm trying to decide which would be worse... Placing an ATM straddle when long options are overpriced, or getting shot in the head.
• Comment from 1SimpleTrader: Re: TSLA. Musk sells $600 million worth of stock in 2016, nobody bats an eye. He buys $10 million back and everyone loses their s*#t.

Around the Block: Trade wars? Watching the POTUS Twitter account.

In this episode, the all stars are live at the annual Option Pit Pro Trader Summit. Chaos, hilarity, and options discussion ensued.

Trading Block: What is happening in the markets this week?

• Stocks shake off G7 row as investors await US-North Korea summit
• Bitcoin tumbles as hackers hit South Korean exchange Coinrail
• New research shows European demand for US equity options remains strong

Odd Block: Funky closing spread in Owens Corning (OC), call love in BGC Partners, Inc. (BGC) and playing with house money in Beacon Roofing Supply (BECN).

Strategy Block: Uncle Mike Tosaw discusses Bitcoin/crypto future.

Mail Block/Options Question of the week

GoogleTrends is full of interesting, and surprising, data. When you analyze the "options" search data you uncover some surprising results. Which brings us to this week's question: Which "subregion" is currently ranked 1 for overall "options" interest by Google?

• 33% - Illinois
• 23% - California
• 32% - New York
• 12% - Maine

Listener questions and comments:

• Question from EAQ -Can you always rely on the bid ask spread when you're analyzing unusual options activity? Seems like that can be gamed?

Around the Block/This Week in the Market

• Jun 12 - Consumer Price Index, Treasury Budget
• Jun 13 - PPI, FOMC Meeting
• Jun 14 - Jobless Claims, Retail Sales
• Jun 15 - Industrial Production, Consumer Sentiment

Trading Block: Earnings!

• Monday - Dell, PaloAlto, CSMC, Orion
• Tuesday - HD Supply, Duluth Trading, Navistar
• Wednesday - Signet, Knot, SecureWorks,
• Thursday - Smuckers, Broadcom, At Home
• Warren Buffett and Jamie Dimon join forces to convince CEOs to end quarterly profit forecasts

Odd Block: Size opening puts in Banco Bradesco (BBD), Size opening call sale in Analog Devices, Inc. (ADI).

Mail Block: Options question of the week

Google Trends is full of interesting, and surprising, data. When you analyze the "options" search data you uncover some surprising results. Which brings us to this week's question: Which "subregion" is currently ranked one for overall "options" interest by Google?

• Illinois
• California
• New York
• Maine

Flash Poll: Let's stick with our Volatility theme to round out the week. Quite simply - which product do you think has the highest 30-day implied Volatility? No cheating (or checking with your broker)! What does your gut tell you? VIX? Bitcoin? TSLA? RUSSELL2000? RUT? IWM?

• Tesla, TSLA
• VIX
• Bitcoin
• Russell 2000: Emini, RUT

Listener questions and comments:

• Comment from Till - I'm looking forward to the rock lobster's ongoing webinar series on Asian options.
• Question from DollClub - How do you price ratio spreads. If it's a long 1x2 do you just multiply the cost of the second leg by 2 and then subtract it from the long leg? Is it just that simple?
• Question from Division1 - Why has there never been a cool trading video game? Options or stocks I don't care. Maybe Insider should do it?

Around the Block: What's on the radar for next week?