The Option Block

Trading Block: Last week in review

• Is the trade war back on the table?
• The May number are in: OCC cleared contract volume increased 8% in May.
• Credit Suisse announces 1-to-10 reverse split for $TVIX and $TVIZ effective June 8th.

Odd Block: Ratio call spread in Melco Resorts & Entertainment (MLCO), put apocalypse in Nektar Therapeutics (NKTR), and put roll in iShares MSCI Turkey Index Fund (TUR).

Strategy Block: Uncle Mike Tosaw discusses how to trade skew.

Around the Block: What are we looking at for the upcoming week?

Trading Block: Trade wars are back on the table. Credit Suisse announces 1-to-10 reverse split for TVIX and TVIZ effective June 8th.

Odd Block: Put palooza in Deutsche Bank AG (DB). Opening size call sale in Exeton Corporation (EXC). Calls and puts trade in PagSeguro Digital Ltd (PAGS)

Mail Block: Options question of the week

Holiday Weekends are notoriously tough for VIX traders. The markets love to crush Volatility going into these events. So we thought we'd poll the savvy VIX traders in our audience - where do you think VIX will OPEN on Tues 5/29?

• 39% - Here: 12-14
• 30% - Higher: 14-16
• 18% - Lower: 10.5-12
• 13% - Much Higher: >16

Options Flash Poll: Let's stick with our Volatility theme to round out the week. 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 Charlie Tunsen - I would like to add my vote for after hours options trading. It's ridiculous that the underlyings keep trading while the derivatives of those products are locked in an artificial deep freeze. I don't care if it's entirely illiquid or just a resting order book. Some liquidity is better than none when everything is melting down.
• Question from Mads Melken - Why don't you guys talk about Asian options?

Around the Block: What is on our radar?

Trading Block: Earnings!

• Friday - Foot Locker
• Best Buy reaffirms guidance - renews concerns about the inroads of Amazon.
• Monday review: Intuit - 191.30, ATM straddle: 11, approx.7%
• Gap Inc. (GPS) - 33, ATM straddle: 2.60, approx. 8%
• Netlifx vs. Disney - Who will come out ahead in the long run?

Odd Block: Big selloff in Petroleo Brasil (PBR). Size opening risk reversal in iShares JPMorgan USD (EMB). Call buyer giving up the ghost in Deutsche Bank AG (DB).

Mail Block: Options question of the week

Holiday Weekends are notoriously tough for VIX traders. The markets love to crush Volatility going into these events. So we thought we'd poll the savvy VIX traders in our audience - where do you think VIX will OPEN on Tues 5/29?

• Here: 12-14
• Higher: 14-16
• Lower: 10.5-12
• Much Higher: >16

Listener questions and comments:

• Question from Scott Somer - When doing earnings trades do you ALWAYS default to nearest Friday expiration.
• Question from Charlotte - How about that move in WWE? You buying calls like crazy?
• Question from Justin - I know you guys hate cheapie options trading but your comments about HMNY got me thinking. I could sell the June ½ straddle for about .25. If I could do that again in July then in two months I could have the stock almost for free. A free stock is even better than a cheap stock.
• Question from LTTW - HMNY AUG .5 strad is currently around .25-.30. I agree it makes no sense to buy that when the stock is .46 but I'm liking selling this straddle to get the stock for .16 by Aug exp. Maybe even work a .01 or .05 bid for some 1 calls further out on a ratio in case stock recovers aggressively?

Around the Block/Economic Reports:

• May 25 - Durable Goods, Consumer Sentiment

If you are interested in what the Federal Reserve has to say or has been saying, this is the week for you. Not only are the notes from the last meeting going to be released on Wednesday, several Fed presidents will be talking this week including three on Monday and on Friday.

Trading Block: Earnings!

• Tuesday - Kohl's
• Wednesday - Lowe's, Target
• Thursday - Best Buy
• Friday - Foot Locker
• Intuit - $191.30, ATM Straddle: $11, approx. 5.7%

Odd Block: Call palooza in PayPal Holdings Inc. (PYPL). Rolling calls in Union Pacific Corporation (UNP). Cheapie calls in Northern Oil & Gas, Inc. (NOG)

Strategy Block: Uncle Mike Tosaw discusses how to profitably buy OTM calls

Around the Block/Economic Reports:

• May 23 - New Home Sales, FOMC Minutes
• May 24 - Jobless Claims, Existing Home Sales
• May 25 - Durable Goods, Consumer Sentiment

If you are interested in what the Federal Reserve has to say or has been saying, this is the week for you. Not only are the notes from the last meeting going to be released on Wednesday, several Fed presidents will be talking this week including three on Monday and on Friday.

Trading Block: Featuring special guest host Greg Stevens, VP of Product Development for Options at Fidelity.

Earnings!

• Tuesday - Home Depot
• Wednesday - Cisco, Macy's
• Thursday - Walmart, Applied Materials, JC Penney, Nordstrom
• Friday - John Deere
• AMAT - 54.30, ATM straddle: 2.25, approx. 4%

Odd Block: Line in the sand puts in Teva Pharmaceutical Industries (TEVA). Call love in General Electric Company (GE). Roll/stupid in Mylan NV (MYL).

Mail Block: Options question of the week.

CME Group just announced a new Ether index this week - expanding the universe of Crypto indices. But, at the end of the day, we all want more tradeable products. Which derivatives product would you like to see next in the Crypto space? Bitcoin Ether Ripple LightCoin

• Bitcoin Options
• Ether Futures
• Ripple Futures
• LightCoin Futures

Listener questions and comments:

• Question from Litnic - What is the best "secret" options indicator that you use that isn't widely known or followed?
• Question from Brian P. - What's your favorite underlying to trade options on?
• Question from Alexi K. - How large do you think the universe of readily tradeable options is for the investing public?
• Question from QZ98 -Do you trade options on stocks below 5? What's the cutoff? 1

Around the Block: What are the all-stars keeping their eyes on?

Trading Block: Earnings!

• Tuesday - Home Depot
• Wednesday - Cisco, Macy's
• Thursday - Walmart, Applied Materials, JC Penney, Nordstrom
• Friday - John Deere

Odd Block: Crazy call palooza in Caesars Entertainment Corp (CZR). Bullish risk reversal in QUALCOMM, Inc. (QCOM).

Strategy Block: Uncle Mike Tosaw discusses what skew is.

Mail Block: Options question of the week

CME Group just announced a new Ether index this week - expanding the universe of Crypto indices. But, at the end of the day, we all want more tradeable products. Which derivatives product would you like to see next in the Crypto space? Bitcoin Ether Ripple LightCoin

• 73% - Bitcoin Options
• 13% - Ether Futures
• 7% - Ripple Futures
• 7% - LightCoin Futures

Listner comment:

• Shared from Sonic Merlin - My Monday SPY puts.

Around the Block/Economic Reports:

• May 15 - Retail Sales, Business Inventories, Treasury International Capital
• May 16 - Housing Starts, Industrial Production
• May 17 - Jobless Claims

Trading Block: Earnings!

• Thursday - Nvidia
• NVDA - ATM straddle: 17, approx. 6.5%

Odd Block: More Jan 2019 50 "catastrophe" put in Tesla Motors (TSLA). Crazy option palooza in Helios and Matheson Analytics (HMNY). Line in the sand puts in HP Inc. (HPE). Call trade in Nabors Industries Ltd. (NBR).

Mail Block: Options Question of the Week

VIX is back in the mid-teens but the Volatility space is hotter than ever. This is breathing new life into old Volatility products as they try to elbow their way into the VIX spotlight. Which do you think has the best chance of hitting it big with traders?

• 23% - RealVol- S&P Realized Vol
• 16% - VolDex -S&P ATM Vol
• 29% - Spikes- aka SPY VIX
• 32% - None: There's Only 1 VIX

Around the Block/Economic Reports:

• May 11 - Import and Export Prices, Consumer Sentiment

Trading Block: What's moving the options market?

• Options Volume for April: OCC announced that total cleared contract volume in April reached 405,853,179 contracts, a 27% increase from April 2017 volume of 320,547,848 contracts and marking the highest April on record.

Earnings!

• Tuesday - The Walt Disney Company
• Thursday - Nvidia

Odd Block: Bullish paper opening in Coty Inc. (COTY). Rolling calls in Marathon Oil Corporation (MRO). Near ATM earnings calls in Amicus Therapeutics, Inc. (FOLD).

Strategy Block: Uncle Mike Tosaw discusses when it might be better to use verticals or diagonal/calendars.

Around the Block/Economic Reports:

• May 8: JOLTS
• May 9: PPI
• May 10: Jobless Claims, Consumer Price Index, Treasury Budget
• May 11: Import and Export Prices, Consumer Sentiment

Originally Posted January 24th, 2017

Trading Block: The Trump Effect: President Donald Trump is set to unleash a cascade of stock-market anxiety - The day of reckoning for the Wall Street is here. McDonalds (MCD) earnings today. Friday close - $122.26; ATM Straddle - $3.52, approx. 3%; Open down $.75, Traded as low as $2.44; No more love for all-day breakfast.

Odd Block: Calls and puts trade in Morgan Stanley (MS), calls trade in Home Depot Inc (HD) and calls trade in Lending Club Corp (LC)

Mail Block: Questions, Comments, Polls, and more

Options #QuestionOfTheWeek

Earnings Season awakens! How do you play earnings using options? Are you an Earnings #Jedi or #Sith?

• 41% - Dark Side (Short Premium)
• 26% - Light Side (Long Premium)
• 25% - No Side - Avoid earnings
• 08% - Other (Reply/DM w/ideas)

Options #QuestionOfTheWeek - Lots of earnings on the horizon. Which company will outperform their earnings straddle by the largest margin?

• Alphabet - $GOOGL
• Microsoft - $MSFT
• Intel - $INTC
• Starbucks - $SBUX

Listener questions and comments

• Comment from Steve Place - CREE it is always CREE
• Question from Chris - Is there a way to subscribe to your posts as they go up on the website so you can get notified via email or mobile phone? Thanks, Chris
• Question from Fundconcept - Do you think activist investors opportunities will rise considering their experience with mkt volatility?

Around the Block/Earnings Highlights this Week:

• Tuesday - Alibaba Group, Verizon, Johnson & Johnson, 3M, Kimberly-Clark
• Wednesday - Boeing, Abbott Labs, eBay, Qualcomm, AT&T
• Thursday - Alphabet, PayPal, E-Trade, Microsoft, Southwest, Caterpillar, Intel
• Friday - Honeywell

Trading Block: Earnings!

• Monday - McDonalds
• Tuesday - Apple, Snap Inc.
• Wednesday - Tesla
• Thursday - Activision/Blizzard, WWE
• Friday - CBOE

Odd Block: Jan 2020 50 "catastrophe" puts in Tesla Motors Inc. (TSLA). Closing/rolling paper in ILG Inc. (ILG). Buying a put stupid in PowerShares DB US Dollar Index (UUP). Crazy put-paoolza in Sea Foods Co (DF)

Strategy Block: Uncle Mike Tosaw discusses ways in which to look at covered calls in a channeling market.

Around the Block/Economic Reports:

• Apr 30: Personal Income, Chicago PMI
• May 1: Construction Spending
• May 2: FOMC Meeting
• May 3: Jobless Claims, International Trade, Factory Orders
• May 4: Unemployment