The Option Block

Trading Block: The numbers are in for 2017

• OCC announced 2017 volume reached the third highest total cleared contract volume ever with 4,327,576,930 contracts, a 4% increase from 2016.
• December cleared volume was 346,006,092 contracts, up 3% from December 2016.
• OCC also reported record-breaking 2017 volume for cleared futures with 138,029,762 cleared contracts; a 32% increase from 2016.
• What were our top 5 Option Block episodes for 2017?
• Odd Block: Call spreads trade in (EWJ); Funky ratio call spreads in Marriott; Calls closing out in (DWDP).

Mail Block: Listener feedback

Our final options question of the week for 2017 was an easy one. Quite simply: 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. We'll share the interesting ones on the network. Happy New Year!

• 16% - Death of Volatility/VIX
• 32% - Rise of Bitcoin
• 49% - The Unstoppable Bull
• 3% - Other

2017 was the "Year that Volatility Died." So our first options question of the week for 2018 is a puzzler. Quite simply: where do you think $VIX will close at the end of the year?

• Between 7.5-9.99
• Between 10-12.49
• Between 12.50-14.99
• Above 15

Listener Questions and Comments:

• Question from Scott Somer - At 11 AM on December 22, RIOT stock traded at 24.20 , normally you would expect the 23 call to trade for 1.20 more than the 23 put, this morning the January 19th 23 calls were only trading TEN CENTS above the 23 put, Am I missing something for this to be normal pricing? Or is there something else I need to know about this? With this stock at 4.24, I can buy a June 5 call and Sell a June 5 put for a credit of 2.30. Looks like I'm getting the stock for 2.70. What am I missing since we now the options market does NOT give money away?
• Comment from MCgILLmONTREAL -Had a question regarding $GIL and two large 3K 30 strike puts on 10/9 with earnings 11/2. Can you guys explain any rationale around that? Had a question regarding $GIL and two large 3K 30 strike puts on 10/9 with earnings 11/2. Can you guys explain any rationale around that?

Around the Block: VIX. Earnings are coming. Dow 25,000. SPX 2700. Non-farms. Will there be a sell-off in Q1?

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: NKE after hours. ATM straddle - $3.40, approx. 5%. Looking back on 2017: The year without volatility.

Odd Block: More Jan 2019 50 "Catastrophe" puts in (TSLA). Size roll/diagonal in Autodesk Inc. (ADSK). Size call party in First Data Corp. (FDC). Closing call party in Blackstone Group LP (BX).

Strategy Block: Uncle Mike Tosaw discusses his most recent trading strategy in SPY.

Mail Block: Options question of the week.

Now it's a party! Bitcoin futures are live on both CME Group and CBOE. But everyone's asking us the $1M question, "When will we get Bitcoin Options?" So we thought we'd ask you: When will we be able to trade options on these futures?

• Q1 2018
• Q2 2018
• Q3 2018
• Q4 2018

Breaking News Poll: Are you interested in the new Bitcoin futures, except you hate futures? Maybe an ETF is more your speed? Are you interested in trading the new Bitcoin ETF announced today by ICE?

• Yes
• No
• I prefer the Futures
• This is getting crazy!

Listener questions and comments:

• Comment from Tom - Let's be honest. If any of us had size Bitcoin we would have sold out ages ago and probably be kicking ourselves right now.

Around the Block/Economic News: Dec 22: Durable Goods, Personal Income, New Home Sales, Consumer Sentiment

Trading Block: JPMorgan is lighting up Twitter. It's one of the bank's best ideas for 2018. A lot of div plays lighting up the tape today. Now it's a party! CME Bitcoin futures are live! Volume a little lighter in XBT now. Taleb is not a fan of Bitcoin - at least not without options. Petterrfy also hates Bitcoin - but it didn't stop him from buying ads on the futures.

Odd Block: More Jan 2019 50 "Catastrophe" puts in Tesla Motors (TSLA). Size call party in Regions Financial Corp (RF). Ratio call vertical in CSX Corporation (CSX). Rolling puts in Synchrony Financial (SYF).

Mail Block: Time to hear from you.

This week's Options Break: Finally seeing Star Wars "The Last Jedi." Did you see it? What did you think?

• 24% - Better than Force Awakens
• 24% - Worse than Force Awakens
• 39% - Not a Star Wars fan
• 13% - Better than Empire

Options Question of the Week: Now it's a party! Bitcoin futures are live on both CME Group and CBOE. But everyone's asking us the $1M question - "When will we get Bitcoin Options?" So we thought we'd ask you - When will we be able to trade options on these futures?

• Q1 2018
• Q2 2018
• Q3 2018
• Q4 2018

Listener questions and comments

• Question from LLN8 - What products would you like to see on the bitcoin/crypto front?
• Comment from TMal - Rumors that Donald Trump is long Bitcoin, hence why he hasn't opined on the big story of the year.

Around the Block/This Week in the Market

• Dec 19: Housing Starts
• Dec 20: Existing Home Sales
• Dec 21: Jobless Claims, GDP
• Dec 22: Durable Goods, Personal Income, New Home Sales, Consumer Sentiment

Trading Block: Volume is a little lighter in XBT now. Taleb is not a fan of Bitcoin, at least not without options.

Apparently Bitcoin is destroying the world.

Question of the week: Everyone's caught Bitcoin fever these days. The first "real" futures launched at CBOE. Our question is simple - are you going to trade them this week?

• Heck Yes!
• Hell No!
• I already traded them
• Sticking w/Coinbase et al

Odd Block: Closing vertical w/ puts in Time Warner Inc. (TWX). Closing upside calls in Symantec Corp. (SYMC). Size ITM put roll in Sanchez Energy Corp. (SN)

Mail Block: Options question of the week

Options during earnings is a coin flip. But you know you love to do it. What's your earnings options MO?

• Buy Calls/Call Spreads
• Buy Puts/Put Spreads
• Sell Puts/Put Spreads
• Fly/Iron Fly/Iron Condor

Listener Questions: What's on your minds?

• Comment from Tom - Let's be honest. If any of us had size bitcoin we would have sold out ages ago and probably be kicking ourselves right now.
• Question from GiddyFranciscan - Sell in May and go away. What option strategy benefits from the profound market malaise that occurs over the summer?
• Question from KBX32 - What is the cheapest way to hedge my portfolio with options?

Around the Block/Economic Reports:

• Dec 15 - Industrial Production

Trading Block: We are living in the Bitcoin futures world. At 5:00 pm CT on Sunday, XBT futures opened at $15,000 and 890 contracts were traded by 7:15 pm. Total volume Sunday overnight was a reported 3,001 contracts, with nearly 20 trading firms actively participating.

Apparently Bitcoin is destroying the world.

Options Question of the Week: Everyone's caught Bitcoin fever these days. The first "real" futures launched today on CBOE. Our question is simple - are you going to trade them this week?

• Heck Yes!
• Hell No!
• I already traded them
• Sticking w/Coinbase et al

Odd Block: More Jan 2019 50 "catastrophe" puts in Tesla Motors Inc. (TSLA). Put-palooza in GameStop Corp. (GME). Call love in Nucor Corporation (NUE). Cheapie call roll in Glu Mobile Inc. (GLUU).

Mail Block: Last week's option question of the week

The war for Bitcoin derivatives is heating up again. CME Group is launching futures on 12/18. CBOE just announced a 12/10 launch date. Not enough? Nasdaq also announced futures with a planned Q2 2018 launch. With so many choices-How will you trade Bitcoin in 2018?

• 50% - CBOE Futures 12/10
• 28% - CME Futures 12/18
• 3% - Nasdaq Futures Q2 2018
• 19% - "Old School" Bitcoin

Listener questions and comments:

• Question from WillyCat9 - Hi Mark great show keep up the good work! I am used to a diagonal call spread being buying a longer term call with lower strike while selling a shorter term call with higher strike, much like a covered call. However, the TOS platform option scanner often generate a diagonal spread with buying shorter long call while selling the longer term. Can you explain the difference between the two? Why is the TOS identifying selling the longer term while buying the shorter term as high probability trade? I want to trust the TOS scanning result but it seems kind of risky. Would love to hear your thoughts, Thanks!
• Question from Taj Penaso - Hi, will there be options for bitcoin once the futures are traded?? Or just the futures until there are tradeable ETFs available? Thanks

Around the Block/Economic Reports:

• Dec 12 - PPI, Treasury Budget
• Dec 13 - CPI, FOMC Meeting
• Dec 14 - Jobless Claims. Retail Sales
• Dec 15 - Industrial Production

Trading Block: Someone has the gall to downgrade Tesla, but the stock still rallies. OCC Cleared contract volume increased 1% in November. It was the highest November ever for options volume.

Odd Block: Jan 2019 50 "Catastrophe" puts in Tesla Motors Inc. (TSLA) Paper doubling down in (JBLU). Calls trade in Union Pacific Corp (UNP). Puts trade in Amgen, Inc. (AMGN).

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

Mail Block: Options question of the week.

The war for Bitcoin Derivatives is heating up again. CME Group is launching futures on 12/18. CBOE just announced a 12/10 launch date. Not enough? Nasdaq also announced futures w/ for a planned Q2 2018 launch. With so many choices-How will you trade Bitcoin in 2018?

• CBOE Futures 12/10
• CME Futures 12/18
• Nasdaq Futures Q2 2018
• "Old School" Bitcoin

Listener Question:

• Question from Scott Somer -How would movement to treat capital gains to FIFO for the underlying stocks be good or bad for the options market?

Around the Block/Economic Reports:

• Dec 7: Jobless Claims
• Dec 8: Unemployment, Consumer Sentiment

Trading Block: GOP tax plan passes the Senate. CBOE Plans December 10 Launch of Bitcoin Futures Trading

Odd Block: Size OTM call paper in Plains GP Holdings LP (PAGP). Funky ratio verticals/stupid in Him Technologies Inc. (HIMX). Weird backwards post-earnings roll in L Brands Inc. (LB).

Mail Block: Options question of the week

The war for Bitcoin Derivatives is heating up w/ both CME Group and CBOE jumping into the fray. How do you think you'll be trading Bitcoin in 2018?

• CME BRR Futures
• CBOE Gemini Futures
• Stick w/ Regular Bitcoin
• Still don't trust Crypto

Listeners weigh in:

• Question from The Financial Grynch - Do you REALLY reckon long options is profitable?

Around The Block/ Economic Reports:

• Dec 4: Factory Orders
• Dec 5: International Trade
• Dec 6: Productivity Costs
• Dec 7: Jobless Claims
• Dec 8: Unemployment, Consumer Sentiment

Trading Block: Dow sets new record by hitting 24,000 and SPX hits 2,657. This was the fifth 1,000-point milestone for the Dow this year, first hitting 20,000 on Jan. 25. The market is still in rally mode, awaiting tax deal. North Korea unable to spook the market.

• Question from Henry Gannett - Is $VIX way up today due to call buying/pricing? It's at 11.70 right now, instead of maybe 9.0 at other, recent SPX all-time highs. The VIX is umbrage-ing me right now!

Odd Block: More Jan 2019 50 "Catastrophe" puts on the tape yesterday - OI breaks 30k. Funky ratio risk reversal in SPDR S&P Retail ETF (XRT). Put spread vs. near-term calls in Aetna Inc. (AET). Near-term Dec call love in Caesars Entertainment Corp. (CZR).

Strategy Block: Uncle Mike Tosaw discusses buying front month OTM calls and the power of gamma.

Mail Block: Listeners weigh in

Options question of the week: SPY always dominates the options volume charts. But what do you think people are actually trading in SPY? Take a guess at the Top OI position in SPY right now. No cheating (or checking with your broker) - use your grey matter & your "gut" to pick the right one.

• Jan 262 Call
• Dec 2019 150 Put
• Dec 280 Call
• Jan 240 Put

Questions and comments:

• Comment from FContangotrader - @OptionPit @Options @OptionVol The best way to show off your Italian heritage :) gluten free. RE: Couple names first child after Olive Garden.
• Question from Real Yute - I see that every strike have its own bid and ask prices, with different volatility. Now my question is.....can options be day trade....are scalped just like with stocks...? Are is volatility only move few times maybe a month....are from the options market open....the prices for options (strikes) will start to change just like how its changing in the stock market....?

Around the Block/ Economic Reports this Week:

• Nov 30: Jobless Claims, Personal Income
• Dec 1: Construction Spending

The Trading Block: SQ and QCOM dominating the options charts today. Looks like QCOM activity is actually a dividend play. Light on earnings this week. Goldman execs cash out decade-old options just days before they expire.

The Odd Block: TSLA tracker; Weird house-money put roll in WDC; Tons of Dec 26 puts in DKS; Size near-term call love in NEM.

The Mail Block: Options question of the week

SPY always dominates the #options volume charts. But what do you think people are actually trading in SPY? Take a guess at the top OI position in SPY right now. No cheating (or checking with your broker) - use your grey matter and your "gut" to pick the right one.

• Jan 262 call
• Dec 2019 150 put
• Dec 280 call
• Jan 240 put

Listener questions and comments

• Question from PBiggers‏: how will the market react if the tax bill fails to pass in the senate on Thursday? Bullish, modest correction or major correction?
• Comment from Robert Baker: in response to your questions regarding TSLA catastrophe puts Jan 19 $50; I believe that they are insurance policies for model 3 depositors to recover their $5000 deposit in the event that Tesla goes bankrupt. After all, it's the cheapest form of insurance because the $50 put will be worth $5000 if TSLA goes to zero. Keep up with your show - it's fun.