The Option Block

Trading Block: Black Monday 30th Anniversary, October 19, 1987.

Earnings:

• GE
• Honeywell
• P&G
• SunTrust

Odd Block: Massive closing paper in Norfolk Southern Corp. (NSC), and review from 8/17 - Rolling winning puts in WisdomTree India Earnings Fund (EPI).

Strategy Block: Uncle Mike Tosaw discusses hedging stock

Mail Block: Options question of the week

EarningsSeason is here! Which name do you plan to trade most actively this cycle?

• 31% - Tesla, $TSLA
• 41% - Amazon, $AMZN
• 17% - Apple, $AAPL
• 11% - Alphabet, $GOOGL

Options question of the week, volume two:

Do you think #Options should be traded after-hours like stock?

• 71% - Yes!
• 25% - No!
• 4% - Don't Care!

Listener Questions and Comments: What is on your mind?

• Question from Darqane - Assigned on short SPX puts means getting long the underlying? But how does that work if it's cash settled?
• Question from ButcherBoyz - What options trading strategy would you say is best suited to people with absolutely zero knowledge of options? Thanks.
• Question from Axel D. - Why does open interest only update once a day?

Around the Block: Earnings, earnings, earnings.

Trading Block: Earnings!

• Netflix, ATM straddle - $15.30, approx. 7.5%
• Tuesday - IBM
• Wednesday - Alcoa
• Thursday - Verizon, PayPal, Etrade
• Friday - Honeywell, P&G

Odd Block: Size upside love in Comcast Corp. (CMCSA), size roll in Alerian MLP (AMLP) and funky ratio vertical/stupid in Himax Technologies, Inc. (HIMX).

Mail Block: Options question of the week

Earnings Season is almost upon us! What's your favorite way to trade earnings using #Options?

• Sell Strad./Fly/Condor
• Buy Strad./Fly/Condor
• Sell Puts/Put Spreads
• Buy Calls/ Call Spreads

Listener questions and comments:

• Comment from PeterPan @pierhk - ATM straddle...Buy with ATR>2
• Comment from Trader J Rae @traderjrae - Usually a collar or protective put. Everything else held over earnings is a gamble, not a trade.

Another options question of the week:

Earnings Season is here! Which name do you plan to trade most actively this cycle?

• Tesla - $TSLA
• Amazon - $AMZN
• Apple - $AAPL
• Alphabet - $GOOGL
• Comment from Trade With Bulls LLC - $INTC

Still more questions:

• Question from McGillIMontreal: 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?
• Question from Ascentaa - What can happen to the current options being held of KITE which is acquired by GILD and is being delisted

Around the Block: GS tomorrow before the bell, ATM straddle - $6.10, approx. 2.5%.

Trading Block: Roku hit the trading floor. We present some stats from the first week.

• ADV: 4413 contracts
• OI: 12,800 contracts, puts slightly outnumber calls 1.2/1.

Plus, the craziest gold trade of the year.

Odd Block: Size put roll in iShares S&P 500 Index Fund (XSP), funky prints in Applied Materials, Inc. (AMAT) and combo Swap/Roll in Edwards Lifesciences Corp (EWW).

Strategy Block: Uncle Mike Tosaw discusses managing vertical spreads.

Mail Block: Options question of the week

EarningsSeasons is almost upon us! What's your favorite way to trade earnings using #Options?

• Sell Strad./Fly/Condor
• Buy Strad./Fly/Condor
• Sell Puts/Put Spreads
• Buy Calls/Call Spreads

Around the Block: Everything macro and the lack of reactions to everything macro. VIX futures. Earnings are coming up. AI rally?

Posted March 21st, 2017

Trading Block: Apple continues to rally. NASDAQ touches fresh intra-day record, but stocks fight for traction. CBOE Skew Index trending higher. It's about time.

Odd Block: Puts trade in GameStop Inc. (GME), call spreads trade in FireEye Inc. (FEYE) and puts trade in Grupo Televisa SAB (TV).

Mail Block: Polls, upsets, questions, and more.

Options #BrokerMadness tournament going on now.

• Tough battle today in #options #BrokerMadness as @optionsXpress takes on @IBKR, Who will emerge to take on @TradingBlock?
• @LSFinancial crushing @tradier

Options #QuestionoftheWeek: In #BrokerMadness spirit, lets bring the fight to exchanges. What is your fav? Where do you send your business?

• CBOE/BATS
• NYSE/Arca/AMEX
• NASDAQ/PHLX/ISE
• Other: BOX,MIAX, etc

Listener question:

• Question from JVao - Sell put + buy call = long delta exposure = cheaper than buying the underlying = maximizing skew = why does everyone not do this?

Around the Block: What's coming up this week?

Earnings!

• Tuesday - Nike, FedEx
• Thursday- GameStop

This week in the market:

• Mar 22: Existing Home Sales
• Mar 23: Jobless Claims, New Home Sales
• Mar 24: Durable Goods

Trading Block: UPS and FedEx stocks fall as Amazon moves further into delivery space. CBOE Holdings plans listing of Roku (ROKU) options with an expected start date of October 6.

Odd Block: More TSLA "Catastrophe" puts. 8/28 - Ratio risk reversal in Dollar General (DG). 8/28 - Nickel put palooza in (PSTG). 8/17 - Call frenzy in (XLU).

Strategy Block: Tosaw discusses interest rates and a new fund through RCM.

Mail Block: Listeners have their say

Options question of the week: Everyone's got electric cars on the brain. How are you playing the shift to electric in your #Options trading? $TSLA $GM

• Sell $TSLA Puts/Buy Calls
• Sell $GM Puts/Buy Calls
• Electric Cars Are A Fad!
• Other - Reply/DM w/Choice

Listener qusetions and comments: What's on your mind?

• Question from Yieldhawk - @Options is it true that MM's give each other signals tough pre specified order size?
• Question from Nelly2 - Just so I'm clear on the spread assignment thing. If I'm in SPX then I just get cash if the index closes inside my spread. But if I'm in a stock then I get the stock?

Around the Block: What might happen to move the market?

Trading Block: A quick overview of our live show from last week. OCC cleared contract volume last month down 9% from September 2016.

Odd Block: A quick summary of the TSLA "catastrophe" puts. Size opening combo in General Motors Company (GM). Puts roll into collar in United States Natural Gas Fund (UNG). Size vertical roll in Caesars Entertainment Corp (CZR).

Mail Block: Listeners have their say

Options question of the week:

Everyone's got electric cars on the brain. How are you playing the shift to electric in your #Options trading?

• Sell $TSLA Puts/Buy Calls
• Sell $GM Puts/Buy Calls
• Electric Cars Are A Fad!
• Other, Reply/DM w/Choice

Listener Questions: What's on your mind?

• Question from Salman Azhar - When are $ROKU stock options going to start trading?
• Question from Intelligence Man - Where can I see existing active options contracts?

Around the Block: Las Vegas. Puerto Rico. Oil. VIX futures. Will we have five straight days of VIX below 10?

Featuring special guests Kevin "Lex" Luthringshausen, and Matt "Tubby" Benson.

Trading Block: What is the Pro Trader Summit? VIX is back in the single digits. Memories of trading floor days.

Mega Live Mail Block:

• What's your favorite ETP?
• Questions from the audience.
• Question from Ryan Staddon - Any chance you could give me some information on how to or most effectively short ECB n feds QE programes or bond markets??
• Question from ISU - Question for the option block: Let's say you're short naked a bunch of puts and the trade goes against you, and you don't have the money to pony up? What can your broker do?
• Question from Matthew - Where do you source your Unusual Options Activity data from? We use TOS Option Hacker which is OK but you are getting the spreads in the Activities - would love to know how or where you get that level of data Many thanks, Matthew
• Question from Tim - Why isn't it standard or maybe required to let people close out shorts for free below $.10?

Trading Block: VIX is back in the double digits hitting 11.21 today. VIX volume is exploding: Over 2.5M contracts traded so far. Will traders take a knee too? Return of the VIX whale?

Odd Block: Put palooza in the iShares MSCI Japan ETF (EWJ), Upside call vertical in United Parcel Service, Inc. (UPS).

Mail Block: Listener Questions and Comments

• Comments regarding the possible Equifax insider trading:
• Comment from Jedi Markus -Sounds easy enough for a jury to understand it then....#GUILTY
• Comment from Sir Martin - Depends on which breach I guess? The one in March or the one which was discovered in July? Trying to say they definitely knew. If the first one was in March and they sold in August, they knew something was amiss.
• Comment from Yell0wbuddha - What they did was so illegal...it makes Pablo Escobar look like an amateur $EFX.

Options question of the week: $VIX products come in many flavors. Pick your poison! What's your favorite way to trade $VIX?

• $VXX
• $UVXY
• $XIV
• $SVXY

More questions from listeners:

• Question from Salman - Any recommendations on trading platform for mock trading? Options specifically
• Comment from FContangotrader - Its easier to make $ with $VXX puts when VIX is low
• Question from Molin - Why don't more options brokers offer trade recommendation engines like idea hub? I think a lot of people would like it and would trade more.

Around the Block: 2500. North Korea. Hurricanes. Presidential tweets.

Trading Block: VIX is back in the single digits, hitting 9.54 today. AAPL and the iPhone X. The Key Question on Equifax Options Trade Is Who Initiated the Order.

Odd Block: A funky fly/stupid in Finish Line Inc. (FINL). Put spread vs. calls in SPDR Euro Stoxx 50 ETF(FEZ). Size collar trade in Amicus Therapeutics, Inc. (FOLD).

Strategy Block: The listeners pick the strategy block: Uncle Mike discusses selling premium with a 9 VIX.

Mail Block: Listeners take control of the show

• Comment from Salman Azhar - I've been selling out of money debit diagonals during earning, on both upside and downside. Essentially exploiting vega during volatility crush. I lose some money at times but the overall strategy has been great. Have I been lucky or does this make sense?
• Comment from Jedi Marcus - Did the EFX executive know about the breach, but before they disclosed it to the public?

Around the Block: VIX futures have been consistently correct, VIX cash consistently wrong. What shoe will drop?

Trading Block: The S&P held 2500 today. Equifax gives away the keys to the kingdom. One exec even cashed in his options before the public disclosure. EFX options volume up is again today.

Odd Block: TSLA Options tracker is back. Size call vertical in Visa Inc. (V). Massive opening call print in T-Mobile US Inc. (TMUS).

Mail Block: Listeners have their say

Options question of the week: First #Harvey, then #Irma, now #Jose & more. We prep houses/cars/family for #disasters. How do you prep your portfolio?

• Get Long $VIX/$VXX/$UVXY
• Go To Cash/T-bills
• Buy Index/Stock Puts
• "Risk Assets" - Gold, etc.

ANOTHER options question of the week: $EFX exec. cashes out #Options worth $584k a month before disclosing massive breach. $EFX off near 35%. Well-timed, lucky or illegal?

• He Got Very Lucky
• He's a genius
• He acted on inside info
• Busy Freezing My Account

Listener Questions and comments:

• Comment from Kathryn Corby: How do you guys know the put buyer is not selling near-the-money puts at the same time? That would be smart.
• Question from Richard D - Dear Derivative Dignitaries, Its your long time listener "Richard D" again. I couldn't write over the last few weeks because I did not have a new appropriate salutation for you!

I have recently been looking at some Apple calendars. I'll see for example I can get near term Apple calendars near the strike using puts for about 5% less than calls.

For example, recently, with the equity price around $161 a long 162.5 Sept 22 / 29 call calendar would go for about $.62 while the puts about $.59. Aren't these supposed to be the same and since they are not can you arb this, especially if you do not have commission charges.

Thanks and I appreciate the wealth of knowledge AND laughs I get from your show. V/R, Richard

• Question from SacMan12: What are the odds that SVXY gets back to 70?

Around the Block: Will we hold 2500? Is it a buying opportunity in SLV? Risk reversals in VIX?