The Option Block

Trading Block: Investors Have Never Been More Short Volatility Futures

Odd Block: An update on the Tesla "Catastrophe Puts," call frenzy in Procter & Gamble Co (PG), size bullish combo/conversion/reversal in iShares IBoxx $ Invest Grade Corp. (LQD), and calls trade in Extended Stay America Inc (STAY).

Mail Block: More Tesla commentary

• From Michael Smith - This is an obscene about of OI that far out of the money.
• From Bart S. - Are those Puts bought or sold?
• From Gary Paster - A very interesting Collar which I will watch until expiration - Re: TSLA MAR 250/470 strangle that paper bought 400 times last week.

Flash Poll: What do you think of the planned launch of cash-settled #Bitcoin futures later this year?

• 34% - I Can't Wait!
• 17% - I'm Not Interested!
• 41% - I'm Somewhat Curious
• 8% - I'm Waiting for Ethereum

Question from Upward Momentum: Is that a good thing you think?

#QuestionOfTheWeek: Which #Options Exchange or group has carved out the largest piece of the #Options market so far in 2017?

• 72% - CBOE/BATS
• 17% - NASDAQ
• 3% - NYSE
• 8% - MIAX & BOX

Comment from FContangotrader: Urban Dictionary: Scaramucci Maybe 2-week options should be called Scaramuccis?

Comment from Tim A. - For the guy who wrote in about trading with free commissions. What about a box?

Around the Block: Earnings!

• Monday - Marriott
• Tuesday - The Walt Disney Company, Valeant Pharmaceuticals
• Wednesday - The Childre's Place, Mylan, Live Nation, Office Depot
• Thursday - Macys, Kohls, Nordstrom, Blue Apron, Snap Inc., Coca-Cola, Nvidia
• Friday - JCPenney

Also this week:

• Aug 8: JOLTS
• Aug 9: Productivity and Costs
• Aug 10: Jobless Claims, PPI, Treasury Budget
• Aug 11: Consumer Price Index

Trading Block: Apple earnings after the bell on Tuesday. ATM straddle $6, approx. 4%

Options Earnings Poll - $AAPL earnings on Tuesday. The market is pricing a 4% move - approx. $6. Do you think $AAPL can do it?

• 32% - $6 is Cheap, Buy Straddle
• 25% - $6 is Rich, Sell Straddle
• 30% - $6 Seems Fair
• 13% - Can't Stand $AAPL

Tesla earnings on Wed - $322.87. ATM straddle - $22.50, approx. 7%

Odd Block: Puts trade in Flotek Industries Inc (FTK), calls trade in Mitek Systems, Inc. (MITK), risk reversal in InterActiveCorp (IAC).

Strategy Block: Uncle Mike Tosaw discusses recent trades within his SPY portfolio.

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

• Earnings: Aug. 4: CBOE
• Aug 4: Unemployment, International Trade

Trading Block: AAPL earnings after the bell on Tuesday. ATM straddle $6, or approximately 4%.

Options Earnings Poll: $AAPL earnings on Tuesday. The market is pricing a 4% move, which is approximately $6. Do you think $AAPL can do it?

• $6 is Cheap- Buy Straddle
• $6 is Rich- Sell Straddle
• $6 Seems Fair
• Can't Stand $AAPL

Odd Block: Puts trade in Altria Group Inc (MO), puts trade in Pantheon NV (PTHN)

Mail Block: Listener Questions and Comments

• Comment from Shawn St.Peter - I think someone would buy those puts like a life insurance policy if for any reason something happened to Elon Musk, Tesla could drop like a stone. Elon is the reason they are successful and without him I'm not sure they could make it!
• Comment from Brian Collamer - I see 950 of the JAN19 50 puts go up @ $1.10 marked "spread". Market was 1.03x1.25. OI 28783 - FROM JULY 26
• Question from Matthew Therrien: I would be interested to see the guys discuss this strategy.
• Question from Richard D: Mark and the Option Crusaders (last time I called you Option Luminaries so I'm going to keep inventing new titles until one sticks!), I'm on a roll and got my questioned answered Tuesday, and I figured I'd try my luck with two more. I also included a 3rd less serious question!

  Often on segments like the odd block or similar segments on your other shows you talk about someone going bullish or bearish on certain contracts. For example let's take the Tesla way OTM puts you have mentioned. You talk about someone wanting to be long those catastrophic Tesla puts, but for each trade there is some party taking the other side. Since there is always another party in these trades why isn't it the inverse analysis - in this case for example that someone really wants to sell way OTM TSLA puts? Thanks!

Around the Block:

Earning this week:

• Tuesday - Apple, Lumber Liquidators, Herbalife
• Wednesday - Tesla, Groupon, Fitbit
• Thursday - Weight Watchers
• Friday - CBOE

This week in the market:

• Aug 1: Personal Income, Construction Spending
• Aug 3: Jobless Claims, Factory Orders
• Aug 4: Unemployment, International Trade

Trading Block: Amazon rallies 2%. Bezos surpassed Gates ever-so briefly as richest man in the world. Then there was a selloff.

Earnings Flash Poll - $AMZN is up next. ATM Straddle approx. $50 - aka 4.5%. Does a $50 earnings move seem reasonable or crazy to you?

• 39% - I'll buy that for $50
• 22% - I'll sell that for $50
• 28% - Seems Fair to Me
• 11% - I'm waiting for $AAPL

Odd Block: Call rolls in Dynavax Technologies Corporation (DVAX) and calls trade in JetBlue Airways Corporation (JBLU).

Strategy Block: Uncle Mike Tosaw gives us an update on the silver collar trade and discusses FAZ

Mail Block: Listner questions and comments

Tons of people giving us crap for not knowing the handle of our listener from the last show.

• Comment from John King - Dude, Louis Wintrhope III. You must be overdue for a live cast Trading Places party - on a trading floor, of course.
• Question from USA Patriot - What is ADV? the cheapest way to hedge my portfolio w options?

Around the Block/This Week in the Market:

• Jul 28: GDP, Consumer Sentiment
• Jul 28: ExxonMobil, AA

Trading Block: Earnings!

• Monday - Alphabet earnings after close today

Earnings Flash Poll - $GOOGL is on deck. With $GOOGL around $993 the ATM Straddle is pricing in a 4% move. Are you a buyer or a seller?

• Buy it - 4% is cheap
• Sell it: 4% is expensive
• 4% is just right
• I'm holding out for $AMZN

More earnings!

• Tuesday - GM, McD, AT&T, Chipolte, AMD
• Wednesday - FB, Coca-Cola, Boeing
• Thursday - Amazon, Intel, UPS, Southwest
• Friday - ExxonMobil, AA

Odd Block: Puts trade in Sirius XM Holdings Inc. (SIRI) and size ratio vertical in Scientific Games Corp. (SGMS).

Mail Block: Listener questions and comments

• Question from Alberto - How does this earnings straddle thing work again? What does that tell me?
• Question from Richard - Dear Option Luminaries, It has been a while years since I have written in (the last time I wrote in Alex was still one of the hosts)! Are there any trades that if you did not have a to pay brokerage fees would be excellent types of trades? I recently have been given the opportunity to trade options and equities for a near zero trading costs for about a year. I had in the past found some multi-leg spreads or underlyings with a really low prices unworkable because the trading costs made the potential gains or expected value too low. Thank you for your time and for the great shows you consistently point out! Uncle Mike after that 12 days of Christmas options parody from 2015 I think you should be given a "license to inflict umbrage" for at least a decade!
• Question from Louis Winthrope III - What are best options trades for the upcoming earning release for Twitter?

Around the Block/This Week in the Market

• Jul 25: Consumer Confidence
• Jul 26: New Home Sales, FOMC Meeting
• Jul 27: Jobless Claims, Durable Goods
• Jul 28: GDP, Consumer Sentiment

Trading Block: Earnings after the bell today:

• Ebay - $37.19
• Microsoft - $73.81

Earnings season is back! $MSFT & $EBAY are up next. $MSFT ATM Straddle = 3.5%. $EBAY ATM Straddle = 7% Which trade would you make?

• Buy $MSFT Straddle 3.5%
• Buy $EBAY Straddle 7%
• Sell $MSFT Straddle 3.5%
• Sell $EBAY Straddle 7%

NFLX Closed $161.70 on 7/17, traded as high as $185 (up $23) the next day.

Odd Block: Put trade in Home Depot Inc (HD) and puts roll in Spider S&P Biotech (XBI).

Strategy Block: Uncle Mike Tosaw discusses call rolls

Mail Block: Listnener questions and comments

• Comment from Roger Barone: Please advocate for ALL AMERICANS to be able to trade foreign equity or index options! Trying to get the SEC or Financial Services Committee to do the right thing is like talking to a wall. They are both controlled by the big banks and QIBs whose monopoly they protect. Insane archaic policy pushing Americans - and their money - offshore. Info: optionproject.wordpress.com/reform. I'm gonna try to change from the inside if all else fails: barone4congress2018.com.

Around the Block/This Week in the Market:

• July 20: Jobless Claims

Trading Block: NFLX earnings after the bell. Netflix trading around $161.19.

Options Flash Poll: Earnings season is back! $NFLX ($161.19) is currently pricing in a $13 ATM straddle (approx. 8%). What's your take?

• $13 is WAY too Cheap
• $13 is WAY too expensive
• $13 is JUST RIGHT
• I'm sitting this one out

Amazon taking on Blue Apron - filing a trademark for a competing meal-kit service

Odd Block: Puts trade in (CHRW), puts roll in Harley-Davidson (HOG), size call diagonal in STZ.

Mail Block: Listener questions and comments

• Question from FContangotrader: How about collaring a stock and seeing whats shakes out instead?
• Question from Fund Concept: Interesting piece on the 3D printing market. Do you think M&A is expected to rise in this area? 3D Printing Market by Offering, Process, Application, Vertical, and Geography. Global Forecast to 2023.

Around the Block/This Week in the Market:

• July 18: Import and Export Prices, Treasury International Capital
• July 19: Housing Starts
• July 20: Jobless Claims

Trading Block: Amazon Prime Day today. Lots of closing VIX puts. Waiting on what Yellen may say.

Odd Block: TSLA options tracker - 145 "catastrophe" puts hit the tape today, 20 more Jan 2018 20 puts also trade today. APRN first week review - paper buys 1080 Aug 9 calls for $0.40. Crazy tree or put spread in iShares MCSI Taiwan Index (EWT).

Strategy Block: A double strategy today! A put roll down trade in silver and a modified collar trade in XLF.

Mail Block: Options question of the week.

$APRN #options are live! Aug 8 calls top the charts so far. With $APRN at $8.15 Aug 8 calls are $.65-$.75. Would you rather?

• 28% - Buy Aug 8 Call for $.75
• 33% - Sell Aug 8 Call for $.65
• 6% - Buy $APRN Stock for $8.15
• 33% - Rather Eat $APRN's Food

Listener Question from Darqane: Assigned on short SPX puts means getting long the underlying? But how does that work if it is cash settled?

Around the Block:

This Week in the Market:

• Jul 14: Consumer Price Index, Industrial Production, Consumer Sentiment

Earnings This Week:

• Friday - Wells Fargo, Citi, and JP Morgan

Trading Block: Blue Apron options to list on CBOE exchanges on Monday."Amazon Prime Day" is today. A plan for new trading pit triggers a feud in the U.S. options market.

Odd Block: TSLA Options Tracker - 51 more "catastrophe" puts hit the tape today. Puts roll in L Brands Inc. (LB) Puts trade in Gap Inc. (GPS)

Mail Block: Listeners weigh in

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 and comments:

• Question from Tomlyn - What the heck does StoppedIM mean? - From IB Website: SPIM Transaction was the execution of an order which was "stopped" at a price that did not constitute a Trade-Through on another market at the time of the stop. Process like a normal transaction except don't update "last".
• Comment from PBiggers - Costco Could not get filled to close, then this happens! Need a bounce next week.
• Question from Alfieg - Interesting artice in Barrons. Any truth to it? How to Tame Volatility? Nix VIX and Buy CBOE.

Around the Block:

This Week in the Market

• Jul 11: JOLTS
• Jul 12: Beige Book, OPEC monthly crude oil report.
• Jul 13: Jobless Claims, Treasury Budget
• Jul 14: Consumer Price Index, Industrial Production, Consumer Sentiment

Earnings This Week:

• Thursday - Delta Airlines
• Friday - Wells Fargo, Citi, and JP Morgan

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 - @Options 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.