The Option Block

Trading Block: The stock market slipped following Fed rate-hike rally, declining in oil prices. The U.S. equity benchmarks slipped Thursday as investors reconsidered the Wednesday rally.

Odd Block: Calls trade in GoPro Inc (GPRO), calls trade in Hecla Mining Co. (HL) and calls trade in Momo Inc (MOMO)

Strategy Block: Andrew Giovinazzi discusses closing trades in his strategy block debut.

Mail Block: Options #QuestionoftheWeek

$VIX = 11.50, $SNAP IV30 =56, $AAPL IV30 = 14, $OIV= 33. If you had to buy #Volatility-which is the best value?

• 22% - $SNAP - aka Tween Vol
• 19% - $AAPL - aka #Iphone Vol
• 35% - $VIX - aka $VIX
• 24% - $OIV -aka #Crude $VIX

Listener questions and comments:

• Question from NanFran - Tomorrow is a triple witching hour. What does that mean for options?
• Question from Goose - What is the difference between weekly options and standard options?

Around the Block/This Week in the Market: Mar 17: Industrial Production, Consumer Sentiment

Trading Block: Are SNAP options set for strong demand on their market debut? Fed kicks off tomorrow.

Odd Block: Puts trade in Encana Corp. (ECA), calls trade in Texas Instruments Inc. (TXN) and calls trade in Rio Tinto PLC (RIO)

Mail Block:

Options #QuestionOfTheWeek - $VIX = 11.50, $SNAP IV30 = 56, $AAPL IV30 = 14, $OIV = 33. If you had to buy #Volatility, which is the best value?

• $SNAP - aka Tween Vol
• $AAPL - aka #iPhone Vol
• $VIX - aka $VIX
• $OIV - aka #Crude $VIX

Listener questions and comments:

• Question from Anthony Carter - Snap puts, what the heck!?
• Question from Dr X - I just saw The Big Short, what do you guys think of it? Also, check out Logan if you have not already.

Around the Block: Beware the Ides of Yellen. Earnings: Del Taco and Oracle.

Trading Block: What's going on in the market?

• The BBI explained.
• What would drive the VIX up?
• Interactive Brokers to Stop Options Market-Making Activities.
• Snap options set for strong demand on market debut.
• Crude oil prices fall below $50 as US stockpiles rise.

Odd Block: Puts trade in ILG Inc (ILG), puts trade in SPDR S&P Oil and Gas (XES) and puts call and puts trade in SPDR S&P Oil and Gas (XOP).

Strategy Block: Uncle Mike Tosaw discusses credit spreads.

Mail Block: Listener questions and comments

• Question from C.J. Magnuson: Is Interactive Brokers basically being squeezed by pay for play?
• Question from Amy: What is the shortest expiration available for plain vanilla options?

Around the Block/This Week in the Market:

• Mar 10: Unemployment, Export Prices

Trading Block: OCC announced that total cleared contract volume in February was 333,411,251 contracts, 1% from February 2016 volume. Index options volume was up 11% with 39,247,030 contracts in February. An escalating broker price war has begun.

Odd Block: Puts trade in iShares Iboxx $High Yield Corp (HYG), calls trade in NRG Energy, Inc. (NRG) and calls trade in Dicks Sporting Goods (DKS).

Mail Block: Options #QuestionOfTheWeek #Oscars Edition.

#WarrenBeatty screwed up Best Picture. What's your biggest #Options screwup?

• 37% - Held onto shorts too long
• 37% - Time Decay killed me
• 11% - Gamma Exploded In My Face
• 15% - Vega Snuck up on My Delta

Listener replies:

• Comment from Matt Benson - Calls in TSLA last week, lol (in response to OQOTW)
• Comment from John Dakota - Too soon to tell. My one mistake was putting an Iron Butterfly on wrong had to lose 20 and a DT for it. Just took off BBY for 200+!

#QuestionOfTheWeek, part deux

SNAP #Options arrive Friday. Assuming $SNAP is still $25 - price the 1-week straddle exp. 3/17 (aka how much movement)

• Between $1 - $2
• Between $2 - $3
• Between $3 - $4
• Over $4

Listener questions and comments:

• Question from Hopgrower - Mark and The meatball, love your shows. My question is as follows: How much heart burn does this thought process give you. I have a directional bias and I buy a slightly in the money call 45 to 60 days out. The stock moves in my favor then stalls or retraces slightly. I then turn it into a vertical. Please fire away. Always learning. Thanks, Hopgrower
• Question from Tom Drake - Whats up with Mike's SLV collar?
• Question from Sean - You have discussed closing positions prior to earnings on past shows. Why would I take an OTM options off the table before the announcement? Is that not exactly when I want to have the option?

Around the Block:/This Week in the Market:

• Mar 6: Factory Orders
• Mar 7: International Trade
• Mar 8: Productivity and Costs
• Mar 9: Jobless Claims
• Mar 10: Unemployment
• Mar 10: Export Prices

Trading Block featuring special guest Ophir Gottlieb, CEO of Capital Market Laboratories, Editor in Chief @CMLviz

SNAP: The first big IPO of the year is off to the races. Supposed to list at $17, opened at $24 and traded up to nearly $26, up over 50% from the listing price.

Earnings earlier in the week:

• Tuesday - Target
• Wednesday - Best Buy
• Earnings today: After the bell - Costco

Odd Block: Puts trade in Shake Shack Inc (SHAK), calls trade in Sirius XM Holdings (SIRI) and calls trade in Dollar Tree (DLTR).

Strategy Block: Uncle Mike Tosaw discusses profit-taking scenarios.

Mail Block: Options #QuestionOfTheWeek #Oscars Edition.

#WarrenBeatty screwed up Best Picture. What's your biggest #Options screwup?

• 37% - Held onto shorts too long
• 37% - Time Decay killed me
• 11% - Gamma Exploded In My Face
• 15% - Vega Snuck up on My Delta

Options Pop Quiz - If $SNAP opens at $17 what price would you give the ATM straddle expiring 3/10? AKA how much movement do you expect?

• Between $1 - $2
• Between $2 - $3
• Between $3 - $4
• Over $4

Around the Block/This Week in the Market: It is a very heavy week as far as economic reports go with a bulk of them coming on Tuesday and Wednesday. Where did February go? Mar 2 - Jobless Claims

Trading Block: Dow sets sights on 12th straight record close. PCLN - $1631.25, ATM straddle approx. $69, approx. 4.2%.

Odd Block: Calls trade in CurrencyShares Euro Trust (FXE), calls trade in SPDR Euro Stoxx 50 (FEZ) and calls trade in Square Inc. (SQ).

Mail Block: Questions, polls, and more.

Options #QuestionOfTheWeek - #Oscars Edition. #WarrenBeatty screwed up Best Picture. What is your biggest #Options screwup?

• Held onto shorts too long
• Time decay killed me
• Gamma exploded in my face
• Vega snuck up on my delta

Listener questions and comments

• Question from Gabe Rich - Hi guys. Do you know of any instance where automatic assignment/exercise by the OCC failed? I am selling a lot of put spreads lately and I have this nightmare that if the stock drops (market crush) and my spread ends up big time in the money. It will be assigned the short leg but not exercised the long leg. Thus creating a huge stock position that might be fatal. I just wonder if that ever happened, something along the lines of flash crush but for options. I am assuming this automatic assignment/exercise process is computerized, and it could be subject to failures. This could be an interesting discussion with your panel of experts, with decades of experience! Thanks, and looking forward for some thoughts.
• Comment from Game Daydog -Just had a successful vertical spread and wanted to thank you for encouraging me to step out of my comfort zone and try different option strategies. That Iron Condor is next, even though it sounds like a move from an old kung-fu movie!

Around the Block:

This Week in the Market:

• Feb 28 - GDP, International Trade, Consumer Confidence
• Mar 1 - Construction Spending, Beige Book
• Mar 2 - Jobless Claims

Earnings this week:

• Tuesday - Target
• Wednesday - Best Buy
• Thursday - Costco

Trading Block: Earnings!

• Earlier this week: Tuesday - Home Depot, Macy's, Wal-Mart; Wednesday - Tesla, Fitbit
• TSLA: Close - $273.51, ATM straddle - $17.16, approx. 6%, Open - $264.08, down 3.4%
• FITBIT: Close - $5.88, ATM straddle - $.76, approx. 13%, Open - $5.92, effectively unchanged
• Earnings today: Before the bell - Kohls; After the bell - Nordstrom, BIDU, Herbalife
• NYSE plans a trial run for Snap IPO.

Odd Block: Calls trade in Carmax Inc (KMX), calls trade in Scientific Games Corp (SGMS) and calls trade in Fireeye Inc (FEYE)

Strategy Block: Uncle Mike Tosaw discusses specifics in a covered call wheel strategy

Mail Block: Quiz, questions and comments

Options #QuestionOfTheWeek - $VIX has already hit single digits under @realDonaldTrump. How low will it get during the rest of his term?

• It will not break 10 again
• Between 9 -10
• Between 8 - 9
• Below 8

Listener feedback:

• Question from Bigtonutz - 9372 $WY Jul21 35 calls went up in 1 block on the PHLX. Are they looking for this to probably going above 35 by July? Oh another question since I asked the other one and you did not answer, ahhh why do insiders keep selling shares? Do they feel this will drop for some reason? Just want to get your opinion.

Around the Block: Earnings Friday: JC Penney; Earnings next week: Best Buy, Costco, Target

Trading Block: Earnings earlier this week. Tuesday - Potbelly, T-Mobile Wednesday - PepsiCo, Inc., Cisco Systems, Inc., Groupon, Marriott International Earnings today. AVP - Crush, stock down 17% intraday.

Odd Block: Calls trade in Himax Technologies, Inc (HIMX), Calls trade in Health Care SPDR (XLV), Calls and puts trade in Mondelez International Inc (MDLZ).

Mail Block: #Options #QuestionOfTheWeek - Trading single #Calls and #Puts is fine, but smart #Options traders use spreads. What is your go-to spread? - Vertical/Ratio Vertical - Calendar/Diagonal - Butterfly/ Iron Butterfly - Iron Condor Question from Gramercy - So I am interested in $ATVI ahead of earnings. I buy 1 Feb 39.50 call for $1.50. The stock opens up the next day and I sell it out for $5. What am I missing? Why does everyone say this earnings stuff is so hard? Question from NIZ - Are there options on Snap? *Note from IPO filing - "Like many burgeoning tech startups, Snap warned that it "may never achieve or maintain profitability." Question from Mark Tucker - You think MaxPain was the reason to hold $AAPL below $132.40 for closing? Rest of Nasdaq seemed bright green. Thoughts? Thank you. Question from Richard R. - At 14:00 of episode 553 you stat that a $6 straddle was pricing an 8% move following earnings. Is this just the current ATM straddle?

Around the Block: The market will be closed Monday, February 20 for Presidents Day. This week in the market - Feb 16: Jobless Claims, Housing Starts Earnings next week - TSLA, BIDU

Trading Block: Earnings! Apple did not reach all time highs, but its close price is an all time highs. All time highs happened on April 28, 2015 @ 134.54. MIAX launches 15th options exchange with MIAX-Pearl. ICE Cool on Options: Speaking at the Credit Suisse Financial Services Forum in Miami Beach, Fla., Jeff Sprecher, founder, CEO, and chairman of ICE, painted a less than rosy picture of the options market.

Odd Block: Calls trade in True Car Inc (TRUE), calls trade in Union Pacific Corp (UNP) and puts trade in Amgen, Inc (AMGN)

Mail Block: Questions, comments, quizzes.

Options #QuestionOfTheWeek - Trading single #Calls and #Puts is fine, but smart #Options traders use spreads. What is your go-to spread?

• Vertical/Ratio Vertical
• Calendar/Diagonal
• Butterfly/ Iron Butterfly
• Iron Condor

Listener question:

Question from Game Day Dog - Hi. I have done well buying calls & puts, but have been practicing with credit & debit vertical spreads - see the DPZ trade picture. I am worried about max risk. How is this different than selling a naked option if my 195 protection is OTM at expiration? Can you discuss the "surprises" or things to watch for with vertical spreads? Thanks & great show.

Around the Block: What is on the radar for the rest of this week?

Earnings this Week:

• Tuesday: Potbelly, T-Mobile
• Wednesday: PepsiCo, Inc., Cisco Systems, Inc., Groupon, Marriott International
• Thursday: Time Inc., Waste Management

This Week in the Market

• Feb 14: Producer Price Index
• Feb 15: Consumer Price Index, Retail Sales, Industrial Production, Business Inventories
• Feb 16: Jobless Claims, Housing Starts

Trading Block: Oil prices prop up Wall Street; NASDAQ hits record high. MIAX launches 15th options exchange with MIAX-Pearl.

Earnings Today:

• Before the bell: Coca-Cola, Dunkin Brands Group, Twitter, Viacom
• After the bell: Activision, Nvidia, Zinga

DIS (earnings on Tuesday): Close: $109 - ATM straddle: $3.50, approx. 3.2%; Open: $109.52 - traded as high as $11.42, up 2.2%

Other earnings earlier this week:

• Tuesday:General Motors, Walt Disney Company, Take Two Interactive
• Wednesday: GrubHub, Time Warner

Odd Block: Calls trade in Foot Locker Group (FL), calls trade in Chesapeake Energy Co (CHK) and calls trade in Dicks Sporting Goods Inc (DKS)

Strategy Block: Uncle Mike Tosaw discusses his recent trades in Chevron.

Mail Block: Options #QuestionOfTheWeek - With so many different #Options expiration cycles available (weekly, etc) - which duration do you prefer?

• Longer than 1 month
• Monthly
• Weekly
• Daily/Intra-day

Listener Questions

• Question from EdwardUhs - Hey guys, what do you think about CMG? (from Mixlr chat on Monday 2/6)

Around The Block/This Week in the Market:

• Quarterly earnings continue to roll in as expected economic reports are very slow up until Friday.
• Feb 9: Jobless Claims
• Feb 10: Import and Export Prices, Consumer Sentiment, Treasury Budget