The Option Block

We dug through the archives to bring you the very best of the Option Block.

Trading Block: Gold, the Fed and volatility on this last episode before the holiday weekend.

Odd Block: Calls trade in Globalstar, Inc. (GSAT), calls roll in Michael Kors Holdings, Ltd (KORS) and call buyers in Eldorado Gold Corp (EGO)

Strategy Block: Uncle Mike Tosaw discusses the strategy of "boxing off"

Mail Block: Options question of the week, listener questions and comments

#QuestionOfTheWeek: Major market indices are pushing record highs. Everyone has protection on the brain. How do you protect your portfolio?

• Just Move to Cash/Bonds
• Protective ATM/OTM Put
• Put Spread/Ratio Put Spread
• Collar or Collar with a Kicker
• Question from Yukoner - Are covered calls still a viable strategy in a 401k these days?
• Question from Trader Taz1 - Do you have a broker recommendation for someone who is new to options? Maybe with a cash account, since I do not want to do margin?

Around the Block: Not much happening in the last week of the year.

Trading Block: The polar vortex might have snuck into the S&P, a narrow range of movement today. Vol off half a handle. How likely is the Fed to make an announcement before the end of the year?

Odd Block: Calls trade in GlobalStar, Inc (GSAT), calls trade in Walgreens Boots Alliance (WBA) and calls trade in Energy Transfer Equity LP (ETE).

Mail Block: Listener questions, comments, and opinions

#QuestionOfTheWeek: Financial advisors represent the last options frontier. What level of options knowledge do you expect from your advisor?

• None: I will do it myself
• Level 1: Buy Puts/Calls
• Level 2: Income & Vol
• Level 3:Option Specialist

Listener questions:

• Question from Roiratpd81: @Options thanks! I am a new trader. How should I interpret this chart? Say for BAC? Thanks!
• Question from Hitman - Is the crash priced in yet? What about black sawn events? Any options indicators showing one of those may be on the horizon?
• Question from Martin Stann - I like to trade the 2X levered SSO ETF. What are your thoughts on this and is it a viable candidate for call writing and put writing?
• Question from Aldo2 - Hey Mark, Lobster and UM. Just wanted to get your guys thoughts on Vanguard as an options broker. I know most people use them for mutual funds but I have most of my assets there. Is it a viable platform for the type of trading you guys advocate? Hope you're surviving the big chill in Chicago.

Around the Block: Expecting a very quiet week.

Trading Block: The market and everything else rallied. Vol drops. Fed forecasting. What's the scoop with the shiny stuff?

Odd Block: Call trade in Financial Select Sector SPDR (XLF), call spreads trade in Michael Kors Holding LTD (KORS), calls trade in KEY Corp. (KEY)

Strategy Block: Uncle Mike Tosaw discusses how to choose a financial advisor.

Around the Block: The Fed has spoken. Now what?

Trading Block: Stocks mixed as Dow hits another new record high, flirting with 20,000. Crude and XLE up too. Wealthy investors show a Trump bump in confidence, UBS Wealth Management Americas reported Thursday.

Odd Block: Puts trade in Transocean ltd (RIG), calls and puts trade in SPDR S&P 500 trust (SPY) and calls trade in Hain Celestial Group (HAIN).

Mail Block: Question of the week and listener questions

#QuestionOfTheWeek: Financial advisors represent the last options frontier. What level of options knowledge do you expect from your advisor?

• None: I will do it myself
• Level 1: Buy Puts/Calls
• Level 2: Income & Vol
• Level 3: Option Specialist
• Question from Adam Sam - Hello again... I figured out a way to predict the direction of the market for the day with 75% accuracy. I am wondering what would be the smartest way to trade this info? Should i sell the opposite options OTM with 45 days? And buy them back at the end of the day? Or buy OTM in the direction it will move? I cannot predict the after hours so i want to get out at the end of the day. How would you hedge such trade? Thank you
• Question from BGT - What happens to options if the fed raises rates in December?

Around the Block/This Week in the Market:

• Dec 12 - Treasury Budget
• Dec 13 - Import and Export
• Dec 14 - PPI, Retail Sales, FOMC
• Dec 15 - Jobless Claims, CPI
• Dec 16 - Housing Starts

Earning Highlights:

• Thursday - Adobe, Oracle

Trading Block: Stocks rise as NASDAQ joins Dow, S&P and notch new record highs. Understanding the minutiae of VIX. The Tao of Don: Sell or sell not. There is no buy.

Odd Block: Calls trade in CBOE Holding Inc (CBOE), Massive calls trade in Financial Select SPDR (XLF), Calls trade in Bank of America Corp (BAC).

Strategy Block: Uncle Tosaw discusses trading collars in Apple

Mail Block/Options#QuestionOfTheWeek:

#CrudeOil has been volatile lately. $OIV, aka Oil $VIX, is 37.33. Where will #Crude #Volatility close on Friday?

• Between 37 - 38.5
• Between 38.5 - 40
• Below 37
• Above 40

Around the Block/This Week in the Market: Dec 9: Consumer Sentiment

Trading Block: CBOE sets record volume with S&P 500 Index and CBOE Volatility Index in November. Apple still up on the year. What might next year look like? Lululemon on Wednesday closed $57.16. The ATM straddle is trading at $5.35, or approx. 9%.

Odd Block: Puts trade in Barrick Gold Corp (ABX), Calls trade in Market Vectors Russia ETF (RSX), Calls trade in Pandora Media Inc (P)

Mail Block/Options#QuestionOfTheWeek:

#CrudeOil has been volatile lately. $OIV, aka Oil $VIX, is 37.33. Where will #Crude #Volatility close on Friday?

• Between 37 - 38.5
• Between 38.5 - 40
• Below 37
• Above 40
• Question from Trader Chad - Are ATM straddles really a good way of predicting a stock or are they just more noise like whisper numbers?

Around the Block/This Week in the Market:

• Dec 6: International Trade, Factory Orders
• Dec 7: JOLTS
• Dec 8: Jobless Claims
• Dec 9: Consumer Sentiment

Earnings Highlights:

• Tuesday - Toll Brothers, Autozone
• Wednesday - Costco, Lululemon

Trading Block: Earnings after the bell today: TD Ameritrade, Krogers, Lands End, Dollar General. OCC cleared contract volume increased 20% in November. Why was November such a massive month for markets around the world? XLE up 8% since Tuesday. Volume 1.5x ADV, calls slightly over puts.USO up over 10% since Tuesday - volume 2x ADV, calls over puts 2-to-1. VOLUME 2X ADV TODAY, CALLS OVER PUTS 2-TO-1. Trump plan to dismantle Dodd-Frank unlikely to be realized, says TABB Group.

Odd Block: (Review from Monday) Calls and puts trade in SPDR S&P Oil and Gas Exp (XOP), alls trade in Financial Select SPDR (XLF), calls trade in Seadrill LTD (SDRL) and calls trade in Ford Motor Co. (F).

Strategy Block: Uncle Mike Tosaw discusses his new modified collar strategy.

Mail Block/Options#QuestionOfTheWeek:

Commodities are capturing a lot of attention and generating a lot of #Volatility. What's your option of choice?

• $GLD / Comex Gold
• $USO / $WTI
• $TLT / ED / 10YR
• EUR/USD, GPB/USD
• Question from Go Hoos - If I buy 10,000 XYZ calls at $1 and sell them for $2, who loses that $1M? The MMs who make $$ on expired option premiums? TIA!

Around the Block/This Week in the Market:

• Friday - Nonfarm payrolls

Trading Block: Jobs report and the Fed set the holiday table this week. Opinion: How the "Trump bump" to the U.S. economy could fall flat?

Odd Block: Calls trade in VALE SA (VALE), calls and puts trade in SPDR S&P Oil and Gas Exp (XOP) and calls trade in ArcelorMittal SA (MT)

Mail Block/Options#QuestionOfTheWeek:

Commodities are capturing a lot of attention and generating a lot of #Volatility. What is your option of choice?

• $GLD / Comex Gold
• $USO / $WTI
• $TLT / ED / 10YR
• EUR/USD, GPB/USD

Listener questions: Listeners have their say

• Question from Marco - Trading on election night was horses**t! What can an options trader do when the futures are plummeting but the options are not open? So frustrating.
• Question from Chris Brecher - Is legal pot driving squeeze in $DRYS? Debating now on. Maybe if I was high, I would have believed all the bull flags on the way up:)

Around the Block/Earnings Highlights:

• Tuesday - Tiffany & Co.
• Thursday - TD Ameritrade, Krogers, Lands End, Dollar General

Trading Block: Stocks jump as S&P 500 and Nasdaq set new record highs. Goldman insiders underwater options were salvaged by the Trump election.There are still earnings being released.

Earnings today:

• Tyson Foods (before the bell)
• Palo Alto Networks (after the bell)

Odd Block: Calls trade in NRG Energy Inc (NRG), calls trade in Ultra DJ - AIG Crude Oil ProShares (UCO) and calls trade in Cypress Semiconductor Corp (CY).

Mail Block: Listener questions and comments

• Question from RealRK - Juice for free is always nice. I would have never thought of mixing in the call time spread. Musk uses the massive short interest, tweets and it goes up ten points. Thanks fellas! Also, check out the call/put ratio on CY (Cypress Semiconductors). OI near and out of the money in the next three months contracts shows huge call buying (Probably 100 million plus in value). Buyout rumors, so I got long a small amount of January 11 calls. Let me know what you guys think Thursday! Thanks

Options#QuestionOfTheWeek

Great traders need many weapons in their arsenals. But everyone has a favorite. What is yours? Reply/DM w/others.

• Vertical/Ratio Vertical
• Iron Condor/Iron Fly
• Straddle/Strangle
• Covered Call/Short Put
• Addition from Options_Addict - Options ratio spreads and naked purchases.

More questions:

• Question from Rico Landa - Did you guys see this? Is Cuban talking about buying puts or something else? Guess he has a savvy financial advisor?
• Question from JNic - When the market is rallying like it is now what is wrong with just buying calls? Seems to work or is that just too basic?

Around the Block/This Week in the Market:

• Nov 22: Existing Home Sales
• Nov 23: Durable Goods, Jobless Claims, New Home Sales, Consumer Sentiment, FOMC Minutes
• Nov 24: Thanksgiving Day, markets closed
• Nov 25: International Trade, Markets close at 1:00 pm Eastern.