The Option Block

Trading Block: A mild market rally today. VIX cash back below the 14-handle. TSLA recovering from some recent losses; was up over 2% at mid-day. Yellen says Fed might hike interest rates relatively soon. Jobless claims in U.S. declined to lowest level in four decades.

Odd Block: Size calls trade in Financial Select SPDR (XLF), calls trade in Advanced Micro Devices (AMD) and puts trade in Freeport Mc MoRan Inc. (FCX).

Strategy Block: Uncle Mike discusses trading in IBB

Mail Block: Listener questions and comments

• Question from Mike The Bookie - Yeah, the ETF based volatility indexes. Is here a good place to bracket UVXY or VXX?
• Question from Ian Wagner ‏- Why trade volatility vs direction or income? Preference? More favorable risk/reward profile.

Around the Block/Earning Highlights this Week:

• Friday - Foot Locker, Abercrombie & Fitch

Trading Block: U.S. stock market Trump rally loses steam. Oil gets left behind in post-Trump rally. Trump presidency raises questions on the future of Wall St. regulation.

Odd Block: Calls trade in Canadian Natural Resources LTD (CNQ), calls trade in Financial Select SPDR (XLF) and calls trade in Square Inc (SQ)

Mail Block/Options #Question of the Week:

$TSLA ($182.50, down 3%, IV30:41, HV30:31) Straddle says $8.20 move (4.5%) by Friday close. How much will $TSLA actually move

• In line: ($8-$8.50)
• Beat Straddle: > $8
• Less than Straddle:
• Sick of #Musk / $TSLA

Listener questions:

• Question from Moolla - WTF is up with $DRYS? Thing is going nuts - takeover? Lots of calls trading?
• Comment from Burgh83: Can you explain what that means exactly?...thanks, I'm trying to figure options out still. But holding MRO, want to buy more...

Around the Block/Earnings Highlights:

• Tuesday - Home Depot, Dick's Sporting Goods
• Wednesday - Lowe's, Target, Cisco
• Thursday - Walmart, Best Buy, Salesforce
• Friday - Foot Locker, Abercrombie & Fitch

Trading Block: Volume in non-U.S. trading hours sets a new daily record. Pharma pop on Hillary loss.

Earnings After the Bell:

• DIS - $95.72, ATM Straddle = $2.70, approx. 3%
• NVDA - $68, ATM Straddle = $5.40, approx. 8%
• JWN - $57.10, ATM Straddle = $4.85, approx. 8.5%

Odd Block: Calls roll in YRC Worldwide Inc (YRC), calls trade in Huntington Bankshares Inc. (HBAN) and calls trade in Financial Select SPDR (XLF)

Strategy Block: Uncle Mike Tosaw discusses what to do when you get called away from a covered call.

Mail Block/Options #QuestionOfTheWeek:

$SPX Weds Weekly straddle says 2% move through election. How much will SPX / $SPY move through Weds 11/9?

• Over 3% - crazy move
• Between 2-3% - big move
• Between 1-2% - mild move
• Less than 1% - meh

Comment:

• Comment from Bongsong2: Trump win makes America great again.

Around the Block: Checking back on the earnings straddles from the top of the show. Who will be in the Trump cabinet? Funky sector rotation. Will tech buyers show up?

Trading Block: Dow soars 300 points after FBI clears Clinton again. Are certain volatility funds raising election risk for the stock market? Earnings today after the bell

• Fogo de Chao
• Hertz Global Holdings
• Marriott International - ATM Straddle = $2.75, approx. 4%
• The Priceline Group - ATM Straddle = $82, approx. 5.5%

Odd Block: Calls trade in SPDR KBW Bank ETF (KBE), calls and puts trade in iShares MSCI Mexico Fund (EWW) and puts trade in Marathon Oil Company (MRO)

Mail Block/Options #QuestionOfTheWeek:

$SPX Weds Weekly straddle says 2% move through election. How much will SPX / $SPY move through Weds 11/9?

• Over 3% - crazy move
• Between 2-3% - big move
• Between 1-2% - mild move
• Less than 1% - "meh"

Listener questions:

• Question from RKintz - What do you guys think of out of the money puts on PBR? I noticed heavy buying across several expiries the last few weeks (possibly speculation of prolonged glut in oil supply)
• Question from Real RK - What do you guys think of being long a little less than one standard deviation puts OTM for Jan in everyones favorite hyperbolic name Tesla?

Around the Block/Earning Highlights This Week:

• Tuesday - Valeant, CVS Health
• Wednesday - Valeant, Mylan, Shake Shack, Macys
• Thursday - The Walt Disney Company, Nvidia, Kohls, Nordstrom
• Friday - JCPenney

Trading Block: Wrapping up the week in options

Earnings this Week:

• Alibaba (Wednesday before the bell). Close: $101.15, ATM Straddle: $5.46. Open up: $2.65, Traded up: $2.95.
• Facebook (Wednesday after the bell). Close: $127.17, ATM Straddle: $6.68. Open down: $5.17, Traded down: $7.56.
• Starbucks. Close: $52, ATM Straddle: $2.45 - 4.7%

OCC cleared contract volume down 13% in October.

Options #QuestionOfTheWeek: Special #Earnings, #Election, #WorldSeries edition $FB ATM strd=$7.30 $VIX=17.20. Which outcome is most likely?

• $VIX > 20 before election
• $FB beats ATM Straddle
• @realDonaldTrump wins
• @Cubs win World Series

Odd Block: Calls trade in Itau Unibanco Holding SA (ITUB), puts trade in Electronic Arts Inc. (EA), calls trade in Powershares QQQ Trust (QQQ)

Strategy Block: Uncle Mike Tosaw discusses ways to use money management in your favor

Around the Block: Prescient polling...so many correct answers on the #QuestionOfTheWeek. Does that mean Trump will win?

Trading Block: The tumultuous presidential election could peak the VIX today. Emotional uncertain about the election? Stick to your investing plan.

Odd Block: Calls trade in Metlife Inc. (MET), calls and puts trade in Holly Frontier Corp (HFC) and puts trade in Encana Corp (ECA).

Mail Block/ Options #QuestionOfTheWeek:

Special #Earnings, #Election, #WorldSeries edition $FB ATM strd=$7.30 $VIX=17.20. Which outcome is most likely?

• $VIX > 20 before election
• $FB beats ATM Straddle
• @realDonaldTrump wins
• @Cubs win World Series

Listener questions

• Question from Nickel 45: Your talk of the P&G and COTY arb had my head spinning. So I did some research and came across terms like "put squeeze" and "GEX." Now my head is spinning even more. I included one of the links below for clarification. Is this stuff accurate or just noise? Thx.
• Question from PFC11: Whats up with $PG/Coty options arb? Any updates?
• Question from Barncat: I guess this is for the Options House crew. I am an Etrade customer but I am not happy with their platform. I have been thinking about making the switch to your firm for a few months. Will my account automatically switch over to Options House after the merger or I should I switch it manually now?

Around the Block/Earnings Highlights this Week:

• Tuesday - Pfizer
• Wednesday - Alibaba, Facebook
• Thursday - Starbucks
• Friday - Berkshire Hathaway

Trading Block/Earnings Palooza!

Before the Bell:

• TSLA: stock up 1.5%, $12.30 (6%)
• AAPL: stock closed $118.25, but dropped nearly $5 the next trading day - now trading around $115, straddle $5.25 (4.5%)
• TWTR: ATM straddle - $2.10, approx. 12% - stock nearly unchanged today.

After the Bell:

• GOOG: ATM straddle - $39.45, approx. 5%
• AMZN: ATM straddle - $50 - approx. 6%

Odd Block: Calls trade in Gilead Sciences Inc (GILD), calls trade in Southwest Airlines Co. (LUV) calls trade in Marathon Petroleum Corp (MPC)

Strategy Block: Uncle Mike Tosaw discusses when you would sell a long-dated option.

Mail Block/Options #QuestionOfTheWeek

Is #Trumpocalypse done? Is $VIX already pricing in @HillaryClinton win? Where will $VIX close on election day?

• UNCHD (Between 12-14)
• Elevated (15-18)
• Spike (Over 18)
• Selloff (Below 12)

Listener questions:

• Question from Trader Onki - I think you recently attended two trading conferences. Would you please share anything new for some of us retail traders who were not able to attend? Or if you already shared them, please direct me to right place?
• Question from ItsGoodUntilTheBearRaid - @Options Does this mean someone picked up 19k $8 calls? Refers to this article.

Around the Block: The big story is the elections, even during earnings season. Will the VIX continue to roll up? 2016: A lot of up, a lot of down, but going nowhere.

Trading Block: Earnings today before the bell: T-Mobile USA, Inc. Earnings today after the bell: Visa Inc. S&P 500 Skew Unwind Shows Complacency Over Clinton Win: Analysis. TD Ameritrade to buy Scottrade in two-step deal with TD Bank: Read more.

Odd Block: Calls trade in Fiat Chrysler Auto (FCAU), puts trade in Time Warner Inc. (TWX), calls and puts trade in CBS Corp. (CBS).

Mail Block/QuestionOfTheWeek:

Is #Trumpocalypse done? Is $VIX already pricing in @HillaryClinton win? Where will $VIX close on election day?

• Unchaged (Between 12-14)
• Elevated (15-18)
• Spike (Over 18)
• Selloff (Below 12)

Listener question:

• Question from Mark Brant: How do funds get orders routed to floor traders? If OH hosts HFs please discuss, thx. Starting one to run the Big Kahuna and favor OH!

Around the Block:

Earnings Highlights This Week:

• Monday - Visa
• Tuesday - Apple
• Wednesday - Tesla
• Thursday - Alphabet, Amazon, Twitter
• Friday - Exxon Mobil

This Week in the Market:

• Oct 25: Consumer Confidence
• Oct 26: International Trade, New Home Sales
• Oct 27: Jobless Claims, Durable Goods
• Oct 28: GDP, Consumer Sentiment

TRADING BLOCK

Earnings highlights today:

Before the bell: American Airlines, Dunkin Brands, Verizon Communications, Textron (TXT), Illinois Tool Works (ITW) and Union Pacific (UNP)

After the bell: E*Trade Financial Corporation, Microsoft Corporation, PayPal Holdings

The return of pit trading?

CFTCs Massad wants access to automated trader source code.

A Nasdaq speed upgrade is threatening IEX.

Resources mentioned in the show:

http://www.valuewalk.com/2016/10/cftc-automated-trading/

http://www.wsj.com/articles/a-nasdaq-speed-upgrade-is-threatening-iex-1476982856

ODD BLOCK

Calls trade in Activision Blizzard, Inc (ATVI), calls trade in Groupon Inc (GRPN), puts trade in Bunge LTD. (BG)

STRATEGY BLOCK

Uncle Mike Tosaw discusses the Wash sale

MAIL BLOCK

Question from James T - What do you think about HIMX ?

Question from TradeCraft - Are there options on carbon trading right? Do they trade much volume?

Question from Trader Onki - MTG Earnings MGIC Investment Corporation is expected to report earnings tomorrow before open. I attached the OI book, Heavy volume 10K contracts -Oct 8 call -Nov 7 puts -Jan17 5 puts -Jan17 10 calls. Would you please share your thoughts? Thank

AROUND THE BLOCK

Earnings Highlights this Week:

Friday - General Electric Company, Honeywell International, McDonalds Corporation

Trading Block: Earnings today before the bell:

• Bank of America (BAC) leading off before the market opened Monday with a positive result.

Earnings today after the bell:

• IBM: $154.50, ADV 23K; Today over 50k, ATM Straddle: $6.50, approx. 4%

Resources mentioned in the show:

• OptionsHouse blog
• Options market sees Netflix as a coiled spring ahead of earnings
• CEO sold millions in Wells Fargo stock before fraud revelations

Odd Block: Calls trade in SPDR KBW Bank (KBE), calls trade in Bank of America Corp (BAC) and calls trade in 3D Systems Corp (DDD)

Mail Block: Listener questions and comments

• Question from Adam - Could you please explain what it means to "gamma scalp" and why this is not called delta scalping? Thanks and your show has saved me a lot of money now that I have come to the dark side!
• Question from Ian Wagner - Why trade volatility vs direction or income? Preference? More favorable risk/reward profile?

Around the Block/Earnings Highlights this Week:

• Tuesday - Dominos, Goldman Sachs, Intel, Johnson & Johnson, UnitedHealth.
• Wednesday - Abbott Labs, American Express, eBay, Mattel
• Thursday - American Airlines, Dunkin Brands, E*Trade Financial Corporation, Microsoft Corporation, PayPal, Verizon Communications
• Friday - General Electric Company, Honeywell International, McDonalds Corporation