THE WEEK AHEAD: BBBY EARNINGS; XOP, XLE, EWW PREMIUM SELLING
Updated
EARNINGS:
Next week's earnings announcements are light, with options liquid underlying to play for volatility contract even lighter.
BBBY (52/119/18.8%*) announces on Wednesday after market close, so look to put on a play before the end of Wednesday's session. Pictured here is a July 17th (12 days) 11 short straddle, paying 2.03 as of Friday close, 18.8% of where the stock was trading at 10.81. Look to take profit at 25% max or otherwise manage the trade by rolling out to August if it doesn't work out fairly immediately.
DAL (43/89/12.3%*) also announces this week on Thursday. A July setup isn't paying much, so I'd be inclined to go out to August to make it more compelling, where the 23/36 short strangle paid 1.83 as of Friday close.
EXCHANGE-TRADED FUNDS ORDERED BY RANK/PERCENTILE AND SCREENED FOR >35% IMPLIED:
EWW (37/37/15.0%**)
EWZ (37/56/10.5%)
GDXJ (34/53/14.6%)
XLE (33/45/14.6%)
GDX (28/39/12.7%)
XOP (22/57/16.3%)
USO (9/51/13.2%)
The most bang for your buying power buck appears to lie in XOP, followed by EWW, XLE, and GDXJ.
BROAD MARKET:
IWM (41/36/10.0%)
IWM is the only broad market exchange-traded fund where the background implied remains greater than 35.
IRA DIVIDEND GENERATORS:
EWZ (37/56/10.5%)
... and EWZ the only dividend generator with a 30-day greater than 35.
* * *
Broad market volatility has come in quite a bit here, but SPY 30-day implied at 27.2% isn't exactly a "low volatility environment" either. Nevertheless, it's not a bad thing to sit back, let powder dry out a little bit in preparation for the next volatility wave and/or more productive earnings announcements, particularly with underlyings like NFLX, MSFT, and IBM announcing next week, along with a number of financials: C (36/55), WFC (45/54), BAC (33/48), JPM (32/43), MS (30/45), and GS (27/41).
* -- Percentage of stock price the July 17th short straddle was paying as of Friday close.
** -- Percentage of stock price the August 21st short straddle was paying as of Friday close.
Next week's earnings announcements are light, with options liquid underlying to play for volatility contract even lighter.
BBBY (52/119/18.8%*) announces on Wednesday after market close, so look to put on a play before the end of Wednesday's session. Pictured here is a July 17th (12 days) 11 short straddle, paying 2.03 as of Friday close, 18.8% of where the stock was trading at 10.81. Look to take profit at 25% max or otherwise manage the trade by rolling out to August if it doesn't work out fairly immediately.
DAL (43/89/12.3%*) also announces this week on Thursday. A July setup isn't paying much, so I'd be inclined to go out to August to make it more compelling, where the 23/36 short strangle paid 1.83 as of Friday close.
EXCHANGE-TRADED FUNDS ORDERED BY RANK/PERCENTILE AND SCREENED FOR >35% IMPLIED:
EWW (37/37/15.0%**)
EWZ (37/56/10.5%)
GDXJ (34/53/14.6%)
XLE (33/45/14.6%)
GDX (28/39/12.7%)
XOP (22/57/16.3%)
USO (9/51/13.2%)
The most bang for your buying power buck appears to lie in XOP, followed by EWW, XLE, and GDXJ.
BROAD MARKET:
IWM (41/36/10.0%)
IWM is the only broad market exchange-traded fund where the background implied remains greater than 35.
IRA DIVIDEND GENERATORS:
EWZ (37/56/10.5%)
... and EWZ the only dividend generator with a 30-day greater than 35.
* * *
Broad market volatility has come in quite a bit here, but SPY 30-day implied at 27.2% isn't exactly a "low volatility environment" either. Nevertheless, it's not a bad thing to sit back, let powder dry out a little bit in preparation for the next volatility wave and/or more productive earnings announcements, particularly with underlyings like NFLX, MSFT, and IBM announcing next week, along with a number of financials: C (36/55), WFC (45/54), BAC (33/48), JPM (32/43), MS (30/45), and GS (27/41).
* -- Percentage of stock price the July 17th short straddle was paying as of Friday close.
** -- Percentage of stock price the August 21st short straddle was paying as of Friday close.
Note
As a defined risk alternative to the BBBY naked 11 short straddle in July: the August 17th 6/11/11/16 iron fly, paying 2.64 at the mid (.64 at 25% max) with a max loss metric of 2.36 -- basically a bet that price stays within the expected move.
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