THE WEEK AHEAD: EARNINGS AND A PERSISTENTLY LOW VIX
Updated
If you're going to play anything next week premium selling wise, it's going to be in earnings, because that's all that's really out there volatility-wise. The VIX remains persistently low here, and running a screen for exchange-traded funds with >70% implied volatility rank, and >35% implied volatility yields absolutely nothing.
Here's what showed up on my radar -- some sketchy ADR action (WUBA), a little bit of frisky biopharm (BCRX), and some beaten-down brick-and-mortar retail (M, SHLD, JCP):
WUBA (99/56) (Online Retail): It's scheduled to announce earnings on Thursday (2/23) (Short strangle/iron condor).
BCRX (98/287) (Biopharm): Earnings Monday (2/27) Before Market Open. (Short puts, short straddle). This is biopharm, which -- in itself -- should serve as a warning. You may want to do a bit more due diligence on this one than you would ordinarily, since they can explode, but also implode.
DKS (98/48) (Sporting Goods/Retail): Earnings are three weeks out, but I thought I'd put it out there since it's nearly ripe for play implied volatility rank/implied volatility wise. (Short strangle, iron condor).
M (96/49) (Department Store Retail): Earnings Tuesday (2/21) Before Market Open. Because we have a long holiday weekend here, with the markets being closed on Monday, I've probably missed an opp to play this one unless there is high vol afterglow post earnings. (Short strangle, iron condor).
SHLD (93/127) (Department Store Retail): I don't see that this has earnings up, but it's in the process of imploding. (Short puts, short straddle).
BBY (93/47) (Retail): Earnings 3/1 Before Market Open. We're still a ways out from earnings, so like DKS, nearly ripe ... . (Short strangle, iron condor).
HTZ (92/73) (Car Rental): Earnings 2/27 (Monday) After Market Close. Another one that's ripe right now. (Short strangle, iron condor).
JCP (88/65) (Department Store/Retail): Earnings Friday (2/24) Before Market Open. Another beaten down brick and mortar retail issue. (Short puts, short straddle).
OCN (85/70) (Financial): Earnings on 2/22 (Wednesday) After Market Close. (Short puts,short straddle).
Here's what showed up on my radar -- some sketchy ADR action (WUBA), a little bit of frisky biopharm (BCRX), and some beaten-down brick-and-mortar retail (M, SHLD, JCP):
WUBA (99/56) (Online Retail): It's scheduled to announce earnings on Thursday (2/23) (Short strangle/iron condor).
BCRX (98/287) (Biopharm): Earnings Monday (2/27) Before Market Open. (Short puts, short straddle). This is biopharm, which -- in itself -- should serve as a warning. You may want to do a bit more due diligence on this one than you would ordinarily, since they can explode, but also implode.
DKS (98/48) (Sporting Goods/Retail): Earnings are three weeks out, but I thought I'd put it out there since it's nearly ripe for play implied volatility rank/implied volatility wise. (Short strangle, iron condor).
M (96/49) (Department Store Retail): Earnings Tuesday (2/21) Before Market Open. Because we have a long holiday weekend here, with the markets being closed on Monday, I've probably missed an opp to play this one unless there is high vol afterglow post earnings. (Short strangle, iron condor).
SHLD (93/127) (Department Store Retail): I don't see that this has earnings up, but it's in the process of imploding. (Short puts, short straddle).
BBY (93/47) (Retail): Earnings 3/1 Before Market Open. We're still a ways out from earnings, so like DKS, nearly ripe ... . (Short strangle, iron condor).
HTZ (92/73) (Car Rental): Earnings 2/27 (Monday) After Market Close. Another one that's ripe right now. (Short strangle, iron condor).
JCP (88/65) (Department Store/Retail): Earnings Friday (2/24) Before Market Open. Another beaten down brick and mortar retail issue. (Short puts, short straddle).
OCN (85/70) (Financial): Earnings on 2/22 (Wednesday) After Market Close. (Short puts,short straddle).
Note
Scratching that WUBA off the list: monthlies only plus oddball strikes. Virtually unworkable.Note
BCRX has juicy short put premium relative to the price of the underlying (the March 17th 16 delta 4 put is going for .70 at the mid), but it's got monthlies only, which can extend duration longer than you'd like if you need to roll. Scratches off list.Note
For SHLD, I think you need to go to the weeklies to take advantage of the 1/2 strikes given the price of the underlying. The 19 delta March 31st 5.5 short put goes for 1.20 at the mid, but the bid/ask is grotesquely wide, making it unlikely that you'd get a fill for that. May be worth checking on during regular market hours to see if that tightens up at all; if it doesn't, pass.Note
In spite of its high implied volatility rank/high implied volatility, no setup seems to pay enough. The March 17th 7 short straddle pays a .94 credit at the mid, which borders on "totally not worth it."Note
Like JCP, no OCN setup appears "worth it." Unlike JCP, it only has monthlies, making it even last attractive for a play.
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