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Short Ideas: $COST $ARES $GOOG $FBDuring my last stock market analysis yesterday, I had identified some key indicators that showed this market is most likely headed lower. In order to take advantage of the possible flush back down to the lows, I have been looking for some good short ideas. The markets are currently consolidating and if we make new lows today or tomorrow, that would be a great time to start initiating new shorts. COST: Despite the relative strength, COST has been consolidating beautifully and is currently at the low of this consolidation. COST rejected and is now below the 200DMA. Good below 280 with a stop loss at previous lower high. ARES: ARES is currently consolidating after an impressive bounce. There is a clear level of support and resistance. ARES will be a good long above 31.70 or short below 29.00. Place stop losses at previous higher low if long and lower high if short. GOOG: GOOG has been pretty weak during the previous bounce and rejected the 20DMA. There is a rising wedge forming and GOOG is near the lower bound of this consolidation pattern. Good for a short below 1090 with a stop loss at 1129. FB: Same pattern as GOOG, rising wedge on the 30m timeframe. Good for a short below 155 with a stop loss above 161.50.
NASDAQ:GOOGShort
by Trader_Kaji
COST Doomsday prep?It has been a wild week so far on the market, with price swings up and down. Cryptocurrency seems to have a correlation with the US market, following the market. This is due to cryptocurrencies youth. In this post I want to see the share price of Costco will increase as demand increases with the current corona virus outbreak. The chart doesn't look great in the short-medium term with a double top and a strong horizontal resistance formed, however long term this would be a great entry point.
NASDAQ:COST
by Bixley
THE WEEK AHEAD: CHWY, LULU, COST, ORCL EARNINGS; EEM, VIXEARNINGS: It's a fairly light week for earnings, but there is some highly liquid underlyings to play for volatility contraction: CHWY (--/74): Monday, After Market Close. LULU (64/42): Wednesday After Market Close. COST (44/23): Thursday, After Market Close. ORCL (42/26): Thursday, After Market Close. Pictured here is a CHWY January 17th 21 short put at the 20 delta, paying .78 at the mid price as of Friday close with a 20.22 break even. In this particular case, I'm not looking to play earnings for volatility contraction, but waiting for earnings to pass, as well as lock up to end, which is supposed to occur on the 11th (Wednesday) with a whopping 83% of outstanding shares subject to lockup. Depending on what happens with the share price at the end of lock up, as well as implied volatility, I will look to put on a play thereafter. The only other play I'm potentially interested in is LULU, where the January 17th 190/200/260/270 iron condor is paying 2.61 with delta/theta metrics of -1.69/5.35. It's not a one-third the width setup, but LULU has had a tendency to move, so my inclination would be to go wider to stay clear of potential friskiness. EXCHANGE-TRADED FUNDS: UNG (55/54) TLT (44/13) USO (21/30) GLD (19/10) GDXJ (18/27) With the possible exception of UNG, shorter duration premium selling isn't ideal here, with rank below 50% and 30-day below 35%. As an interesting aside, however -- compare and contrast premium selling in UNG and USO versus trading /NG and /CL directly, using at-the-money short straddle pricing: UNG January At-the-Money Short Straddle: 2.68 versus 18.03 (14.9%) /NG January At-the-Money Short Straddle: .309 versus 2.25 (13.1%) USO April At-the-Money Short Straddle: 1.75 versus 12.32 (14.2%) /CL March At-the-Money Short Straddle: 6.76 versus 59.07 (11.4%) BROAD MARKET: EEM (8/16) QQQ (7/16) IWM (6/16) SPY (2/13) First Expiries in Which At-the-Money Short Straddle Credit Exceeds 10% of Value of Underlying: EEM: June: --4.48 versus 43.07 (10.4%) QQQ: June -- 21.49 versus 205.00 (10.5%) IWM: September -- 20.05 versus 162.83 (12.3%) SPY: September 34.46 versus 314.87 (10.9%) As with the exchange-traded funds, short duration premium selling isn't paying here, so your choices are to hand sit or sell in higher implied volatility expiries farther out in time. I've been largely opting for the latter, while simultaneously exercising some restraint as to sizing, since the last thing you want to do is tie up buying power with longer-dated setups, only to have literally nothing left over to take advantage of shorter duration volatility pops. Secondarily, I've been managing these longer-dated setups more aggressively, taking them off in profit in many cases a good deal short of 50% max. FUTURES: /6B (60/12) /NG (55/58) /CL (21/29) /6E (20/5) /GC (19/10) As with the exchanged-traded funds, volatility is in natty and oil with /NG paying in short duration (January). One thing I noticed is that /CL expiry-specific premium selling doesn't necessarily lend itself to going longer-dated (at least at this moment in time) since implied is about the same regardless of where you go (i.e., January: 28.9%; February: 29.5%; March: 29.3%), so all you're basically getting paid for is duration, as compared to -- for example -- expiry-specific implied in SPY, which generally increases incrementally over time (i.e., January: 14.5%; February: 15.7%; March: 16.8%, etc.). This is not necessarily a bad thing, just an observation of what you're getting by going out farther in time with /CL options versus other instruments that have a sort of expiry-specific implied volatility "term structure." VIX/VIX DERIVATIVES: VIX finished Friday at 13.62, with /VX futures contracts trading at 16.32, 17.51, 17.63, and 18.19 in January, February, March, and April respectively. Consequently, the contango environment remains productive for term structure trades in those expiries, although it's apparent that you won't get much trading February over January due to the fairly small differential between where those two contracts are trading at the moment. In practical terms, the February 17/19 short call vertical is paying .65 with a 17.65 break even versus 17.51; the March 17/19, .65, with a 17.65 versus 17.63. In other words, it doesn't pay to go longer in duration (February versus March) here ... . As before, I'll look to put on bullish assumption plays in VXX or UVXY at extreme lows (these setups don't work well in VIX directly due to /VX term structure) and add bearish assumption in VIX, VXX, and/or UVXY on VIX pops to greater than 20 on top of any VIX term structure trades that I'm working ... .
NYSE:CHWY
by NaughtyPines
THE WEEK AHEAD: COST, GDXJ, IWM, CL1!EARNINGS: COST (71/29) announces earnings this week, along with THO (89/66), PEP (32/21), and LEN (26/35). Pictured here is a directionally neutral iron condor camped out around the 14 delta strikes for the shorties paying 1.04 (.52 at 50 max) with break evens at 253.96/316.04, which are slightly wide of one standard deviation. The correspondent short strangle at 215/315 pays 3.74, although you can certainly tighten that up to get a surgical 2x expected move setup at the 260/310, which is paying 5.15. They're scheduled to announce on Thursday, October 3rd after market close, so look to put on a play in the waning hours of the New York session on Thursday. Although THO has more ideal volatility metrics, you'll face problems there with 5-wides in the November cycle, and PEP metrics are too low for my tastes to bother with, with 30-day background at 21. EXCHANGE-TRADED FUNDS GDX (74/34) SLV (73/27) GDXJ (70/38) GLD (61/15) TLT (58/15) XOP (44/41) I don't know if there's every been a longer period of time in which precious metals have been at the top of the premium stack for such an extended period of time. GDXJ has the most ideal metrics, with rank >50%, and implied >35%: the November 15th 34/43 delta neutral short strange with the short strikes at the 20 delta's paying 1.22 at the mid. If you're tired of playing gold, consider a play in XOP: the November 15th 22/23* almost a short straddle short strangle, is paying 2.08. * -- XOP finished Friday's trading session at 22.51, which is why I'd split the straddle a tad here in the absence of a directional assumption. BROAD MARKET Last week saw a bump in volatility, but it still isn't great short to medium term to sell premium in broad market exchange-traded funds. Running the 10% short straddle test on the highest implied volatility broad market exchange-traded fund -- IWM, shows that you'd have to go all the way out to February (145 days 'til expiration) to get the at-the-money short straddle to pay greater than 10% of the value of the stock; the IWM February 21st 151 short straddle is paying 15.11 versus Friday's closing price of 151.16. Not everyone likes to go out that far out in time, since it takes longer for those types of plays to come in, but would consider something in that cycle if I don't want to play earnings, I have substantial buying power sitting idle, or I'm inclined to a slower, less attention-intensive type of trading. The IWM February 21st 1 x 2 ratio'd 130/174 short strangle is paying 3.03/1.51 at 50% max, with 1x contracts at the 15 delta on the put side, 2x contracts at the 7 delta on the call side to accommodate skew, with the February 21st 120/130/2x172/2x175 "double double" paying 1.74. Setting up a double double in that expiry is a bit pesky at the moment, since the put side is limited to 5-wides. FUTURES /ZF (75/4) /SI (73/25) /6B (61/11) /GC (61/14) /UB (58/5) /ZB (58/10) /ZS (51/22) /ZN (44/5) /CL (37/40) Friskiness in precious metals (/SI, /GC), friskiness in treasuries (/ZF, /UB, /ZB, /ZN), with some volatility left in beans (/ZS) and oil (/CL). 10% Short Straddle Tests: /SI January 28th 17.5 short straddle: 1.93 versus 17.59. /CL December 16th 56 short straddle: 7.10 versus 56.18. I've got /CL setups on in both the November and December cycles, but this implies that it may not be worth initiating premium selling in /CL in the November cycle. Honorable Mention: /NG (25/44). I pulled the trigger on a UNG play at seasonal lows, after which /NG popped temporarily. It has receded back from mid-September highs around 2.70 and closed Friday around 2.40. Ideally, I'd want in at 2016 lows (<1.75), but that may be asking for a bit much ... . VIX/VIX DERIVATIVES VIX ended the week above 17. While an exciting development for short volatility traders, I would keep my pistol in my holster for the time being, waiting for VIX pops to greater than 20 to start legging into bearish assumption positions in either the VIX itself or derivative products like VXX or UVXY.
NASDAQ:COST
by NaughtyPines
Close Up Of Previous Idea and LevelsCOST Ideas are attached, had opportunities to get in and ride this ride on up while everyone else thought it had ran too far too fast. Now sitting at an inner resistance area of its lifetime channel. Break above and hold here then opens up 370's-380's next, knocking on the door of 400. Make sure you look at this chart through the correct lens, and don't just take anyone's word for it that its "overbought" or "exhausted" or "parabolic" and has to come down. It isn't and it doesn't. Congrats if you've been in here a while, or if you bought just a few weeks ago. For now just watch price action around this trend line, and trade accordingly. Happy hunting and GLTA!!
NASDAQ:COST
by UnknownUnicorn1314136
Like I Said, Think Again...As mentioned in previous idea about COST (linked) if you think this has run too far too fast, think again. As mentioned then, the critical level is this inner resistance near 300, which if broken can open the floodgates for COST. If it closes 305 convincingly, this thing can feasibly hit 400 without much trouble. Just because a chart looks straight up in "Auto" charting mode doesn't mean it's overextended. Take another look from the right perspective and things become much clearer. Congrats if you bought then. Happy hunting and GLTA!!
NASDAQ:COSTLong
by UnknownUnicorn1314136
THE WEEK AHEAD: COST EARNINGS; EEM, OIH, XOP, TSLAEARNINGS COST (46/25) announces earnings on Thursday after market close, so look to put on a play in the waning hours of the regular New York session. Pictured here is an iron condor in the July (53 days) expiry with the short options at their respective 20 delta strikes. Preliminarily, it's paying 1.55 at the mid price, a smidge shy of one-third the width of the wings, with break evens wide of the expected move at 228.45/266.55 and delta/theta metrics of -1.41/1.93, and a buying power effect of 3.45. For those who don't like waiting as long for their candy, the June monthly (28 days) iron condor with the shorties set up nearest the 20 delta -- the 230/235/260/265 is paying spot on one-third the width of 1.68 with break evens at 233.32/261.68, delta/theta metrics of -1.65/3.80, and a buying power effect of 3.32. As of Friday close, the May 31st (4 days) to June volatility contraction is from 34.7% to 24.7% or about 28.8%. Look to manage intratrade by rolling the untested side toward current price on approaching worthless with a 50% max take profit target. BROAD MARKET Majors are at the lower end of their 52-week ranges with background implied in QQQ and IWM in the low 20's; SPY and EFA, in the teens: EEM (32/21) QQQ (27/21) IWM (28/20) SPY (27/16) EFA (23/16) The EEM July 19th 36/40/40/44 iron fly is paying 25% of the width of the longs (8-wide) at 2.05 and break evens right at the expected move of 37.95/42.05, delta/theta metrics of -9.01/1.09, with a buying power effect of 1.95. Look to take profit at 25% max, as you would with a short straddle. Generally, these can't be effectively managed intratrade to delta balance without adding setup, so any trade management has to occur toward the back end of the cycle (i.e., taking untested off at approaching worthless, rolling out tested, selling untested side against in new cycle, assuming that the roll out of the tested and the sell against can be done for a net credit). QQQ is paying slightly more than one-third the width of the wings for the short option strikes nearest the 20's -- the 163/166/188/191: 1.16 credit, break evens at 164.84/189.16, delta/theta metrics of -3.55/1.55, and a buying power effect of 1.84. Manage intratrade by rolling in untested on approaching worthless toward current price; 50% max take profit. A similarly delta'd IWM setup is paying 1.06: the July 19th 137/141/159/162, with break evens of 139.94/160.06, delta/theta metrics of -1.82/1.34, and a buying power effect of 1.94. 50% max take profit. Manage intratrade by rolling in untested on approaching worthless toward current price; 50% max take profit. SECTOR EXCHANGE-TRADED FUNDS Top 5 By Rank: GDXJ (45/28); ASHR (42/28); OIH (40/37); XLB (41/31); EEM (32/21). The only short straddle paying in excess of 10% of the value of the stock is OIH with the July 19th 14 short straddle paying 1.51 versus 13.81 spot. The at-the-money short straddle in the closely correlated XOP (30/34), the July 19th 27, is also paying > 10%: 2.82 versus 27.12 spot. Manage intratrade by rolling in untested side on approaching worthless to cut net delta in half without inverting to a width greater than credits received; 25% max take profit. SINGLE NAME WITH EARNINGS IN THE REAR VIEW TSLA (62/83). The July cycle iron condor set up nearest the 20's -- the 150/155/235/240 is paying 1.78 at the mid, -31/1.65 delta/theta. Markets are wide, so look to do some price discovery if you want to get in on a play. Manage intratrade by rolling in untested on approaching worthless toward current price; 50% max take profit.
NASDAQ:COST
by NaughtyPines
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