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GPS

THE WEEK AHEAD: BABA, GPS EARNINGS; TSLA, GDX, USO, GDXA quick, dirty of next week: EARNINGS WITH FAVORABLE METRICS FOR A VOLATILITY CONTRACTION PLAY BABA (86 rank/41% 30-day) announces on 8/23 (Thursday) before market open. Sept 21st 155/195 short strangle (16 delta), 3.68 credit. Sept 21st 150/155/195/200 iron condor, 1.32 credit. Notes: With the defined risk, you'll need to bring the wings in a touch more or use the same shorties to get the one-third the width of the wings in credit I ordinarily look for out of these. GPS (58 rank/46% 30-day) announces on 8/23 (Thursday) after market close. Sept 21st 31 short straddle, 3.26 credit. Sept 21st 28/35 short strangle, .91 credit. Sept 21st 26/31/31/36 iron fly: 2.78 credit. Notes: The flies can be pesky to manage if they go awry, so I generally opt for the naked short straddle over that if it's an underlying under $50. SINGLE NAME WITH EARNINGS IN THE REAR VIEW MIRROR TSLA (85 rank/79% 30-day): Sept 21st 250/255/350/355 iron condor, 1.61 credit. Notes: Very nearly one-third the width of the wings out of this 20 delta. EXCHANGE TRADED FUNDS GDX (76/31), GDXJ (56/33), USO (54/27), and EWZ (52/40) round out the top funds with ranks greater than 50. Notes: GDX and GDXJ may be amenable to bullish assumption directionals (short puts, short put verticals, upward call diagonals) while EWZ continues to have just Plain Jane premium that can you can skew directionally if you're so inclined (since it pretty much remains on its butt). USO has never been my favorite /CL proxy with XOP (18/28) being my go-to. MAJOR FOOD GROUPS QQQ has the highest 30-day (17), followed by IWM (15), SPY (14),and EFA (13). /VX term structure remains in contango with VIX at 13.10 as of Friday close versus the August /VX contract at 13.15, September at 14.40. The QQQ Oct 19th 168/172/2x188/2x190 "double double" (see Post Below) is paying 1.48 at the mid, although it's a little early for me to pull the trigger on an October setup (61 days 'til).
NYSE:BABA
by NaughtyPines
11
THE WEEK AHEAD: HD, CSCO, TGT, BBY, WMT, GPS, AMAT EARNINGSWe have bevvy of retail earnings announcements next week as the full season tapers off: HD announces earnings on Tuesday before market open with a background implied volatility of 23% (top quarter of 52-week range). CSCO -- Wednesday before market open with a background of 27 (near 52-week high). TGT -- Wednesday before market open, at 36 (top quarter of 52-week range). BBY -- Thursday, before market open, at 53 (near 52-week high). WMT -- Thursday, before market open, at 25 (near 52-week high). GPS -- Thursday, after market close, at 44 (above middle, but below top quarter of 52-week range). AMAT -- Thursday, after market close, at 41 (near 52-week high). I generally prefer playing earnings where the background volatility exceeds 50%, and it's in the top-quarter of its 52-week range, implying that the best candidate for an earnings contraction play would be BBY with AMAT close behind/worth watching for an increase in implied volatility running into the announcement. Broad-market exchange-traded fund-wise, there isn't much to play: the Brazilian exchange-traded fund continues to print implied volatility percentages at or above 30% (currently, 35-ish), followed by the petro exchange-traded fund, XOP (34). For non-earnings individuals, TEVA (72/upper end of its 52-week range) continues to garner my attention, along with CTL (56), which -- post-earnings -- maintains high volatility. The majors -- well, there isn't much to look at. IWM leads with a background implied of 16, which is basically tied with the QQQ's at 16. SPY comes in at a paltry 13 ... . On the volatility product front, the first /VX future trading at or above 16 is out in May (184 DTE), meaning that a <90 DTE VIX Term Structure trade isn't in the offing for me. However, the VXST/VIX ratio finished Friday's session somewhat elevated (.92), so it's worth keeping an eye out for any >1.00 pops in which to consider Contango Drift trades, particularly as we wind into a rollover with VIX spot trading at 11.29 relative to the Nov contract's 11.60 (2 DTE).
NYSE:HD
by NaughtyPines
TRADE IDEA: GPS JULY 1ST 17.5 SHORT STRADDLEOne of the few earnings plays this season that meets my >70 implied volatility rank, >50 implied volatility criteria -- GPS. It announces on Thursday after market hours, but I won't have time to fiddle with it then, so I'm shooting for a fill here. I looked at both an iron condor and a short strangle, but those didn't have enough juice in them to make them worthwhile given the price of the underlying. I'm also going farther out than usual for an earnings play, as I generally like to give straddles greater leeway to work themselves out with time (although I'm naturally hoping we get beaucoup volatility contraction post-earnings such that I can take it off fairly immediately). Metrics: Probability of Profit: 56% Max Profit: $208/contract Max Loss/Buying Power Effect: Undefined/~$350 Theta: 2.24/contract Delta: -3.3/contract Break Evens: 15.42/19.58 Notes: A short straddle is a short call and short put at the same strike ... . Unlike a strangle, I'll look to manage this at 25% max profit because the "profit zone" is somewhat narrower as compared to an iron condor or short strangle ... .
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by NaughtyPines
2