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IYR

IYR Elliott Wave Analysis: Pullback can Provide Buying ChanceHello Traders, In this Elliott Wave Analysis, we will have a look at the Real Estate ETF (IYR). IYR ended the cycle from 03/23/18 (72.71) low at the peak of 07/06/18 (82.20) in blue wave (3). Below from there, the ETF ended the correction from 07/06/18 (82.20) peak in blue wave (4) at 79.23 low. Up from there, it broke already to new highs, confirming that the next extension higher has started. Near-term IYR ended the correction from 07/06/18 (82.20) peak in blue wave (4) at 79.23 low. The internals of blue wave (4) unfolded as Elliott Wave double correction which ended red wave W at 07/18/18 low (79.76), red wave X pullback at 07/19/18 peak (81.26) and red wave Y of blue wave (4) at 07/25/18 (79.23). Up from there, the ETF ended the cycle from 07/25/18 low in red wave A at 08/06/18 (82.50) peak. The internals of that move unfolded as a leading diagonal where it ended black wave ((i)) at 07/26/18 low (81.01), black wave ((ii)) pullback at 07/30/18 low (79.24), black wave ((iii)) at 07/31/18 peak (81.51), black wave ((iv)) at 08/01/18 low (80.15) and finally black wave ((v)) of red wave A at 08/06/18 peak (82.50). The ETF is currently in the progress of correcting the cycle from 07/25/18 low (79.23) in 3-7 or 11 swings in red wave B. Near-term focus remains towards 81.03-80.81, which is 100%-123.6% Fibonacci extension area of black wave ((w))-((x)) to end red wave B pullback. Afterwards, the ETF is expected to find buyers for red wave B higher ideally or should do a 3 waves reaction higher at least. We don’t like selling it into a proposed pullback as the right side remains to the upside.
AMEX:IYRLong
by Elliottwave-Forecast
THE WEEK AHEAD: TSLA EARNINGS, EEMAlthough AAPL and GILD announce earnings next week, the only earnings announcement that interests me from a premium selling standpoint is TSLA, with a background implied volatility of over 65%. The 73% probability of profit May 11th 255/330 short strangle is paying 5.83 at the mid (off hours quotes) with its defined risk counterpart, the 68% probability of profit May 11th 250/255/330/335 iron condor paying 1.06, which is less than I'd like to see out of a 5-wide. On the exchange-traded fund front, most of the most liquid funds are sub-35% implied volatility, which generally makes for less than compelling premium selling plays. For what it's worth, however, the top five ranked by implied volatility are: XOP (30.4%), OIH (30.2%), EWZ (27.4%), GDXJ (25.5%), and FXI (23.1%). I'm already in XOP and GDX plays, so I might consider having another go at "the Brazilian" in the June cycle -- the June 15th 39/47 short strangle (18 delta) is paying .77. Naturally, more aggressive delta strikes pay more, and it may be amenable to a short straddle/iron fly, depending on your account size, risk appetite, and patience for managing an underlying that seems to whip all over the place on occasion ... . Alternatively, I might go with another net credit double diagonal due to setup flexibility over a static one-off play, this time in the fairly broad market EEM, which has been closely tracking FXI of late, but is of greater liquidity: the June/Sept 44/47/47.5/50.5 double net credit diagonal is .26 at the mid for a three-wide, and I'd probably look to bail on it at 20% the width of the 3.00 wings ... . I'll also look at bullish directional shots in IYR, XLI, XHB, and/or XLP, which appear to be the weakest of the sectors currently. Pricing those out in non-New York hours tends to be non-productive since the deep-in-the-money back months show wide bid/ask in off hours, so it's tough to tell how much you're going to have to commit buying power wise to play ... .
NASDAQ:TSLA
by NaughtyPines
THE WEEK AHEAD: TWTR, X, IYR, XLU, ORCL, IBMAlthough there are quite a few earnings coming up next week, only two catch my eye from a premium selling standpoint: Twitter and U.S. Steel. Twitter announces on Wednesday before market open; has a 30-day implied volatility of 75.19%; and the May 4th 20-delta, 74% probability of profit 27.5/38 short strangle is paying 1.28 at the mid with its defined risk counterpart, the 24/27.5/38/41 iron condor paying .87. US Steel (which can be a mover; 30-day implied 59.6%) announces on Wednesday after market close; and the May 4th 20-delta, 72% probability of profit 33/41 is paying 1.07 with its defined risk counterpart, the 30/33/41/44, paying .69. On the exchange-traded fund front, nothing looks particularly enticing at the moment. OIH and XOP round out the top of the pile volatility-wise, but their 30-days are sub-35, with other funds trailing off from there, so I'm looking at potentially putting on a couple of directional plays in single names where earnings are in the rear view mirror -- ORCL and IBM and/or in exchange-traded funds where concerns over rising interest rates and/or comparative yield have beaten them down, temporarily or otherwise -- IYR and XLU. I'll set out those ideas in a separate post, since there are multiple ways in which you can go directional with an options setup in those without hanging up a lot of buying power in actual shares. Additionally, sometimes it can be worth comparing and contrasting various "options options" so that you can decide which strategy suits your preference as to how much you want to devote to the trade ... .
NYSE:TWTR
by NaughtyPines
TRADE IDEA OF THE WEEK IN KB HOME INC KBH!Overall we are seeing some weakness in the market right now. Something that we're seeing is a lot of the sector/stocks have rejected the 21 period moving average, which tells me that there's a somewhat good chance that we might go test the lows that were created 2 weeks ago. This stock KB HOME INC is an example of a stock that has rejected that 21 period moving average shown by the green line on the chart! If the market continues to show overall weakness this week, then this is a high probability setup to move lower and that's what we're banking on here. Really the only sector that looks strong to us right now is the Semiconductor/Technology Sector. Stocks like NVDA, AMAT, ON, MU, etc. held up the market today from being even worse. Good luck to you all!
NYSE:KBHShort
by StrengthTrading
2
Neutral trade on IYR,58% probability (Strangle)The Implied Volatility Rank of IYR is at 65 and with a down move of around 6% in the last 20 days, I expect we are going to start a correction soon around the value area. So I decided to sell a Strangle to collect some premium. With 37 days to expiration I Sold the 80/76 Strangle for 0.95 credit. That will give me a 58% probability to make money, but if I close it when the price of the strangle reach 0.48 my probabilities jump to 80%, so that's the plan. The Trade: Expiration = Feb 16 Sell 80 Call Sell 76 Put Credit Received = $0.95 ea Probability of profit 58%
AMEX:IYR
by AlexanderGotay
2
THE WEEK AHEAD: IBM, SLB, KMI EARNINGS; XLU, SMH, IYR, EWW, VXXEARNINGS The earnings on tap aren't looking very enticing to me, as I generally look at getting in on these where the implied volatility rank is >70% and the background implied volatility is >50%. However, they might be worth watching running into earnings to see if implied ramps up. KMI (implied volatility rank 79/implied volatility 30) announces earnings on the 17th after market close. The January 19th expiry's implied volatility is at 40%, with the 26th's at 31.4% (a 27.5% potential contraction). Given the underlying's price, it's probably best to go short straddle. Unfortunately, the Jan 19th's 19.5 short straddle isn't paying much -- .70 at the mid, with break evens clear of the expected move. Given what that's paying, a defined risk play won't pay. IBM (implied volatility rank 93/implied volatility 26) announces on the 18th after market close. January 19th's implied's at 43.2; the 26th's at 31.3 (38.0% potential contraction). The January 19th 157.5/170 short strangle (23 delta) is paying 2.30 at the mid; the 152.5/157.5/170/175 iron condor's only paying 1.49 (<1/3rd wing width), so would probably pass on a defined unless implied volatility frisks up running into earnings. SLB (rank 100/implied 27) announces on the 19th before market open. January 19th's implied is 35.4 vs. Jan 26th's of 27.9 (26.9% potential contraction). The 19th's 76/80 short strangle's paying 1.07 at the mid. Defined -- not worth it. NON-EARNINGS Another area in which implied volatility rank makes potential plays look promising, but where background implied volatility isn't up to stuff. Currently, there are no exchange-traded funds whose implied volatility rank is in the upper one-quarter of so of where it's been over the past year and where background implied is greater than 35%. For what it's worth, though, here are the top ones: XLU (73/15), SMH (59/23), IYR (57/14), and EWW (51/24). VOLATILITY PRODUCTS Recently I've been working VXX* in two ways: (1) "price agnostic," where I enter either a long put vertical or short call vertical when the next weekly expiry open on Thursday or Friday; and (2) on pops where the VXST/VIX ratio is >1.0 (the higher the better). Unfortunately, it's tough to forecast a pop (although I've seen people repeatedly make the attempt), so you just have to set up an alert to trigger on a VXST/VIX ratio print of >1.00 or a VVIX print of >110 and keep powder dry for when it happens. * -- I've been waiting for UVXY to reverse split on the notion that a 1/2 strike of movement in an 8.67 (UVXY Friday close price) underlying is somewhat more of a heavy lift than a 1/2 strike of movement in a 25.85 one, even though UVXY is leveraged.
NYSE:IBM
by NaughtyPines
1
THE SHORT PUT-ACQUIRE/KEEP PREMIUM-COVERED CALL CYCLEI have touched on this topic before in separate posts, but thought I'd refresh the notion of what I like to call "strategic acquisition" here, since I get repeatedly asked about how I go about acquiring shares in an underlying I actually really do want to buy and hold, usually for an indefinite period of time (we're talking years here). The focus of these acquisitions is not on growth (although that's sure always swell), but on the dividends owning the shares provide plus any premium I collect that reduces my cost basis. This may seem "radical" ("What?! You're not acquiring the shares for growth potential! Ridiculous!"), but the fact is that you cannot count on growth ad infinitum , and if you're going to bail on your dividend earning positions "intermittently" as they appear to run out of steam to the upside, then the whole purpose for owning the shares in the first place -- dividends plus cost basis reducing short call premium -- is somewhat out the window. All that being said, here's the basic cycle: 1. Sell 30 delta puts.* Depending on your account size, how aggressive you want to be, and how patient you are, you can sell one contract, 45 days-'til-expiry or ladder these out in time (e.g., one at the November expiry 30 delta; one in the December at the 30; one in January at the 30). 2. Allow the short put(s) to go to expiry. (a) If price is above the short put at expiry, the short put expires worthless, and you keep the premium you received for selling it. You can then re-up the position in the next monthly at the 30 delta, and then lather, rinse, repeat the process. If you've laddered out; you can re-up in the back month at its 30 delta. (b) If price is below the short put strike at expiry, you are assigned shares, after which you proceed to sell call(s) against them to reduce your cost basis over time. I generally sell the 20-30 delta short call against, and then roll the short call for duration when it has decreased significantly in value or-- if it has been broken -- to keep it clear of current price (because I want to hold on to the shares; I don't want them called away).** You can naturally continue to sell short puts if you want to continue acquiring additional shares at lower prices. * -- Naturally, selling a given 30 delta may not be where you would want to ideally acquire, so having a fairly long list of underlyings with "ideal" buy points is a good idea. While you're waiting for some, others may be "ripe." For me personally, I generally stick to a small number of comparatively high yield exchange-traded funds -- e.g., EFA, TLT, IYR, SPY, but I'm fine with waiting months for potential buy points and/or am willing to sell 30 deltas on a quarterly basis as compared to forty-five days out in time to get strikes more distant from current price than a 45 day 30 delta would be (compare SPY November 17th 244 short put (28 delta) with, for example, the March 29th (Quarterly) 237 (29 delta)). ** -- When rolling a short call out for duration, you always want to roll for a credit. If you want to attempt to improve the strike, you generally have to roll out further in time to do this, which is naturally okay in this case, since you want to hold onto the shares for the dividends. However, you don't want to roll out further in time than you absolutely have to, and you may have to consider improving strikes a bit more incrementally than you'd like. I mean, who wants to roll out a year to get their calls clear of current price? (Extreme example, but you get the idea).
AMEX:IYR
by NaughtyPines
3
Good Return on Risk trade on IYR (Debit spread)With a low Implied volatility rank of 15 in the real estate ETF I decided to make a directional bet with a debit put spread. This is a low probability trade, but will add some negative deltas to my portfolio. It does have a decent R:R of almost 2:1 so at least I will get paid when I am right and my risk is defined. Bought a Vertical debit put spread on IYR for $1.01 per contract. I did 5 contracts so the trade would look like this: (+5) 79 Put (-5) 76 Put Max win $995 Max loss -$505 Probability of profit is 45%
AMEX:IYRShort
by AlexanderGotay
2
OPENING: IYR JAN 20TH 70/75/75/79 IRON FLY... for a 2.79 credit. Here, I'm looking to add to core exchange-traded fund fly positions in underlyings whose implied volatility is high relative to where it's been over the preceding six months (>70th percentile) There aren't many out there at the moment, and this is one of them. Notes: Unfortunately, I forgot to write down the metrics for this fella while I was placing the trade. I'll look to manage it at 25% max, as I do with all flies and short straddles.
AMEX:IYR
by NaughtyPines
2
OPENING: IYR DEC 23RD 68/75/75/80 IRON FLYI had intended to put on a similar setup last week, but got distracted by something else ... . Implied volatility rank remains high here, even though IYR's background implied volatility isn't that great. Metrics: Probability of Profit: 44% Max Profit: $343/contract Max Loss/Buying Power Effect: $357/contract Break Evens: 71.57/78.43 Notes: The probability of profit metric on these always seems to suck hard (45-50%). The trade off between this and an iron condor (which has a higher probability of profit) is greater premium at the door, so a better max profit/loss ratio. This is basically a 1-1 setup; most iron condors I do are 1-2. Look to manage at 25% max profit as you would a short straddle ... .
AMEX:IYR
by NaughtyPines