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Lending Club could see $5.50 by Mid next week.Investors are loving what they heard on the call with LC executives. I'm expecting healthy gains until the end of the month. Be mindful not to enter at a peak and chase gains, I'd say its a good time to enter a options trade on this. 3.50 strike in the money with a straddle for downward movement, track the gann fan lines for support and resistance. Look for confirmation in support of the fan lines for a movement to the upside should signal an enter. Once this post positive on moving averages I expect institutional and computer generated buying. Saddle up. I'm already in @ 2.79 and I'm about to double down on an options play. I'll be in this long.
NYSE:LCLong
by HustleEconomics
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
GE - Time to bet on a rebound?THE BACKDROP GE closed at $32.25 on Dec 20 2016, at the top of its long term trading channel. The stock has lost 50% since, closing at 16.26 yesterday. This downfall has been ugly, with heavy selling volume, especially most recently. There is no telling how much lower the stock will go. Currently, the stock looks oversold on all time frames and could be ready for a bounce-back on any marginally positive news - Perhaps as early as this week when the earnings are announced and we start to hear about measures to fix the business… THE TRADE I do not like to catch falling knives, and would not normally be compelled to enter a stock with disappointing fundamentals and such an ugly technical configuration. However, there is an options trade which looks interesting at this stage, and might be worth considering ahead of earnings publication in 2 days. Look to get synthetically long close to the money, and to finance such position by selling a longer, further OTM put. THE SETUP 1. Sell $15 SEP PUT and cash in $0.94/share (indicative). 2. Buy $17 JUN CALL and pay $0.92/share (indicative). THE OUTCOMES If the stock trades up, capture synthetically the full upside. If the stock trades down, the worst case is to hold GE at $15. If the stock remains range-bound —> No impact. THE ALTERNATIVE For those looking for risk-less opportunities, and do not mind paying for them, look to trade only the second leg (buy call)...
NYSE:GELong
by HAL9000
2
BABA - Triple-topping: What to do with the upcoming earnings?BABA’s exceptional run seems to be triple-topping. While the long-term trend remains up, the short and mid-term pictures look like they have turned to the downside. The company should announce earnings on Feb 1 before market open and I would wait for this catalyst to go long, just in case any fundamental disappointment should take us lower to confirm the poor, current technical picture. In line with the strategy I proposed on NFLX (see below), the game consists in buying synthetic upside exposure ahead of earnings. If the stock breaks out, you will be exposed to the upside. If the stock remains range-bound, you will lose a small premium. If the stock disappoints and tanks, you could decide to lose your premium or to sell a put to make your lost premium up. 1. BUY BABA Feb 16'18 $182.5 CALL = $6.90 (3.78%) OR 2. BUY BABA Feb 16'18 $192.5 CALL = $3.32 (1.82%)
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by HAL9000
A SIMPLE BUT EFFECTIVE OPTION WRITING STRATEGY.A simple but effective option wrting strategy for a monthly income: Underlying concept : a) Strategy - Writing nifty call and put options simultaneously. b) Strike selection - Call and put strikes approximately above / below 100 points from market price at the time of entry. c) Adjustment post position - For every 100 point or close to 100 point change in nifty, square both call and put and write fresh call and put as per point b. Continue this till expiry. Example: A) 01/01/2018 - Nifty at 10435 1) Write 10600 strike call at 76. 2) Write 10300 strike put at 64 B) 05/01/2018 - Nifty at 10558. 3) Square off s.no.1 at 90 with a loss of 14. 4) Square off s.no.2 at 36 with a profit of 28. 5) Write 10700 call at 47. 6) Write 10400 put at 55. C) 11/01/2018 - Nifty at 10651 7) Square off s.no 5 at 61 with a loss of 14. 8) Square off s.no.6 at 29 with a profit of 26 9) Write 10800 call at 26. 10) Write 10500 put at 44. D) 15/01/2018 - Nifty at 10740 11) Square off s.no.9 at 43 with a loss of 17. 12) Square off s.no. 10 at 20 with a profit of 24. 13) Write 10900 call at 16. 14) Write 10600 put at 32. E) 18/01/2018 - Nifty at 10817 15) Square off s.no. 13 at 23 with a loss of 7. 16) Square off s.no. 14 at 15 with a profit of 17. 17) Write 11000 call at 7 18) Write 10700 put at 29. F) 19/01/2018 - Nifty at 10895. 19) Square off s.no.15 at 17 with a loss of 10. 20) Square off s.no.16 at 12 with a profit of 17. 21) Write 11100 call at 4. 22) Write 10800 put at 23. G) 23/01/2018 - Nifty at 11083. 23) Square off s.no.21 at 40 with a loss of 36. 24) Square off s.no 22 at 6 with a profit of 17. and so on..... Net PnL : -14+28-14+26-17+24-7+17-10+17-36+17 = 31. Net PnL per lot : Rs 2,325 Margin required per lot (NRML) : Around 1,40,000 for both call and put. No. of days in the above eg : 23. Return : 1.6% for 23 days. Annualised return : 26%. A capital of Rs 10 lacs would provide an income of Rs 23k plus. Assumptions : In the above example, all prices taken at close of the day. Hence actual trading might not replicate the above return. There could be increase or decrease depending on the exact time of trade during the day. The above example assumes current month's maturity. Income can be increased by opting for next month maturity. Risk factors: This strategy is naked sale of call and put. Hence theoretically risk is unlimited and unknown while returns are limited and known. However, the unlimited loss scenario is a 6 sigma event, which is the underlying strength of writing options IF RE-ADJUSTMENT IS DONE AS AND WHEN REQUIRED. This strategy might end up in loss if there is a very significant gap up / down beyond the premium received. Important: I have not backtested this strategy. Use at your own risk. The objective of this is to share info and not a recommendation to trade.
N
by scorpiomanoj
5
AEP - May '18 Exp. Put Vertical Credit SpreadTrade details: 65/60 Put Vertical Credit Spread @ $1.00 Prob. of Max Profit = 70.13% Prob. of Max Loss = 10.10% Break-even @ $64.00 119 D.T.E. Trade plan: Entry by oversold + support/resistance analysis Expecting $68.00 support level to survive possible test before earnings report next week for an uptrend continuation before May '18 expiration. Using longer duration for some more premium + allow for adjustment if trade goes very wrong. Expecting spread to expire worthless but will take early profit + place new trade with same bias around earnings if IV swells premium up enough to give a greater edge.
ALong
by AtoHoward
BX - Looking for yield? Covered short straddle on Blackstone!THE DAWN OF ASSET MANAGERS As discussed towards the end of last year, 2018 should be the year of the brokers and asset managers (please watch related ideas below). In this context, and with a dividend yield of 6.36%, BX is probably one of the best asset management pure-plays out there. The trend has been strong on all time frames and the stock is attempting a breakout as we speak. But how to play it in the current top-ish market environment? There is a smarter way than a simple outright buy. LOOK FOR YIELD AND ENHANCE IT WITH OPTIONS 1. Buy the stock in a half size which makes sense to your strategy or portfolio at $34.91 (last close) 2. Sell one-year $40 OTM CALL and pocket $1.39 (indicative) 3. Sell one-year $32 OTM PUT and pocket $2.66 (indicative) COMPELLING RISK AND YIELD ANALYSIS At expiration of the options, in one year, one of the below should happen. 1. The stock is range-bound ($32-40): Stay long the stock and pocket (call premium + put premium + dividend yield) = 3.98% + 7.62% + 6.36% = 17.96% 2. The stock breaks out and trades above $40: Deliver the shares at $40 and pocket (capital gain + dividend yield + call premium + put premium) = 14.58% + 6.36% +3.98% + 7.62% = 32.54% 3. The stock breaks down and trades below $32: Receive the shares and end up with a full position at an average price of $33.45 while you pocket (dividend yield + call premium + put premium) = 6.36% + 3.98% + 7.62% = 17.96% . All the while, you become long one of the best asset managers in the world with an improved dividend yield >10%. THIS STRATEGY CAN BE ROLLED OUT WITH ANY TIME HORIZON (MONTHLY, QUARTERLY, SEMI-ANUALLY). COMMENTS WELCOME.
NLong
by HAL9000
67% Probability trade on OIH (Put Ratio+Call)With over 20% move to the upside in the last 29 days, I think is time for OIH to have some sort of pullback or correction. The last 5 candles couldn't close outside of the Upper Bollinger Band, so it looks like is losing momentum and most likely retrace at least to the midline. Implied Volatility Rank is at 54 so I sold the 28/27 Put Ratio Spread (2 Short Puts at 27 Strike Price for each Long Put at 28). And also added some juice with a Short Call at the 30 Strike. In total I ended up with $0.40 credit for each contract. I did 5 of those, so it would be 5x10 Put Ratio + 5 Calls. Between $30 and $28 I would be making $200, and my max profit of $700 would be at the $27 price (around where the 20MA is). This trade will make profits between the $25.60-$30.40 Price, this gives us a 67% chance to make money. The trade: Long (1) 28 Put Short (2) 27 Put Short (1) 30 Call Total Credit was $0.40 per contract Probability of Profit 67%
A
by AlexanderGotay