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Shortstrangle

SOLD GDXJ APRIL 31 23/31 SHORT STRANGLEAs with the XOP play, selling premium where the volatility is and that's in gold issues (GDX, GG, GDXJ) and oil (OIH, XOP) right now. I filled this earlier today for a $98 credit. The current metrics are: Probability of Profit: 72% Max Profit: $90 per contract Buying Power Effect: Undefined Notes: At the suggestion of FractalTrader (that you very much for your ideas, by the way), I'm playing around with what I can do graphically here with options setups, so that it's easier to visualize where price has to "sit" for the duration of the setup. If you have traded options before, the vast majority of platforms display a range of prices horizontally, with prices below current price on the left, current price in the middle, and prices above current prices on the right, so it's a bit of a challenge to adapt an options platform view (which only consists of a horizontal "price axis") to a candlestick chart. In any event, this is a short strangle, so I want price to remain between my two short option strikes for the duration of the trade -- above the 23 short put and below the 31 short call ... . I'll look to take the whole setup off at 50% max profit.
AMEX:GDXJ
by NaughtyPines
ANF OPTIONS EARNINGS PLAYI found another possible play in addition to COST and that is in ANF, which announces on Tuesday before market open. The current implied volatility rank is 76, and its implied volatility is 97, so it would meet my general high implied volatility/high implied volatility rank standards for a premium selling play. Given the price of the underlying, I would probably go short strangle (you won't get squat if you go iron condor on a sub-$30 underlying, usually): March 11th 24/33 Probability of Profit: 74% Max Profit: $105/contract Buying Power Effect: Undefined ... but I'll probably look at tweaking this on Monday, depending upon what happens with price during the session.
NYSE:ANF
by NaughtyPines
CRM -- EARNINGS PLAY: MAR 4TH 54/72 SHORT STRANGLECRM announces earnings tomorrow after market close, so look to put on a play in the waning hours and minutes of the NY session to take advantage of any volatility crush that occurs post earnings announcement. Here's the setup, which naturally might have to be tweaked depending on how much CRM moves tomorrow intraday: March 4th 54/72 Short Strangle Probability of Profit: 75% Max Profit: $122/contract Buying Power Effect: Undefined Notes: I played with doing a defined risk strategy, but I just can't get the 1.00 credit/contract I would want out of the play.
NYSE:CRM
by NaughtyPines
FSLR -- MAR 4TH 51/54/70.5/73.5 IRON CONDORGoing small here, given the fact that the solar space has been a bit of wild of late ... . Metrics: FSLR March 4th 51/54/70/73.5 Probability of Profit: 66% Max Profit: $71/contract Buying Power Effect: $229/contract Notes: Ordinarily, I pass on stuff that doesn't have at least a 1.00 credit in it. I could naturally go short strangle, but don't want to tie up the buying power if the thing goes awry (a 53.5/71.5 short strangle would get you a 1.44 credit). That being said, I don't have a ton of stuff going on (mostly waiting for longer-term setups to play out), so I figured I'd play it just to keep some buying power engaged ... . Look to take it off at 50% max profit.
NASDAQ:FSLR
by NaughtyPines
FSLR -- EARNINGS PLAYS VIA OPTIONSFSLR announces earnings tomorrow after market close, so look to put on a play in the final hours of the NY session. Here's two setups, one of which is an undefined risk trade; the other, defined: FSLR March 4th 55.5/73.5 Probability of Profit: 74% Max Profit: $144 per contract Buying Power Effect: Undefined FSLR March 4th 53/56/72/75 Iron Condor Probability of Profit: 66% Max Profit: $79 per contract Buying Power Effect: $221/contract Notes: I had to goof around with the iron condor setup, since the strikes "thin out" at 75 and increase to 5 dollar increments, making it difficult to set your short strikes at the 85% probability OTM strike with your long options 3-4 strikes out from that, so the max profit isn't what I'd ordinarily like to see.
NASDAQ:FSLR
by NaughtyPines
BIDU EARNINGS PLAYSBIDU announces earnings "some time tomorrow", so it could be either before or after market; if you want to play it, look to put on a setup before today's market close. One thing I would note is that the bid/ask spreads aren't that great, implying that the options' liquidity isn't the best in the world, so I would look to put on a play at the mid price, but not to chase price ... . In any event, here are the setups: For the folks who like to "go naked": Feb 19th 124/157.5 short strangle Probability of Profit %: 72% Max Profit: $225/contract Buying Power Effect: Undefined For those who are "more shy" or of a defined risk bent (I've gone out a little farther in time because I can't get the long option strikes I want for a symmetrical setup in the Feb 19th expiry): Feb 26th 115/120/165/170 iron condor Probability of Profit %: 70% Max Profit: $117/contract Buying Power Effect: $382 Look to take off the entire setup at 50% max profit or a single side nearing worthless. In the event a side is tested, look to roll that side out to a later expiry and sell and oppositional side against the rolled out option(s) for a credit that exceeds the cost of the roll of the tested side.
NASDAQ:BIDU
by NaughtyPines
1
TSLA EARNINGS PLAYSTSLA announces earnings tomorrow after market close, so look to put on any volatility contraction play (short strangle/iron condor) before then. You'll naturally want to tweak these strikes if there is any movement during the market day ... . Short Strangle Feb 19th 111/180 short strangle Probability of Profit: 74% Max Profit: $404/contract Buying Power Effect: Undefined Feb 19th 106/111/180/185 iron condor Probability of Profit: 70% Max Profit: $101/contract Buying Power Effect: $400 Notes: I'm probably not going to play this one, since I'm still working off FB and have DIS and BIDU on, as well as a bunch of other index ETF balls I'm juggling ... .
NASDAQ:TSLA
by NaughtyPines
DIS EARNINGS PLAYSDIS announces earnings today after market hours, so look to put on any setup before New York close. Here are the two "classic" setups: Feb 19th 82.5/100 short strangle Probability of Profit %: 74% Max Profit: $127/contract Buying Power Effect: Undefined Feb 19 77.5/82.5/100/105 iron condor Probability of Profit %: 72% Max Profit: $86/contract Buying Power Effect: $414 Notes: You can naturally play with the width of the iron condor wings to increase/decrease buying power effect and/or max profit potential. As always, look to take the setup off at 50% max profit post-earnings or a side at or near max. In the event a side is tested, look to roll the tested side out for duration to a later expiry and then sell an oppositional side against the rolled side for a credit that exceeds the debit paid for any roll and look to exit the rolled out setup for scratch (total debits paid minus total credits paid = 0) and to redeploy your buying power elsewhere. They are, after all, meant to be quick and dirty plays ... .
NYSE:DIS
by NaughtyPines
FB EARNINGS PLAYSFB announces earnings tomorrow after market close, so look to put on any play in the final hours of the NY session. Here are the two possible plays that may naturally require strike adjustment in light of any movement the underlying experiences during the trading day: FB Feb 5th 81.5/87.5/107/113 $500 BP Iron Condor Probability of Profit %: 69% Max Profit: $101/contract Buying Power Effect: $499/contract Break Evens: 86.49/108.01 FB Feb 5th 87.5/107 Short Strangle Probability of Profit %: 71% Max Profit: $150/contract Buying Power Effect: Undefined Risk Break Evens: 86/108.5 Notes: Look to take off the entire setup at 50% max profit and redeploy the buying power elsewhere; one side or the other when it reaches near worthless (<.05/$5); and be prepared to roll on the break of a side prior to expiration out for duration, selling an oppositional side against for a credit that exceeds the cost to roll the tested side.
NASDAQ:META
by NaughtyPines
BABA EARNINGS PLAYBABA announces earnings on Thursday before market open, so look to put on any play in the final hours of the NY session on Tuesday. Here is one possible play that may naturally require strike adjustment in light of any movement the underlying experiences during the trading day: BABA Feb 5th 61.5/78 Short Strangle Probability of Profit %: 70% Max Profit: $115/contract Buying Power Effect: Undefined Risk Break Evens: 60.35/79.15 Notes: I looked at an iron condor setup in off hours, but it may not provide enough juice to be worthwhile. Right now the Feb 5th 56/61.5/78/83.5, a $470 buying power setup, looks like it could get you a .80 credit ($80/contract max profit), but the long call at the 83.5 strike is nearing "no bid" (bid .01/ask .10). Of course, it certainly wouldn't hurt to try during market hours to see if you could get a fill if a defined risk setup is more to your liking. Look to take off the entire setup at 50% max profit and redeploy the buying power elsewhere; one side or the other when it reaches near worthless (<.05/$5); and be prepared to roll on the break of a side prior to expiration out for duration, selling an oppositional side against for a credit that exceeds the cost to roll the tested side if you have to pay a debit to roll.
NYSE:BABA
by NaughtyPines
1
AAPL EARNINGS PLAYAAPL announces earnings tomorrow after market close, so look to put on a play before the end of NY trading. Here are two possibles: AAPL Feb 5th 84/89.5/110/116 iron condor Probability of Profit %: 66% Max Profit: $93/contract Buying Power Effect: ~$507 Break Evens: 88.57/110.93 AAPL Feb 5th 89.5/110 short strangle Probability of Profit %: 68% Max Profit: $142/contract Buying Power Effect: ~$1600 Break Evens: 88.08/111.42 Notes: With the iron condor, I'm mixing things up a bit with wing widths in order to produce a $500 buying power effect setup; for a person with a $10k account, that setup would represent a 5% BPE for the trade ... . As usual, strikes may require some tweaking between now and NY close depending on price movement of the underlying. As with all earnings plays, look to take the entire setup off at 50% max profit and redeploy the buying power elsewhere.
NASDAQ:AAPL
by NaughtyPines
NFLX EARNINGS PLAYNFLX announces earnings on Tuesday 1/19 after market, so look to put on any premium selling play shortly before NY close. Here are two possible setups, which may have to be tweaked, depending on price movement in the underlying: Jan 29 80/128 short strangle Probability of Profit %: 77% Max Profit: $246/contract Buying Power Effect: ~$1041 Break Evens: $77.54/$130.46 Feb 5th 75/80/127/132 iron condor Probability of Profit %: 73% Max Profit: $103/contract Buying Power Effect: ~$397 Break Evens: $78.97/$128.03 Notes: I went out a little longer than I usually like with the iron condor, as I had difficulty on the put side getting the strikes (and credit) I wanted for the setup with the Jan 29 expiry. The Jan 29th short strangle is also a little wider than I usually like to go, as there is some "funkiness" with the strikes on the put side (they open up to five bucks apart at the 1 standard deviation line, unfortunately). Look to take these setups off at 50% max profit and redeploy the buying power elsewhere.
NASDAQ:NFLX
by NaughtyPines
GS EARNINGS PLAYGS announces earnings on Wednesday before open, so look to put on this play before Tuesday market close. Here are the plays: Jan 29 142/170 short strangle Probability of Profit %: 76% Max Profit: $180/contract Buying Power Effect: ~$1749 Break Evens: 140.20/171.80 Jan 29 138/143/167.5/172.5 iron condor Probability of Profit %: 69% Max Profit: $136/contract Buying Power Effect: ~$364 Break Evens: $141.64/$168.86 Notes: As with all these earnings plays, look to cover at 50% max profit for the setup and redeploy the buying power elsewhere.
NYSE:GS
by NaughtyPines
CREE EARNINGS -- A NONSTANDARD "EXPECTED MOVE" SETUPCREE announces earnings on 1/19 after market close, so look to put on any premium selling play before the session ends to take advantage of a post-earnings announcement volatility contraction. Ordinarily, when a play won't yield at least a 1.00 credit for a 1 standard deviation short strangle or iron condor setup, I just pass it over. It is, after all, earnings season, and there's going to be plenty to play. Nevertheless, I looked at various setups with CREE as possible alternatives to my standard setups one of which involves narrowing the width of a short strangle to the range of the expected move for the expiration. Naturally, this decreases the probability of profit percentage (while increasing the potential max profit), but this is what I came up with as a potential play: Jan 29th 22/26 short strangle Probability of Profit %: 61% Max Profit: $105/contract Buying Power Effect: ~$297 Break Evens: 20.95/27.05 When I do these somewhat "goofy" setups that are tighter than usual, I ordinarily look at the chart to see if those ranges (the strike prices and the break evens) make any objective sense in light of recent historical price action. On the chart shown here, I've marked the strike prices in red and the break evens in green. You can kind of see that the ranges do, in fact, make a little sense, at least with the price action that has existed since July or so. If anything, though, these ranges suggest that I could possibly skew the setup a touch to the bullish side by a strike or two, something I'll play on market open ... .
C
by NaughtyPines
IBM EARNINGS PLAYIBM announces earnings tomorrow after market, so look to put on a play before market close. Here are two possible plays, but I'm looking at these in off hours, so I'm doubtful that the potential credit to be received is accurate, although the strikes, probability of profit, and break even metrics should be fairly accurate (as usual, they may require a strike of two of tweaking after market open): Jan 29 119/142 short strangle Probability of Profit %: 74% Max Profit: $147/contract (tentative) Buying Power Effect: ~$1493 Break Evens: 117.53/143.47 Jan 29 116/119/141/144 iron condor Probability of Profit %: 68% Max Profit: $21/contract (tentative; if it's ultimately the case that this setup will yield <1.00, I would pass on it or look at widening the wings to yield additional credit, assuming that's consistent with your risk tolerance) Buying Power Effect: ~$279 Break Evens: 118.79/141.21 Notes: I'm already in an IBM trade left over from last earnings that I'm working on, so I won't be playing this one .... .
NYSE:IBM
by NaughtyPines
NEXT WEEK'S EARNINGS PLAYS -- NFLX, IBM, GS, SBUX, AND OTHERSNext week is literally hopping with potential earnings announcement plays. I've tried to pick out the ones that (1) have > 70% implied volatility rank; (2) offer greater than a 1.00 credit ($100) for the "classic" one standard deviation short strangle setup; (3) have fairly good liquidity with options prices; and (4) offer weeklies, but there are also a few >.50/<1.00 credit plays that I might nevertheless play (e.g., CREE, SBUX), although I think I can afford to be picky here given the selection ... . PLAYS TO PUT ON TUESDAY CREE -- Tuesday, after market close. High implied vol rank/high implied vol, but <1.00 credit for a 1 standard deviation short strangle. IBM -- Tuesday, after market close. NFLX -- Tuesday, after market close. GS -- Wednesday, before market open. PLAYS TO PUT ON WEDNESDAY SBUX -- Wednesday, after market close. High implied vol/but implied vol <50% and <1.00 credit. PLAYS TO PUT ON THURSDAY SLB -- Thursday, after market close. I don't think I've every played this underlying. It's a tech company that provides support to oil and gas, and I've got plenty of petro plays on. Notes: There are also a couple of earnings plays that might be interesting to play via other methods. One of these that comes to mind is KMI. It's got a high implied volatility rank, high implied volatility, and liquidity. The problem is that the price of the underlying is currently $13.00, so you just can't get enough premium out of it via short strangle or iron condor to bother with it using one of those strategies ... .
NASDAQ:NFLX
by NaughtyPines
XOP SHORT STRANGLE IDEAWith an implied volatility rank of 76 and an implied volatility of 56, an XOP short strangle is a good premium selling play here, with the standard 45 day setup yielding about 1.00 in credit for only $275 or so worth of buying power. Here's the setup: Feb 19th 23/32 short strangle Probability of Profit: 71% Max Profit: $97 Buying Power Effect: ~$275 Break Evens: 22.03/32.97 Naturally, things may change come Monday open, so be prepared to tweak your strikes and/or fill price ... .
AMEX:XOP
by NaughtyPines
NKE -- POST SPLIT/EARNINGS PREMIUM SELLING PLAYAfter its split and shortly post-earnings, NKE still enjoys a fairly high level of volatility such that it offers a 1.00 credit plus premium setup (rank 53/implied 24). Here's a setup: NKE 58/67 Feb 12th short strangle POP%: 74% Max Profit: 1.07 credit ($107/contract) BPE: Undefined Break Evens: 56.93/68.07 Notes: I ordinarily only want to enter a short strangle when the implied volatility rank exceeds 70%. However, my guess is that the split may have affected the 52-week vol stat (don't quote me on that), so I'm willing to play it even though its volatility isn't above the 70th percentile ... . That being said, we've got earnings upon us, so I'll have to look at it again at market open, see what buying power I have available, and make a decision as to whether I want to enter a 45 DTE setup here or not.
NYSE:NKE
by NaughtyPines