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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
SMH-bearish-Breaks below 32-month rising trendline for lowerSMH extended the decline off the 60.13 peak (June 1, 2015) to breach 32-month rising trendline (from November 2012 low), suggesting scope remains for further downside. The immediate support lies at 50.40 (61.8% of 44.43/60.13 upleg) then 48.11 (76.4% of 44.43/60.13 upleg). Below there would expose the 44.43 key support (October 15, 2014 reaction low). The 53.97/55.03 resistance zone should cap near-term bounces. Only a push back above the 55.03 area would stabilize. Outlook: Short term: bearish Long term: bearish
SShort
by novvoll12
ARMH- If Looking To Short It? Wait, And Here Is Why.3-29 Here's the drill. Nice clearly defined uptrend channel that? Put in a Double Top and broke its uptrend to the downside. Now for shorting? Let it stage a snapback rally up to new resistance at either the red line around $52.00 or a Fib retracement zone (notice where the 61.8% zone is? Its at those levels one wants to see? Stalling, THEN one can think about short selling it for a trade and not until. If you are one who shorts stocks THAT is the "What to Watch For" from here. @AmazingPatterns Strictly for educational and informational purposes only. Trade at YOUR own risk This is NOT a recommendation.
A
by Amazingpowerpatternguy