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XOP trade ideas

THE WEEK AHEAD: XOP, EWZ, GDXJIt's somewhat a lather, rinse, repeat of last week, given the fact that we're kind of in-between earnings seasons, with the next to kick off here in a couple of weeks. XOP:* With the underlying somewhat in the middle of its range, I'm more inclined to go directionally neutral here, either via short strangle or iron fly. The 27 delta-ish May 18th 33/38 short strangle is paying 1.26/contract with break evens at 31.74/39.26; for the less aggressively inclined, the 32/39 is paying .84. For both of these, look to take profit at 50% max. The May 18th 30/35/35/41 dynamic iron fly** is paying 2.75 with break evens at 32.25/37.75. Look to take profit at 25% max. EWZ: "The Brazilian" is perennially frisky ... . The May 18th 41/49 is paying 1.13 at the mid with break evens at 39.87/50.13, with the 30/35/35/41 dynamic iron fly paying 3.34. GDXJ:*** My general tendency with GLD, GDX, and GDXJ are bullish assumption setups on weakness. Unfortunately, GLD is at a bit of a high here, and there is divergence between GDX/GDXJ in terms of strength versus the commodity, implying that weakness in gold may drag GDX/GDXJ down, when they're already toward the weak side of their ranges to begin with. Consequently, it may pay to be patient and wait until GDXJ drops to the bottom of its range between 30 and 31 before pulling the trigger on something bullish. Caveats aside, here are three bullish assumption setups: The "spack"**** trade: May 18th 30 short put for .45 with a break even of 29.55. Ride the short put to expiry. If assigned, proceed to sell calls against at or above your cost basis (29.55). The Synthetic Covered Call: May 18th 34 short put (70 delta) for 2.40 with a break even at 31.60. Look to take profit at 50% max (i.e., 1.20/contract). Otherwise, roll out for duration "as is" for additional credit or proceed to cover at or above cost basis (31.60) if assigned. The Poor Man's: May 18th 34 short/Aug 17th 26 long, 6.01 debit for an 8 wide (75% debit/width ratio) with a break even of 32.01 versus 32.15 spot. Look to take profit at 20% of what you paid to put the setup on for (i.e., 1.20/contract). * -- I'm in an XOP May 32/39 I put on last week for around a 1.00/contract. ** -- An iron condor won't pay one-third of the width of the wings here. *** -- I'm already in a long-dated GDX net credit diagonal, so won't be partaking of GDXJ here. **** -- Short Put Acquire Cover.
AMEX:XOP
by NaughtyPines
THE WEEK AHEAD: XOP, EWZ, EEM, QQQ, AND VIXEven though earnings season is winding down to a few names (BB, GME) next week, there's stuff to play in sectors or broad market, with the May expiry (54 days until expiry) coming into view for plays. The XOP May 18th 31/39 short strangle (19 delta) is paying .98 at the mid with the slightly more aggressive 25 delta 32/38 paying 1.38. If you're looking to go defined risk, you'll probably have to go wide iron fly (e.g., the May 18th 29/35/35/41 iron fly is paying 3.05 with a max loss metric of 2.95). The EWZ May 18th 40/48 short strangle (22 delta) is paying 1.38; the more aggressive 29 delta 41/47, 1.86. The 38/41/47/49 delta neutral iron condor is paying just a smidge over a buck at 1.01. The EEM May 18th 44/50 short strangle (25 delta) is paying 1.18. If you aggress in toward the 30's, a 42/45/49/51 delta neutral iron condor will pay just over a buck with break evens around the expected move for the expiry. QQQ: one word -- juicy, particularly if you can "go naked." The May 18th 145/170 20 delta short strangle is paying 3.62 at the mid. The 142/145/170/172 delta neutral iron condor is showing .86 at the mid after hours, but the bid/ask is wide. I wouldn't bother with a defined risk play for less than 1.00/contract ... . Lastly, the VIX. Futures term structure is in backwardation which sets up a rare and interesting play, which I've described in a separate post (see below).
AMEX:XOP
by NaughtyPines
OPENING: XOP JUNE 15TH 32 LONG/APRIL 20TH 35 SHORT CALL DIAGONAL... for a 2.49/contract debit. Metrics: Max Profit: $51/contract* (20.5% ROC) Max Loss: $249/contract** Notes: As with any diagonal, there aren't many metrics to look at. If you just leave the setup alone, however, your max loss is $249/contract, and your max profit is $51/contract. Max profit is realized with a finish above the 35 strike at expiry; max loss, with a finish below 32 and no rolls of the short call to reduce cost basis. Another way to look at the setup is that you're paying only 2.49 for a 3.00 spread ... . * -- Assuming no short call rolls and a finish above the 35 strike. ** -- Assuming no short call rolls and a finish below the 32 strike.
AMEX:XOPLong
by NaughtyPines
5
OPENING: XOP JUNE 15TH 31 LONG/MARCH 29TH 34 SHORT PUT DIAGONAL... for a .15/contract credit. As with any diagonal, there aren't many metrics to provide, since max profit is dependent on the number of rolls undertaken, the credit received for each, as well as whether the long maintains value. However, the max loss is the width of the spread (3) minus the credit received for the setup (.15) or 2.85. This is the max I can lose if I do nothing, and the setup goes to max loss. Similarly, my max profit is a whopping .11 ($11)/contract if price rips totally away from the setup, the long and short go to worthless, and I don't roll the short to take in more credit. The particular thing I like about these setups is flexibility and the number of ways in which they can be worked intratrade: (1) Allow the short put to go to at or near worthless (.05 or less), and then sell the long for a credit if it has held value in excess of the credit you received to put the trade on. The difference between the credit received for selling the long minus the credit you received to put the trade on is your profit (minus fees and any debit you paid to close the shortie). (2) Work both ends of the candle. Roll the long down on significant increase in value to lock in gains and roll the short put down when you're able to do so for a credit. Alternatively, roll the short put out for duration and credit on significant decrease in value, leaving the long in place. Cover the setup for a debit that is less than total credits received. The difference between total credits received and the debit you paid to exit is your profit. Keep in mind that if you burn both sides of the candle, you'll be widening the spread and therefore increasing buying power effect and max loss. (3) Work the short put only. Roll the short out "as is" on significant decrease in value (I ordinarily do this at 50% max) and exit the trade when rolling is no longer productive (usually when price has ripped away from the setup). If price breaks the shortie, allow as much extrinsic to bleed out of the contract as you can, and then roll for a credit while examining whether you can strike improve on roll. This is the generally accepted approach to these setups. The width of the spread (and therefore the buying power effect) remains constant throughout the process or decreases if you're able to roll the shortie down for strike improvement and a credit (decreasing the width of the spread and therefore max loss). And we'll see how it goes ... .
AMEX:XOP
by NaughtyPines
Long XOP? Trend break, double bottom, news and indics agree.www.tradingview.com Recent buzz has been growing that XOP could rally so I have been watching it. Almost pulled the trigger at 2:55 - end of option session local time but did not have my head wrapped around it. I do not mind trading quickly but it is easy to make clostly mistakes (how do I know that?) so I try to have it completely clear when commit. I have published some of the indicators, they all need updating now. Holler in comments with any questions. Thanks and Keep Smiling! - News: Dollar creeping down, world oil inventories/production and general buzz draws attention so if a crowd will gather I want to be in and out closed before the excitement dies down. Plan with me is -take $ off of the table and limit risk exposure. - Down trend is broken and just passed a double bottom plus price picked its way through some historical resistance. - Williams per cent R 21 period with 13 average has signal above average, above mid range and into so-called overbought. The top line color green tells me the four period Random Walk part of this indicator is greater than 1 positive. - The Hull MACD is inconclusive in the macd part while trend break is tested but the back colors tell me the Force Index is above zero (bullish) though it just turned light green meaning it went from up slope to down slope - again testing trend and resistance - we will see how this price passes the direction quiz tomorrow :-) . - Finally got a four time frame Exponential Moving Average pairs ribbon working the way I want. Inputs here default 9 and 15 period exp. moving averages in each of four time frames (here at default 5, 15, 60 and D). Showing here 5 and 15 pull backs - 60 and day advancing. Be interesting to see if price tags along now! This indicator displays a column of 4 circles; top is shortest time frame; color is green if fast moving average is above the slow else red.
AMEX:XOPLong
by Tom1trader
9