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OPTIONS TIP: HOW TO PLAY EARNINGS (PT II)5) Look at Setups in Expiries in the Friday Immediately Following the Announcement or the Friday Thereafter. I mechanically set these up in options that expire the week following the announcement, as it gives me a little more time for the setup to work out. 6) Avoid ADR's and/or Underlyings That Aren't Scheduled to Announce on a Particular Date/Time. Next week, STX earnings are scheduled "for some time on April 15th." If STX doesn't know at this point in time whether it's going to be before market or after or even on the 15th at all, don't play it; they could occur on the 15th or some other date or time that isn't currently known to the market. You're looking for volatility contraction immediately post announcement for premium selling plays, and if you don't know when that announcement will be, you certainly can't be expected to know when the contraction will occur. 7) Go Small. Limit these plays to, at most, 5% of your total buying power. These plays do go awry on occasion, so it's important not to go "crazy big" from the get go, keeping buying power available for the plays you want to do going forward in the season. 8) Look for 50% Max, Get Out, and Redeploy. These plays are meant to be quick and dirty, take the money and run affairs. After getting a fill for the setup, immediately set up a GTC order to have it taken off at 50% max. 9) Don't Panic On Breach/Familiarize Yourself With Rolling Methodology. On occasion, the move in the underlying is greater than anticipated by the Black Scholes model, and a side your setup will be breached. It is important not to panic in these circumstances, allow the setup to play out, and then roll the tested side if you have to for duration as expiry approaches to allow the setup additional time to work itself out. Knowing how to mechanically address these breaches is critical to these trades. (See Rolling Posts, Below).
NYSE:AA
by NaughtyPines
OPTIONS TIP: HOW TO PLAY EARNINGS (PT I)Traditionally, AA's earnings announcement marks the beginning of the earnings season for me, and it announces earnings on Monday after market close. Naturally, there are tons of plays you can make, but, unfortunately, not all are ideal for premium selling or, for that matter, other options strategies that rely on a firm directional assumption (like Super Bulls/Super Bears). Here's a short checklist for what to play and what not to play with options, with an emphasis on what to look for in premium selling setups, as well as a few guidelines as to what to do once you're in the trade: 1) High Liquidity. Look for average daily volume in the underlying of at least 2 million shares. If volume of the actual shares is less than that, in all likelihood you'll be staring at wide bid/ask spreads in the options, which means you're less likely to get filled on any options order for a "fair price" (i.e., a price at or slightly above the mid price). Even if the underlying trades more than 2 million shares, pass on trades where the options' bid/ask spread is grotesquely wide. 2) No Weeklies, No Go. Truth be told, I have, on occasion, played earnings for underlyings that only have monthly expiries available; most of the time I've regretted it. They're a pain and offer less flexibility with rolls than with underlyings that have weekly expiries. Premium selling earnings plays are meant to be quick and dirty; the sooner you can get out of the play and redeploy the capital elsewhere, the better, and being stuck in a play with only monthlies can prolong the process. Additionally, having weekly expires are a hallmark of greater market interest in the options. 3) Both High Implied Volatility Rank/High Implied Volality. Look to enter trades where both the implied volatility rank is greater than 70th percentile and the implied volatility is greater than 50% (i.e., where the implied volatility is high now as compared to where its been and where the implied volatility is currently high). Keep in mind that you're looking for a volatility contraction when selling premium around earnings, so it's obviously better if the implied volatility percentage is higher, since there's "more to contract from." As an example of this, IBM, which announces earnings shortly, meets the "rank test" (its rank is greater than 70), but fails the implied volatility percentile test (<30%). It's just one of those underlyings that is never all that volatile, so I generally pass it over for premium selling. 4) Don't Force Setups. All of my short strangle/iron condored earnings plays are set up the same way, with the short option strikes in the 80-85% probability out-of-the-money strikes. With iron condors, I can naturally fiddle with the width of my wings' spreads, but I don't monkey with tightening the short options in order to get a particular credit out of the setup. If a setup doesn't offer the credit you would like to see, pass the play over entirely. (Continued in Part II).
NYSE:AA
by NaughtyPines
Alcoa Inc (AA)Possible Hold Speculation & Technical Analysis • Double top formation o Could be bearish o Wait for confirmation, around the low 9s to breakdown (Short) o Double top reversal @ low 10s (Long) Chinese Aluminum Market/Economy China Driving the Commodity Rally • Chinese aluminum production will likely increase by 1.4 million tons this year • Negative impacts because of slower demand growth • Europe in expansionist mode? o more lending, and if there is more lending then there will be more buying o Twenty-five percent of Chinese exports go to Europe, so what's good for Europe is going to be good for commodities. • 10 million people are expected to be lifted out of poverty this year • The Street • Prices of metals are benefiting from optimism that global growth is rebounding. • Aluminum prices remain below $1,600 per metric ton after falling more than 40% last year Alcoa • Under pressure through 2015, 28% decline over the past 12 months • China has an abundant supply
NYSE:AA
by adamivori
AA - Neutral/LongAlcoa successfully breached its downward trendline (blue) and made it past key resistance at 8.51, in line with my expectations for this stock to perform bullishly based on technicals at the time. The picture has changed somewhat. First, note the slightly decreasing volume during its 2016 breakout signalling that its momentum is decreasing, albeit not significantly. Secondly, we can notice that the RSI is at 65 and that a sell-off of a few days is due. Finally, notice the spinning tops on the last day of trading. This indicates a tug of war between the bears and the bulls - the stock moving wildly up and down before settling into an uncertain close only a minuscule amount below its open. This is a difficult position for the stock to close at, because of key resistance it ran into at around 9.55 back in November and December. Ultimately the stock needed three tries to penetrate this level. Assuming there is no major macroeconomic news one way or the other, I expect this stock to trade down for a few days. I see two major possibilities for it trading down. 1) a few down days in keeping with its current trend before it breaches resistance at 9.55 and establishes that price as new support while it trends for a time between 9.55 and its next key resistance at approx 10.20. 2) It may also trade dramatically lower to support at 8.50 and build moment for a time (many days) between 9.5 and 8.5. Ultimately I think this stock is headed up for a while longer, but it needs to regain some momentum and the bullish signals are less significant than they were several days ago. Additionally, because its closer to a major resistance line at 10.20ish than it was several days ago the risk/reward is less enticing in the short term. All of this points to a neutral, take a wait and see approach.
NYSE:AA
by tapkcir
AA - BULL?Alcoa has been trending down over the past year, as denoted by the blue trendline following its price peaks over the past 12 months or so. Over the past two days its finally broken through that line, indicating that the trend may possibly be reversing and Alcoa may rise. In the short term if Alcoa does continue to rise, expect resistance at $10. This is an important level psychologically (double digits) as well as marking a recent peak that Alcoa was unable to break in mid December. Volume today is already above the moving average on a strong move above the trendline. I view that (at this moment) as a good indicator that this is a for real bullish move and Alcoa is headed up. I'm still calling this neutral however, as its a one day peak so far on a trading day that is still ongoing. A few side notes: Alcoa is divided into two major business sections which are due to split towards the second half of 2016. One half focuses on aluminum, the other on aerospace. This makes it an interesting case with regards to aluminum prices influencing a major producer of aluminum, as a large portion of its current business is no longer centered around that metal. Despite that, prices of aluminum will still influence the stock - keep that in mind.
NYSE:AA
by tapkcir
#Alcoa- At Key Level To Short To The Lows Of The Range! #AATraders, A nice short to take advantage of. A nice pullback after a bearish impulse move has landed us at 50 moving average and the 0.5 Fibonacci retracement. It's clear from the candles that investors weakened at the 50MA resistance and support and resistance transition zone, which implies we have a high probability short situation. -----Interested in joining my professional signals group, or receiving my personalized online professional trading tuition? Message me here on Trading view or email me with the email address on my trading view profile page----- Best of luck, Tom
NYSE:AAShort
by TomProTrader
AA (Alcoa) reports Monday, start of earnings seasonOk lets see a show of hands of those who think AA will bounce UP after they report Monday? OK, come on... is the mic on? I see no hands. Anyone? Smart crowd I see. Purple line is long term TL, red is short TL, and blue is 2013 low support. Purple has broken couple times. last 5 reports have resulted in down days afterwards. AND THIS IS THE MOST ANTICIPATED earnings report in 7 years or so? Good or bad, this could set the trend for the week, and without any other news, good or bad, this week, this could definitely be THE catalyst for the markets this week, unless china devalues to prop up their markets. Surprise, I am short.
NYSE:AAShort
by claydoctor
AA -- WATCH FOR VOLATILITY POP AROUND EARNINGSI have not played AA for it seems like eons. This is because my go-to, premium selling play for earnings is the short strangle, and you won't get sufficient premium out of a low priced underlying like AA via short strangle for the life of you. The other option, naturally, is a short straddle , but even then it's a slog to squeeze sufficient premium out of the setup to make it worthwhile. However, given where AA is at in its trajectory (another beaten down commodity/basic materials play), it's literally begging for a covered call at some point. But those are best put on when volatility in the underlying is high, since volatility enrichens premium in the short call of the setup and reduces your cost basis to a greater degree. Consequently, what I'm watching for is a volatility pop around earnings such that doing a covered call with a short strike slightly above current price is worthwhile (a dip like we had last post-earnings would also be helpful). It's frankly not horrible right now, but I generally look to put these on when implied volatility rank is above 70 and the setup will yield 10% return on capital if called away at the short call price of the setup. A 100 @ 9.87/Feb 19th 10 short call will cost 9.13 to put on with a max profit of .87. Could be better, naturally.
NYSE:AALong
by NaughtyPines