NaughtyPines

NaughtyPines

MON announces earnings on 10/7 before market open, so you will want to put on a play before the 10/6 NY close to take advantage of the volatility contraction post-10/7 earnings. The stock has been hammered since last earnings, which might lead you to a bullish bias here, in which case you can skew setups to the call side to take advantage of that bias. As usual,...

NaughtyPines

PEP announces earnings on 10/6 before market open, so if you're going to make a play, consider putting it on on 10/5 before NY close to take maximum advantage of the volatility contraction that inevitably occurs post-earnings. Unfortunately, PEP's IVR is currently only at 60, which isn't ideal for a premium selling play. This is understandable, since PEP hasn't...

NaughtyPines

YUM announces earnings on 10/6 after market close, so if you're going to play this via an options setup, look at getting a fill for whatever you put on prior to the 10/6 New York close. Ordinarily, I trade these using a short strangle or iron condor, with the short call/put legs at or around the 1 standard deviation line for the chosen expiry, which will either...

NaughtyPines

While I primarily trade volatility and not direction, I remain interested in various levels of support/resistance in SPY and its counterparts (SPX, SPX500). This is not so much to inform my options setups (since they are governed purely by the statistical likelihood of an option expiring out of the money), but it can play a role in reassuring myself that...

NaughtyPines

Naturally, one day of plunging volatility (VIX - 7.96% to 22.55) is nothing to get concerned about. It's great for the premium selling trades you have on now (which benefit from a volatility contraction), but becomes concerning when we have something of the sort that occurred between mid-March and the end of August when sub 20 VIX made squeezing premium out of...

NaughtyPines

I have a love-hate relationship with earnings plays. When they work out, I'm happier than a clam; when they don't, I swear off them, use expletives to describe them, and say that they're a total *?! waste of time. That being said, there are some I just can't pass up, usually because the premium is just too good. In the next couple of weeks, these will be NFLX,...

NaughtyPines

With an IVR at 51 and VIX at 27, here's an example of an IWM trade I would put on were I not to have done the SPY IC I did earlier today: Nov 20 94/98/116/119 Iron Condor POP: 61% Max Profit: 1.02 Buying Power Effect: 2.98 Break-Evens: 96.98/117.02 Delta: -3.71 Theta: 1.53 It's a bit longer in duration than I'd normally like, but I wouldn't look a gift horse in...

NaughtyPines

With VIX at 27, I got a Nov 6th 170/173/198/201 SPY iron condor filled for a 1.01 credit (again, sorry about not noting the stats). Look for similar setups in IWM, DIA, and QQQ 45 DTE while this little bit of volatility lasts with your short put strike at the 1 SD line and your short call strike at the expected move for the expiry, going 2-3 strikes wide with...

NaughtyPines

As I continue to look for premium selling plays other than earnings plays, XHB's IVR (currently 71) looks modestly favorable for a premium selling play: This is the play I filled around market open for a .47 credit ... . (Sorry I didn't note any of the stats at the time ... ). Nov 6th 29/31/36/38 Iron Condor

NaughtyPines

Although we are starting back into another earnings season, I'm just not all that fond of earnings plays; I prefer the relative boredom of index ETF trades or things like sector SPDR's for the generation of steady income as opposed to flash-in-the-plan earnings plays which are generally binary in nature. They either work out quickly and dirtily or go horribly...

NaughtyPines

"Darn it," you say to yourself when you miss an opportunity and have to wait another "who knows" for it present itself again. Immediately post-FOMC, FXE (the Euro/USD proxy) edged up to the "sweet spot" between 112 and 113, only to quickly retreat again toward 110 -- an opportunity missed to milk the instrument one more time before the end of 2015, by the end of...

NaughtyPines

With IVR popping its head above 70 in EWZ, premium selling in this ETF is afoot! Example: Nov 6 15/17/24.5/26.5 Iron Condor POP: 69% Max Profit/BPE: .45/contract; 1.55/contract Delta: -3.16/contract Notes: As with most of my trades, I opt for a nondirectional stance with respect to these setups, even though there is some argument to be made that EWZ is at...

NaughtyPines

With IVR (implied volatility rank) at 69 (ThinkOrSwim 52-Week), OIH offers a premium selling opportunity here. Keep in mind that it is an oil services ETF, so if you already have oil/petroleum/exploration plays on, it would probably be advisable to pass on this trade, since in all likelihood it will be closely correlated with instruments like USO, XLE, and XOP,...

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With GPRO nearing its IPO low, I'm looking at an options play that results in my getting assigned the stock -- at the right price, of course. How do you get assigned stock? Basically, you sell a put, and if price is below the strike price of that put at expiration, you are assigned the stock. The converse of this is you sell a call; if price is above the strike...

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With volatility rapidly bleeding out of the index ETF's (SPY, IWM, DIA, QQQ), it's not looking so hot for me to set up my weekly mechanical index iron condor, something I usually do on Tuesdays. My cut-off to set these up is IVR (IV Rank) 35 (52 Week TOS), and the index ETF's respective IVR's are currently below that. There's nothing that ruins your day more...

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Another tool in the tool box: pairs trading. What is it? It is the trading of closely correlated underlyings at points of unusual divergence and operates on the assumption that the pairs will eventually revert to the historic correlation. GLD and SLV are closely correlated pairs. On the chart below, you'll see that, for the vast majority of the time, GLD and...

NaughtyPines

Now that FOMC is past, it's time for me to return to bread and butter trades, and these ordinarily are in TLT/TBT and the index ETF's -- SPY, IWM, DIA, and QQQ. Currently, TLT IVR (implied volatility rank) is 42. Although it isn't anything to write home about, TLT (or its inverse, TBT) is one of my bread and butter trades, and I'll put a trade on 25-45 DTE...

NaughtyPines

As a premium seller, I look to sell premium in high volatility environments or where the volatility in a given underlying (U/L) is high, and I use Dough.com's "Grid" with the drop down menu set to "TastyTrade" to screen for these plays, looking for IVR numbers that exceed 70 for individual stocks and 35 in ETF's, but naturally higher is better ... . However,...