NaughtyPines

NaughtyPines

TLT (or its inverse, TBT) is one of my bread and butter trades, and I have a trade on in it virtually continously, or so it seems. As with the index trades, I like to put one TLT trade on each week (I frankly prefer it to TBT, since it is a little "juicier" in terms of credit received), ideally as close to 45 DTE as possible. Although I do have an iron condor on...

NaughtyPines

The volatility in the index ETF's remains relatively high with QQQ topping the bunch at 84 IVR (6 Month Dough), followed by IWM (77), DIA (64), and SPY (53). Ordinarily, it is my habit to put on one index-based trade a week, assuming that sufficient volatility is there to make premium selling worthwhile (i.e., IVR >35). I like to look at expiries that are around...

NaughtyPines

As a seller of premium primarily in the index ETF's SPY, DIA, IWM, and QQQ, I look to enter setups 45 DTE when IVR exceeds 35 (Dough 6-Mo). Currently, all four index ETF's IVR's exceed that benchmark, with QQQ weighing in at 82, IWM -- 64, DIA -- 63, and SPY -- 54, making the selling of premium attractive. Since I am bearish on the indices, I am inclined toward...

NaughtyPines

UNG has been locked in a fairly tight range since February between 15.32 and 12.27. Virtually devoid of volatility and unworkable due to the price of the underlying using an iron condor or short strangle (both of which are best used in high volatility environments), it may be perfect for another option strategy that assumes that price will remain in a particular...

NaughtyPines

In a previous post regarding FXE, I described an options strategy called "laddering." Short laddering can be done both on the short put side, as well as on the short call side, and can be done using naked shorts or vertical credit spreads. It can be used for a number of purposes, such as reducing cost basis in an underlying stock you own, to work a directional...

NaughtyPines

Too scared to iron condor PCLN? Well, there's still TSLA, which announces earnings after the close tomorrow. Typically, with earnings plays, I wait as long as possible to enter my trade: regardless of whether it's before or after the bell, I try to enter the trade at the last possible moment (ordinarily, the NY close immediately preceding the announcement), so...

NaughtyPines

As a premium seller, I'm looking to work my directional bias in EUR/USD (bearish) in some fashion using the Euro-proxy, FXE. Unfortunately, volatility has all but bled out of FXE, making premium selling less than ideal. So, for the time being, I am waiting and watching for FXE volatility to return. When it does, I'm looking to set up "laddered" short call...

NaughtyPines

If you're a premium seller and wait for it seems like endless bouts of sub-20 IVR to get into an index premium selling play, QQQ volatility has briefly popped above 35 IVR (currently 56; 6-Month Dough), making it the most premium rich index for the moment. Naturally, that could pass quickly, but for now, consider 45 DTE Iron Condors ... . In considering how to...

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Unlike SPY, IWM's top is not as clean. A couple of levels, however, stand out -- one at approximately 126.77 (in red) (a short-term resistance level), the second at 129.29 (in blue) (this year's high). In considering what strike prices to go with in a short call vert in IWM, I can either play it safe, keeping a break even for the spread above the 2015 highs; go...

NaughtyPines

A short call vertical is a defined risk options spread that consists of a short call and a higher long call and generally assumes a bearish bias as to movement in the underlying. With SPY locked in a fairly long-term range between approximately 204 and 213, I have frequently taken advantage of short call verticals over the past several weeks with break evens for...

NaughtyPines

A good article: "The average stock market correction following the first rate has occurred 21.2 months later." www.zerohedge.com "The number of times that Federal Reserve has hiked interest rates without a negative economic or market impact has been exactly ZERO." www.zerohedge.com "There is an ongoing belief that the current financial market trends will...

NaughtyPines

With indices' IVR's mostly at 35+ (SPY being the current exception), I generally pay little attention to earnings plays from an options strategy standpoint. I just prefer to play the indices as a general matter; they're my bread and butter trades. Earnings plays can either work out fabulously quite quickly or blow up in your face if price breaches or tests one...

NaughtyPines

Gold and gold-related underlyings were hammered this past week, along with other precious metals. The IVR for the go-to proxy for gold -- GLD (SPDR Gold Shares) -- has popped to >90, offering a premium selling opportunity that may quickly evaporate off of GLD sub-104 lows (GLD experienced a modest bounce in Friday's session, up .98% for the day). A Sept 4...

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With the downturn in Friday's indices and their respective proxies (SPY, IWM, QQQ, and DIA), a measure of volatility has returned to the market such that selling premium in these instruments is modestly attractive. QQQ has an IVR of 49 (6-Mo. Dough), IWM: 48, DIA: 41, and SPY: 31 (I generally look for an IVR of >35 in ETF's and the indices in which to sell...

NaughtyPines

THE IRON CONDOR: The iron condor (IC) is a defined risk options strategy that can consist of a short strangle enveloped by a long call at a higher strike price than the short call and a long put at a lower strike price than the short put or a short straddle enveloped by a similar long call/put setup and operates on the assumption that the price of the underlying...

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THE SHORT STRADDLE: The short straddle is an unlimited risk options strategy that assumes that the underlying will remain in a particular range for the duration of the trade and consists of a short call and a short put at the same strike price. It can be skewed directionally or advance a neutral bias, and maximum profit is realized if the price of the...

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THE LONG STRADDLE The long straddle is a defined risk options strategy that assumes that the price of the underlying will move outside a specified range in the lifespan of the trade. It can be directional or neutral in bias, and consists of buying a long call and a long put at the same strike price. If the price of the underlying does not exceed the BE on...

NaughtyPines

SHORT STRANGLE: The short strangle is an unlimited risk options strategy that consists of a short put and a short call. It can be directionally skewed bearish/bullish or it can be neutral and operates on the assumption that price of the underlying will remain in a range for the duration of the trade. Upon expiry, if the price of the underlying remains between...