Options Trading and Education Blog

EFX gets a bad credit score

Posted By Andrew Giovinazzi Tue, 09/19/2017 - 4:54pm

EFX is probably guilty of many sins at this point:

Failure to heed a breach warning from CSCO

Doing little or nothing after a breach was discovered

Having executives sell stock while all this was known INSIDE the company at the very top

How the CEO still has his job is beyond.  This is corporate CYAness on a massive scale.  The stock market reacted and took a healthy $50 out of the name.  IV  is in the 50% range after being near 80% for a while.  Even as I write this the depth of the data hack is not fully known.  Sorta bad or just really bad and there is not a hoot the average person can do about it.  It does appear the CEO will testify in front of Congress in early October and our august Congressmen will sweat him no doubt.  There might be a dead money trade there.

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The Trade

Owning 90 level puts after the testimony and selling puts expiring before the testimony in a put calendar trade would probably work.  Don't expect EFX to do much while this mess gets sorted out.

If you want to learn how to evaluate volatility, price options with Greeks and create good risk/reward profiles to help improve performance and returns, take our Gold Class.  I teach a group mentoring session 2 times per week and Mark runs the best chat in the business for an 1 hour day in the mornings.  All that comes with Gold!

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Volatility Report: Special Situations and VIX

Posted By Mark Sebastian Tue, 09/19/2017 - 9:15am

Is the VIX pricing the big Fed unwind?

Posted By Andrew Giovinazzi Mon, 09/18/2017 - 5:31pm

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There was a complete annihilation of the VIX Sep and Oct futures today.  Most major vol products were down big as the extra premium from last week evaporated with a quiet weekend for once.  Even with the sell of there is still a health contango in the VIX futures.  UVXY and VXX will be well on their way to another split if this keeps up.  VIX at 10.15 is once again stuck in the mud as markets face more cooperation in D.C. and what a rosier economic picture.  A perfect scenario for rallying stocks and lower vol if.....

The FED was not going to unwind their massive balance sheet.  The extra  VIX future premium is most likely there for that reason.  So the market wants to know what the Chairman Yellen will say and most think it will be boring.  VIX cash says boring VIX futures not as sure.

Chart by VIXcentral.com

The trade

I like a VXX put and SPY put pair here.  There is enough juice in the VIX futures to make it work and if the Fed manages the 3 card monty of all is well, VXX gets crushed.

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Look for our Easy Vix course in the fall if you want to learn how to price and trade VIX the right way.


Am Vol Report 9-18-17 VIX to 10

Posted By Mark Sebastian Mon, 09/18/2017 - 9:00am

AM Vol Report NK is DK'd

Posted By Mark Sebastian Fri, 09/15/2017 - 9:11am

AM Vol Report 09-14-2017 VIX futures still bid

Posted By Andrew Giovinazzi Thu, 09/14/2017 - 9:24am

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The Trap Door Spider

Posted By Andrew Giovinazzi Wed, 09/13/2017 - 6:31pm

Take our Directional Trading Class here

I had a nice exchange with one of our Pro clients today I likened his vol trading to a Trap Door Spider.  The Trap Door spider does not spin a web over and over again, hoping for something to fly in.  They wait until the opportunity is there and then pounce out of their hole at the tasty bug sitting there unsuspecting.  Trading volatility is a lot like that as one waits for an opportunity to add a position.

I review in our courses about two kinds of option traders:

One who uses the options to trade the stock, like an AAPL bull


One who use the stock to trade the options, like a vol arb trader

Both are perfectly fine and I have seen many students, floor traders and retail clients alike, excel at either.  What is important is to decide want camp to jump in when putting on a trade.  You really like the stock, what is the best way to get long with options?  You want to sell the juice, what is the best way to do it with the best risk/reward profile.

Mark made a nice EFX trade this week, hated the stock, and found a simple way to express that buying cheap put spreads.  This was a case of the options just as a means to short EFX.  If you want to learn how to tell the difference trading, namely what are you really trading, take our class tomorrow night.  You won’t be disappointed.  You would rather learn to be the spider than the prey.

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AM Vol Report 09-13-2017 AAPL IV getting crushed

Posted By Andrew Giovinazzi Wed, 09/13/2017 - 9:50am


 Check our our directional vol class here for tomorrow night!


Am Vol Report 9-12-17

Posted By Mark Sebastian Tue, 09/12/2017 - 9:17am

AM Vol Report 09-11-2017 VIX got crushed, Oct still bid

Posted By Andrew Giovinazzi Mon, 09/11/2017 - 9:14am

See our new Directional Trading Class here