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Playing Dell Options for a Dividend

One of the interestings stories coming out of the Fiscal Cliff is the juggling of cash positions that is occuring amoung many of the high market cap companies that produce a lot of cash.  We have seen ORCL accelorate their dividend, and we have seen nearly 100 other companies on the S&P 500 adjust their dividend schedule, announce a special dividened, or speed up dividend payments ahead of the cliff.  Today,  our COO Mark was asked about another major name, DELL, and how one might play Dell options.  You can watch the video here:

Paying the Price for PCLN

'It Can't Move That Much"

Famous last words from many of my option mentoring students, when they are dabbling in selling premium into earnings.  Well, those option traders are typically given a tough education about options in short order.  We saw this happen in tall order in PCLN options.  Take a look at the closing price of the weekly straddle:

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Livevol (R) www.livevol.com

Breaking Down a CHK trade from Bloomberg's Lunch Money

Our COO was on Bloomberg's Lunch Money  today discussing trading and options order flow on Chesapeake Energy.  You can watch the Video:

 

One of the things we have been trying to do, along with Mark's Bloomberg appearences, has been to try and explain the Why of the trade, in hopes it will educate potential option traders about options.  Here is an explanation of the trade itself.

Clear Example of Oversold an VIX

One of the problems my option mentoring students have understanding is the concept of relative premium price and 'cheap' options.  But, if one wants to get a good options education, it is really key to understand the concept.  To help you option traders, over the last few days, we have discussed how relative to risk, premium can become oversold.  This happens when premium sellers go overboard risk assets get 'cheap' in the near term.  I also stated that, around 11:00 or so EST, I thought we might see a bottom in premium selling.  Well I was off by about 15 minutes as one can clearly see the point where premium got oversold:

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SPX IV Back on Track

I have been comentating over past few weeks about the whippy nature of the SPX and SPX IV.  I have made mention that the SPX has been driving me nuts, as it keeps breaking correlation one way or another.  Well, after today, I think we are finally seeing some sort of 'tell' from the market, and it appears that a trip back to 1400 is in quick order.  Take a look at the SPX and the pattern of the IV:

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Livevol (R) www.livevol.com

AAPL Option Implied Volatility Snaps Back!

Last week we wrote a post on how AAPL implied volatility was in the toilet.  At that point in time, AAPL was at its lowest level since the early 2000's.  Well, AAPL did one better late last week as the IV fell to the lowest level I have on record.  The March 455 straddle that we pointed out as a nice play in the blog actually FELL over the next few days.  We had a combo of continued sinking IV and time passing:

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Livevol Inc (R) www.livevol.com

Free Webinar: Back Trading Butterflies Replay

You can catch the replay of today's webinar.  I made a special offer at the end, so its worth it to listen till the end.

SPX Calendars, Sell them instead of buy them

I was in an option mentoring session yesterday working with one of my brightest students when we began looking at the SPX September-October call spread.  The spread had a mid price of about 13

POT Breaking down a bullish option spread

During the Pit Report a few of our option mentoring students asked me to take a look at POT and see if there were any bullish trades that might have

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