Mario plays Three Card Monti and wins

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The ECB had their big announcement today and, drumroll, they are going to do nothing else.  I think after watching QE in the USA and the never ending printing press in Japan, Mario Draghi is content to let Europe limp along and figure out a way to pay off its bills.  He will keep hinting at stimulus and  support but will not do anything.  He does not have to since the promise of liquidity is enough to keep the credit wolves at bay.

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Classic Example of An Earnings Vol Crush: FB Edition

One of the most followed stocks on the NASDAQ, FB, had earnings last night.  There was HUGE volume yesterday ahead of earnings and May3 weekly volatility got to 150% ATM.  FB actually made a decent move by the end of the day today, moving up to near 29.00 a share.  But, those who bought upside calls are probably NOT happy.  Take a look at a shot of the FB May3 29 calls from yesterday.


LivevolX (r)

Notice that high IV of near 140%.  Notice the price of the calls is above .50 a contract.  Take a look at what happened to FB volatility today.

Selling a BA Put Spread

Our COO was on Bloomberg TV discussing BA option trading ahead of an upcoming NTSB decision on the 787 Battery.  You can watch the video here:


Boeing continues to rally ahead of an important NTSB decision on the safety of its battery system within its new 787 Dreamliner, but why? Considering BA is nearing an all-time high, it seems likely the market has already “baked in” the idea that the NTSB will eventually approve the system. 

KMB Option IV Is Sky High

The entire Consumer Cyclical sector is killing right now.  PG, CL, CLX and KMB are all at or near all-time high stock prices.  The industry is doing great as a whole; KMB in particular has had a great run higher.  Yet, something a little screwy is happening with Option IV in KMB.  Take a look at the 30 day IV from LiveVolPro of CL, CLX, KMB, and PG.  KMB is the green line:


Livevol (R)

VIX Activity A Hedge or an Ominous Sign?

As Bill Luby reported on his blog VIXandMore.  VIX option volume and call volume both set records today.  Which leads us to this question?  Why?  There are two potential answers:

1.  The Market is about to tank and smart money is covering their butt

2.  The large stock funds are scared, and hedging their portfolio's

Lets pull up a 1 year chart of VIX.  On the top are the levels of VIX and on the bottom is call and put volume.  I thought it would be interesting to look at past volume spikes to see if they are a potential leading indicator.


I liked the special title there for our blog tonight.  For the most part the activity in the volatility markets was pretty muted today.  On balance some decent earnings but nothing to light a candle under the big indexes.  The NDX was up about .33% so the CES show was not exactly lighting a candle under the technology stocks.  I was reading a column in the WSJ not so long ago that the next technology innovations won’t be enough to spur economic growth or some sort of nonsense like that.  Some professor was espousing this idea and it reminds me of a quote from the head of the US Patent Office around the end of the 19th century, “Everything that can be invented has been invented,” he opined in ….1898.”  Well he was a little bit off and while the CE

Is Yahoo worth anything?

We had a pretty listless day today.  VIX down with the SPX down is usually a snoozer, as the market takes a break and evaluates what volatility is really worth now that the printing presses are going full steam.  That moisture you feel in air is the strain of the dollar machine blowing steamy exhaust out of the building.  I guess the Euro theater is now just a spectator sport as the two sides decide what to give and how much to want.  Either way the central banks have committed to throw money at it so the VIX is looking iffy at a 14.18 close.

How does risk change in a short call assignment?

A lot of traders that are new to options have to first deal with the number of moving parts in an option contract (mainly, why we put together the Silver Course) and all the permutations that fall from it.  One of the first things that come to mind is when a call is assigned and becomes stock (this happened to one of our students yesterday).  First, there is a call and now there is stock.  What to do?

Remember is that there are two issues:

Our COO on Bloomberg

Our COO was on Bloomberg's 3 vs Trish segment talking F and GM

Click here to watch

When Should I Re-Sell the Call Side of an Iron Condor in SPX?

Option Traders, as an option mentor one of my goals is to be as modest in victory as I am in defeat.

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