strangle

BAC on more movement

Submitted by atg on Tue, 02/12/2013 - 5:51pm

One of our Pro Clients had a funny quote in the Pro Chat today. He said, "The S&P 500 is up today. You don't see that every day. Oh wait a minute, yes you do." In a nutshell, that is what we have, a market that is finding new ways to rally on news like the better deficit numbers and greater bank lending.

Kersplat goes the implied volatility in FB now what to do?

Submitted by atg on Tue, 01/15/2013 - 6:35pm

We have spent a lot of time in this blog chronicling the movement in Facebook. I think the stock has been a really good trader except of course for the $38 buyers on the IPO. It feels like nobody wanted the stock at $19 either because all the initial investors were getting out. Some did for sure as was reported today but by and large there is a big group of holders not quite ready to hit the bricks yet. The lockup expiration dates have been the great buying opportunities of the year for this name. I guess the point is that when things are telegraphed this well in advance they are generally not what they seem?

AAPL Earnings Straddle is Really Juicy

Submitted by msebastian on Mon, 01/14/2013 - 4:58pm

We all know that AAPL has had a rough couple of months. The stock has moved up and down 200.00 in the last 6 months. The company has earnings next week and I wanted to put into perspective how much the fear is priced into options right now. Take a look at this chart of AAPL stock and IV.

Livevol (r) www.livevol.com

The Vol is a lot higher than it was last earnings, despite the fact that AAPL had taken a dive from over 700 to near 600. If we compare straddle prices with about the same time to expiration I think it becomes even more clear.

This is a straddle from October 18 2012.

Facebook Volatility is Still Cheap

Submitted by atg on Mon, 11/26/2012 - 5:25pm

I had to blink recently, because I thought FB was just a $20 stock. Nothing makes momentum traders happier than an upgrade of a whole bunch of technology stocks at once. FB, AAPL and YHOO all got the nod today from influential analysts and banks. We have had a small short put spread position in YHOO in our Strategy Letter for a while now, so I agree with the bullishness. One thing about the rally in FB is that it was accompanied by a rise in volatility. That I think is interesting.

WishNeedWantHope

Submitted by atg on Wed, 11/21/2012 - 4:37pm

Sometimes the holiday period brings a surprise of action. Last year with iteration 5 or 6 of the Euro Crisis ending we caught a huge rally and volatility compression right through Thanksgiving. It feels like we got that early, on Monday really, this year. That leaves us with the gap between the holidays and the news about Congress and the White House hunkering down to earn their pay checks and perks. I am hopeful but students at Option Pit know that hope for a trader is a 4 letter word. It goes on the list with need, wish and want. If you find yourself in a trade and the only thing going through your mind is one of those 4 letter words, you should probably look for the exit or adjust. A lot of risk management is like that.

The Market that hated good news

Submitted by atg on Fri, 11/02/2012 - 4:37pm

I like many market participants today saw the early rally and the employment report and thought that we would get a continuation of yesterday. No such luck though (more later on that).

Is Yahoo worth anything?

Submitted by atg on Tue, 09/18/2012 - 5:34pm

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.

Corn Vol About to Explode Again?

Submitted by msebastian on Mon, 09/17/2012 - 3:33pm

For those of you not paying attention today, despite the slow equity markets, there is a market where things are really moving around: Grains. Both SOY and CORN are getting smoked today. Corn is down limit, and Soy is off as well. Yet, what is interesting is that, despite an apparent break out today, option prices on the futures and, subsequently, the ETF's are still pretty low.

How would YELP review this short squeeze?

Submitted by atg on Wed, 09/05/2012 - 5:04pm

The ECB had another chance to dazzle today and all we got was nothing. There seems to be no end of disappointment to the Euro area problems. There is no reset button. Although it does not look as bad as it did in early June if market volatility has anything to say about it. So the ECB, will again, wait and see how another auction goes for Spain. The fact that the Euros will have to mutualize all this debt and give up some sovereignty still has not dawned on everyone. After all the USA did that over 200 years ago and it was an 8 year process. In the internet age how would YELP rate the Euro Zone this year? I will give it ** and only because the food is still so good. How is the market rating YELP this year?

Wasn’t Facebook just hard to borrow?

Submitted by atg on Fri, 08/24/2012 - 4:31pm

I spent a few minutes today looking at some other internet blogs about options. Mark and I get links all the time, and I check them out when something looks good. I am happy to pass this one along- http://www.optionstradingiq.com/top-10-option-trading-blogs/. We made this guys top 10! It is nice when someone notices what you do and takes the time to write about it. Now that I have plugged myself, time to look at Facebook.