Changes from prior week:
$GRPN 2012 short
$SVXY (short the January 62 straddle)
One of the key ETFs that traders monitor is $QQQ. As is the case with most charts that I review, there are often good simple approaches to creating a trade trigger approach.
As part of the Simple Approach series, let’s take a look at the Daily chart:
For a Bearish slant on this chart, here is the Sell signal trigger info:
One of the exciting changes to Weekly Options is the addition of 5 consecutive Weekly Option expiration on stocks. I first wrote about this here regarding how this would enhance short-term trading in stocks using $AAPL as an example.
This week we had an earnings event in $RIMM and it just so happened that this new schedule was available for this stock. Awesome. Because I frequently use Options to do pre-earnings trades, this added a LOT more choices in constructing a trade.
I ultimately settled on this trade:
Without the availability of all Weekly’s up to the January Monthly expiration, I would have only had the choice of using the following Weekly & Monthly expirations. This flexibility allowed me to shorten my time-frame on the Put Calendar but still providing the protection I wanted since this is an event trade. What a deal.
Here is how the trade unfolded:
Weekly Option schedule: http://www.cboe.com/micro/weeklys/availableweeklys.aspx
Note: new or position changes from prior week are in italics
On the Long side:
On the Short side:
The Fab 5 positions are noted in my weekly update post for that basket of stocks. The post on the ETF Short pairs trade for $TNA / $TZA & $FAS / $FAZ will be done at the end of the year when the trades are closed.
December Monthly Options expiration was a wild one, it did not disappoint for those that like Volatility. I came into the week with 3 positions in the basket so I had 2 empty seats to fill. I had a small, solid candidate list, but never found a comfortable entry to fill out the basket.
2 of the positions had December Options as part of the trade so I had to manage those pieces into Friday. The $CP positions was called away due to the Short Call part of the Collar being ITM. This was fine with me as this position had already completed the $100 Roll. The $ORLY position looked interested in a Pin at the $90 strike. I managed to get some value from the Long Put, selling it for $.25 on Friday. The Short Call piece expired so now I need to look at the January Option chain for a new Collar.
The other position is $MON – a January 90/95 Call Spread which looks good going into the New Year. Here is the Summary:
I received some great questions yesterday regarding a post-earnings trade that I initiated for $BBBY and thought I would provide a breakdown here on what the strategy is as well as a few scenarios on how it can play out.
Here are the details:
So what does this mean? I often scale in (and out) of trades so this is a typical approach for me to enter a trade in pieces. The twist here is that I elected to sell premium on $BBBY due to its elevated IV. In selling the straddle, being short a Call and a Put, here are 3 potential ways that this trade plays out:
I have several trades with December Option pieces remaining that I am managing today. Several from the Monday post have been closed, here is what remains:
$DDD Long stock with Short December 50 Call (Covered Call). Call is ITM with a bid/ask of 1.00/1.15 (sold for 1.30 on 12/18, 1/2 position).
$SWHC December 12 short Call looks to expire. Remain Long the Jan 12 Call (good luck with that, lol).
$PAY has drifted under the $29 strike, the Put is slightly ITM but just observing it for now (likely called away, fine by me). The Long 30 Call (other piece of Bear Collar) looks to expire worthless. Trade is tied to short stock from 31.35 on 12/14.
$CP I am long the stock with a December 100/95 Collar. I expect this position to be called away – $100 Roll already Complete – so I am fine with that.
$ORLY I am long the stock with a December 95/90 Collar. The Long Put currently has a bid/ask of .10/.20 and the Short Call is OTM (so expect it to expire).
ITM = In the Money
OTM = Out of the Money
Often times in stock chart reading you are not able to get a clean read on the direction that a stock may be going. You may have a number of things within a chart that help create a bias, like a moving average that has been support several times in the past, but there are always elements that provide a hint of doubt.
There are moments however where one indicator on a chart sticks out like a sore thumb. For an example, I bring you the Daily chart of $SCS: