METRICS: Max Profit: $733/contract ($183 at 25% max; 16.7% Return on Cap On Margin) Max Loss/Buying Power Effect: Undefined/~$1100 on margin Break Evens: 47.67/62.33 Delta: 24.37 Theta: 5.11 Notes: I'm still feeling bullish, just not as bullish as I was at the beginning of the year -- hence the 24 long delta metric. From a price action perspective, low side...
... for a 1.90/contract credit. Metrics: Max Profit: $190/contract Max Loss/Buying Power Effect: Undefined/~$260 (on margin); full notional (cash secured) Break Evens: 11.10/14.90 Delta: 31.37 Theta: 1.05 Notes: Implied volatility's still pretty high post-earnings at 42%, so taking a modestly bullish assumption shot with a position that emulates the delta...
Pictured here is a model and/or demo trade set up for purposes of showing a "continuously rolled" short straddle trade in SPY where the straddle is rolled out as a unit for duration/credit at 5-10% max to strikes that will result in a <+/- 30 delta setup, with the ideal being to roll from at-the-money to at-the-money. This type of trade can be used in any liquid...
... for a 1.22/contract credit. Doing a smidge of defined risk, all-weather, broad market instrumentation here ... . The metrics aren't much to look at, because they aren't static,* but here they are: Max Loss/Buying Power Effect on Setup: $378/contract Max Profit on Setup: $122 Delta: 3.48 Theta: 1.9 As far as intratrade management is concerned: Look to roll...
Selling bullishly skewed premium in the beaten down GE with the possibility of an assignment of shares with a cost basis of 7.33/share (a 9.5% discount over current price). Filed for a 1.67/contract credit. Metrics: Max Profit: $167/contract Max Loss/Buying Power Effect (On Margin): Undefined/$171/contract Break Evens: 7.33/10.67 Delta: 23.23 Theta:...
... for a 2.21/contract credit. Metrics: Probability of Profit: 54% Max Profit: $221/contract Max Loss/Buying Power Effect: Undefined/~1.72 on margin Break Even/Cost Basis of Shares If Assigned: 7.79 Theta: 1.46 Delta: 41.92 Notes: Another potential "wheel" trade. Will initially shoot for 25% max for the short straddle, but will also be fine if assigned with a...
... for a 3.05/contract credit. Metrics: Max Profit: $305/contract Max Loss: Undefined: $848/contract on margin Break Evens: 38.95/45.05 Delta: -6.55 Theta: 3.31 Notes: Admittedly, the implied volatility rank and implied volatility metrics here aren't great (11 and 25, respectively) but the credit collected as a function of the buying power effect is decent...
HTZ puts the pedal to the metal on Monday after market close and is at the 52% mark of its 52-week range and has a 30-day implied of 75%. Due to its size, I'd probably only go short straddle: the Aug 17th 16 short straddle is paying 2.28 with a 25% take profit of .57. YELP shout outs its earnings on Wednesday (8/8) after market close (rank 66/30-day implied...
... for a 2.90/contract credit. Metrics: Max Loss/Buying Power Effect: Undefined/8.48/contract Max Profit: 2.90/contract Break Evens: 39.10/44.90 Theta: 4.52 Delta: -10 Notes: Just looking to add some more theta to the pile in August in non-single name, as the September monthly remains too far out in time for my tastes. Because of its duration, will start to...
... for a 2.44/contract credit. Metrics: Max Loss/Buying Power Effect: Undefined/6.94 Max Profit: 2.44 Break Evens: 31.56/36.44 Theta: 3.89 Delta: -14.41 Notes: Going where the volatility is at (again) in exchange-traded funds to sell a little August cycle premium while I wait for the September monthly to be more in that 45 days until expiration sweet spot. ...
... for a 2.97/contract credit. Metrics: Max Loss/Buying Power Effect: Undefined/~$670/contract Max Profit: $297/contract Break Evens: 32.03/37.97 Theta: 3.15 Delta: 30.73 (Neutral to Bullish) Notes: Here, I'm looking to emulate the delta of a naked 30 delta short put (paying ~.70/contract currently), but bringing in the beefier credit and extrinsic value of a...
... for a 7.61/contract credit. Metrics: Max Loss/Buying Power Effect: Undefined/~$909/contract Max Profit: $761/contract Break Evens: 40.39/55.61 Theta: 8.64 Delta: 24.9 (Neutral to Bullish) Notes: Another trade attempting to emulate a ~30 delta short put, while bringing in the greater extrinsic of a short straddle. Will take profit at the lesser of 10% of...
... for a 2.36/contract credit. Metrics: Probability of Profit: 55% Max Profit: $236/contact Max Loss/Buying Power Effect On Margin: Undefined/$525/contract Break Evens: 23.64/28.36 Delta: -9.37 Theta: 2.1 Notes: Did this from my phone on Friday ... . Although I like to see >35% background implied volatility when pulling the trigger on these, at 30.3%, this...
THE DAWN OF ASSET MANAGERS As discussed towards the end of last year, 2018 should be the year of the brokers and asset managers (please watch related ideas below). In this context, and with a dividend yield of 6.36%, BX is probably one of the best asset management pure-plays out there. The trend has been strong on all time frames and the stock is attempting a...
The current dividend yield on Royal Dutch Shell is 7.22% - Some of the highest yields out there. Combining this with a similar yield on the 7% OTM put, and topping it off with additional income from selling an OTM call, brings in an exceptional annualized yield in excess of 15%. The risk is to be long an oil asset in an uncertain oil environment. However, this is...
While I grind away on various covered call positions (I only have one covered call with an October short call on; the rest are in November or December), I'm looking ahead to some decent earnings for premium selling. Generally, I'm looking for underlyings whose implied volatility is above the 70th percentile for the past 52 weeks and that have background implied...
1. P, 79% 2. FCX, 76% 3. X, 75% 4. TWTR, 67% 5. STX, 57% 6. ABX, 56% 7. NFLX, 56% 8 GG, 53% 9. SLW, 52% Naturally, we are coming into earnings season here, so there's a reason that some of these have high IV here (e.g., NFLX announces in a week and a half). Ordinarily, I like IV to be >50% and IVR (current IV's level relative to where it's been for the past 52...
With broader market volatility bleeding out of the markets, I'm on the hunt for non-index premium-selling plays, and there are a few that have popped up on my radar. That being said, earnings season is nigh, so it might be best to be particularly selective as to individual underlying plays, keeping powder dry for the actual earnings, rather than pulling the...