The Options Thread

https://en.wikipedia.org/wiki/The_Blob_(Pacific_Ocean)

The Blob remains. Wettest October on record. I am still wearing tank tops and shorts many days....no sign of frost yet and I am seeing confused blackberries blooming, thinking it is Spring. Oh well....

Natgas prices sliding hard with the prospect of yet another balmy winter.

The wide (Jan-Apr) calendars have wide profit zones, so you can afford to push them out otm way.

Back from vaykay ... . A welcome respite, but probs at the worst trading time in terms of premium selling. It was awfully tough not to at least "take a peak" at the markets as they roller-coastered from panic in the overnight after the election to post-election rippage on relief that, "Holy crap, I'm glad that shit's over ... ."

Did get out of the SVXY 70/74 short put vert for, like, $80/contract net profit. Lol. The instrument is a "little bit much to put up with" but, what the hey, all good fun ... .

Today:

Opening: CHK Jan 20th 4.5 short put for a .31 credit on this dip. Continuing to reduce my cost basis in my shares (now down to ~6.30/share). Had to go out to Jan, since I couldn't get squat for Dec, at least not at a strike I was comfy with. November, and I'm still out walking in my shorts. I'll take it, but WTF; this doesn't bode well for winter natty, so I'm bracing myself for a little more natty gas disappointment this year ... again. Additionally, CHK's getting hit with the 1-2 punch: declining oil + declining natty. Ugh.

Opening: IWM Dec 23rd 116/119 short put vert for a .38 cr. I hate putting on long delta on a rip, but my IWM setups are a little too net short delta, even after I rolled some put stuff up this a.m. to delta balance. Oh, well, sometimes you gotta do what you gotta do ... .

Yikes! Precious metals complex taking it up the glory hole here post-election. No surprise: post-election panic drove the price up; now everybody's bailing to pile into "risk on" assets ... . Same deal with treasuries: Granny's giving up her death grip on those post-election; TLT sliding like there's no tomorrow ... .

Today:

Bought 12 NUGT shares at 8.60/share. (Small engagement trade while I wait for other stuff to work out). Looking to exit at the Daily 2 SD upper Bollinger Band (~$17); alternatively, dollar cost average in lower (hence, the smallness ... ).

Covering: XOP Nov 18th 38P/36C "inverted strangle" body of iron fly for a 2.59 db. This was an iron fly I rolled out, resulting in an inverted "body." I'm closing out the "body" portion here, because the wings cannot be closed as a "unit." The long options are "no bid." I'll look to take those off separately if some nobber wants to buy them from me for a .05 or less; otherwise, I'll just allow them to expire worthless. This will result in a small loss (~$30/contract), which I'll tally up once the long options close out. I could have rolled out, but would rather close this out as a small loser versus working it another cycle ... .

Adding to "core" ETF flies positions: Opening: XLU Dec 30th 42.5/46.5/46.5/49.5 iron fly. Shooting for a 2.10 credit fill. (High IVR).

There isn't much out there with both high IVR and high IV ETF-wise. EWW is one of them. It isn't the most liquid thing in the world, so I'm going for a fill in the most liquid expiry -- the Dec 16th.

EWW Dec 16th 39/45/45/50 iron fly
Probability of Profit: 43%
Max Profit: $302/contract
Max Loss/Buying Power Effect: $298/contract
Break Evens: 41.98/48.02

Notes: Shooting for 25% max profit, as I would with a short straddle.

One pennied it and got immediately filled at 3.01 ($301)/contract ... .

Changed the target price on this puppy to the BB "base line" which is around $13. Looking for a base hit, not a home run ... .

Opening: ANF Nov 25th 14.5 short put for a $48/contract credit. High IVR/high IV + earnings. Looking for a volatility contraction post earnings plus sideways or up movement.

Carl Icahn dumps his remaining stake in CHK, RIG. http://www.investopedia.com/news/ica...artner=YahooSA Supposedly, he's still hanging on to his shares in LNG (LNG terminal co) and a crappy, 1.2 billion dollar market cap limited partnership, CVRR for his "exposure" to the energy sector.

I can understand the LNG, but his stake in CVRR is stupid ... .

VIX continues to meander about in sub-15 territory, temporarily unafraid that Donald J. Trump will be the next President of the United States and that a Dec rate hike is likely.

High quality high IVR/high IV plays are scarce. (Only EWW and ANF came up on my screeners as being premium selling worthy this week, if I recall correctly).

This makes for short work ... . (Fingers crossed on ANF earnings tomorrow before market open; I went Nov 25th 14.5 short put (bullish assumption), and price closed just shy of 17 today, giving me more downside room (thank you, market)).

I still have "minor hopes" for natty, but am using that poo pile CHK ... . It's only advantage over "UNG straight" is higher IV (for purposes of covered calls or short puts; pick your poison).

I traded that wide UNG call calemdar for 12c. it's sitting there waiting for gas to rise (i know....)

I also have basically the same idea in CHK, but Dec/Jan.....I was on a run this morning and saw my breath for the first time since last Winter

Yesterday: 74 (a record high). Today: 41 and windy as all get out with snow (a "dusting") forecast for the upper half of the state ... . Hope springs eternal for natty gas ... .

Today:

Covering: ANF Nov 25th 14.5 short put for a .21 db. Saw the "writing on the wall" with this one and bailed on it immediately after open for a net profit of $25/contract after fees commissions. Price went down from where I entered, but got huge assistance from the vol collapse.

Covering: XLU Dec 2nd 48.5 call for a .05 db (near worthless). The long call is no bid, so I'll have to wait until it's bid to get out or let it expire worthless. This was a leg of an iron fly that I then proceeded to roll out for duration (see below).

Rolling: XLU Dec 2nd 45/48.5 short put vert to Dec 23rd 45/48.5 short put vert for a .05 db and sold the 48/51.5 for a .23 cr, so that I'm net credit for the roll. Naturally, price will have to roll back toward the body of this setup for me to have a shot at getting out for scratch. Otherwise, lather, rinse, repeat with the rolling/selling oppositional side against.

Opening: IWM Dec 23rd 135/138 short call vert for a .52 cr. This is basically just to match up with an IWM short put vert I put on several days ago as a delta hedge of my entire IWM position. With IWM potentially looking toppy and/or overextended here (SPY, QQQ, and DIA were all down today; IWM may follow shortly), I figured now was "the time" to balance out my call side and put side units if I was going to do that.

Interesting series on natty gas: http://marketrealist.com/2016/11/nat...tm_medium=feed

Today:

Had to do something with this broken iron condor:

Rolling IWM Dec 9th 116.5/119.5/123.5/126.5 iron condor to Dec 9th 124/127/127/131 iron fly for a .47/contract credit.

Price will have to roll back into the body of the setup at 127 for this to "work out" by expiry; otherwise, I'll be fiddling with the setup a little more. Gotta think that some of RUT/IWM post-election strength is going to come off ... at some point ... .

I need to "man up" and do some "expanding volatility environment" strategies (calendars/diagonals):



If there is a time to do those, it's when IV is low ... .