The Options Thread

I don't want to get unduly focused on this stock, but I put in a lot of research into it (and sold quite a bit of premium in it, too, prior to its shooting to the sky here), so I'm basically "invested", to a certain extent, in the outcome: SRPT. As suspected, it is totally not out of the woods yet: http://www.investopedia.com/news/sar...artner=YahooSA That being said, my Jan 8 long puts that I put on for $8/contract are total crap shoots, lotto trades ... . Would be a nice present if those worked out ... .

Being cautious about putting on a ton of stuff ... . The Oct 21st expiry will be too close in time to do setups in, imo, and the Nov monthly is a bit farther out in time than I like to dick with. Moreover, we have these little elections going on here, and the outcome (President, House, Senate) could quickly turn the market into a ginormous poo pile, depending on the outcome. The general consensus is a Trump win (not out of the question; polls show Clinton and Trump separated by <4%-age points) would cause some market uncertainty, possibly leading to a small sell-off. In that case, I want to have tons of powder dry to "go shopping" for stuff that I think is way too expensive here which happens to be, well, a ton of stuff. A Clinton win would possibly result in a small relief rally. If that little polling gap closes or Trump somehow manages to pull into the lead, well, things could also get "frisky," and I'd rather not have too much cash in the market when that "frisk" occurs.

The one play I'm going to hold (at least for now) is basically a gold long. It's in GDX (gold miners ETF) and in a small indie miner (HL). Gold's basically good as a "market uncertainty" instrument, and I think we'll have that running into the election unless one of these fine candidates makes a ginormous gaff or is caught in bed with someone of the same sex, a farm animal, or a blow up doll (or something similarly earth-shattering).

Same names, same sectors popping up as high IV plays. I'm in most of the ones on this list:



The ones I'm not in: GPRO (earnings coming up); VRX (could turn into a poo pile; not sure I want to dig out from a poo pile); ESV (I'm already nipple deep in petro); TWTR (I don't do "buyout rumor", but am watching because I will do "buyout rumor failure").

Hand-sitting here for the most part, but figured I'd sell a little premium in XOP, since its IV has popped a bit here. Going with an iron fly, which is basically a long straddled short straddle with the short call and put at the same strike ... . I'm looking for volatility to decrease and for price to remain between the breakevens for the setup. I'm also going fairly short duration for me (the setup's got less than 25 days to run). For me, the November expiry's too far out in time to do setups in right now, and I want to keep powder dry for any post election shenanigans that might occur ... .

XOP 30/35/35/40 iron fly

Metrics:

Probability of Profit: 52%
Max Profit: $246/contract
Max Loss: $254/contract
Break Evens: 32.54/37.46

Notes: I'll look to take this off at 25% max profit ... .

Here's the graphical representation of the thing:

Covering: CHK Oct 21st 8 call for a .05 debit and Opening: Nov 7 call for a .38/contract credit. This is part of a covered call, and I'm reducing my cost basis in the shares further here. Little puppy's getting crushed here on oil weakness ... .

Chased price a touch to get a fill (got places to go, peeps to see) ... . Filled for 2.42 and entered a GTC order to take profit at 25%.

High IV Crap as of Yesterday's Close. (I usually post this in the evening, but got distracted by the "Don and Hill Dog and Pony Show"):

The SRPT saga continues. It's now in a horse race with SMMT. http://seekingalpha.com/news/3210719...ular-dystrophy The "bad" thing for SRPT is that SMMT therapy would treat all DMD, not just the ~13% of all DMD cases that SRPT's drug targets (amenable to skipping exon 51). SRPT looking less and less attractive ... .

In the scheme of things, however, the fact that SMMT's drug is on a "fast track" only means that the track it's on is faster than the regular track, so the "fast track" is just faster than a glacial pace -- think "horse and buggy" for the regular track and maybe "Model T" for the "fast."

The "new" TWTR news (now old at this writing) is that DIS is considering a bid. Seriously? Seems like a tremendously crappy fit, as does Salesforce (CRM). But for various antitrust concerns (or not), Microsoft (MS) or Alphabet (GOOG) would be far better suitors just because ... well, apples with apples, oranges with oranges, right? A DIS acquisition would be like apples and screwdrivers ...

Will an M&A happen? Apparently, it's still "pure speculation" at this point with one analyst saying "unlikely." http://www.benzinga.com/analyst-rati...t_ratings_page (but who the f*@k really knows).

In any event, I think the trade at this point is a buy when and if TWTR collapses into a heap on "no acquisition" news or when the rumor gets so old that people are scratching their heads, saying, "Hey, wasn't someone going to buy out TWTR?"

if the iv's stay up, a nice kitty will pay with almost any outcome. These things sometimes take months to play out, though....

This Deutsche Bank crap is getting a touch concerning.

I won't bore you with all the details, but the bank appears to be in a "touch of trouble." After the CEO indicated in August that DB was not "a dangerous bank," there is mounting concern that the bank will need some kind of state-sponsored infusion of cash to meet capital requirements and in the face of a whopping proposed US DOJ fine that Justice is just getting around to levying as a result of the 2008 financial crisis, coupled with a a fairly massive derivatives book. http://realmoney.thestreet.com/artic...-you-must-read (comparing and contrasting DB's derivatives book with comparable banks).

First of all, a lot of hay has been made in the media with the size of that derivatives book -- multiples of German GDP, yada yada, and a RealMoney article takes pains to explain to us "dim-witted" people what "netting" is and shrugs off DB's "net" derivatives book as not being all that large in comparison and contrast to, say, JP Morgan's derivatives book. Frankly, the juxtaposition is somewhat idiotic: DB is not JPM right now; DB's in trouble, and JPM's not ... .

Additionally, such a contrast is operating on the assumption that having a derivatives book of this size, gross or net, for either a healthy or failing bank is advisable. It very well might not be for either JPM or DB. Since no one seems to know or have bothered to find out what's in DB's book and whether it might be of undue concern, well, they're just smoking hopium that everything's "A okay" because the DB CEO has said "we're not a dangerous bank", just like Lehman Brothers said everything was "peachy keen" up until they totally imploded.

The concerns lie here:

The discussion about derivatives took up a lot of space, so I'll address the other "fears" about Deutsche Bank briefly. Moody's earlier this week cut its credit rating to Baa2, "two notches above junk" as some reports said. Well, I would point out that two notches above junk is still investment grade.

Besides, John Cryan, the Deutsche Bank CEO, came out and told Bloomberg that the bank has enough money to pay its debt four times. Indeed, a look at the first-quarter financial results shows long-term debt worth 151.3 billion euros against loans of more than 424 billion extended by the bank, coupled with other assets worth more than 171 billion euros.

Lehman Brothers was probably considered "investment grade" until shortly before it totally collapsed, largely because company executives did not disclose the situation unfolding in their company until they reported earnings in June of 2008. http://www.telegraph.co.uk/finance/n...ng-public.html In fact, when Lehman disclosed $17 billion of write-downs at that time, Eric Callan, Lehman's CFO, "who [had] been at the forefront of the bank's attempts to persuade the market of its liquidity," said merely that the preceding three months had been "an extremely challenging quarter," http://www.telegraph.co.uk/finance/n...ng-public.html, which was, at best, a gross understatement of the condition of Lehman Brothers at that time. Lehman Brothers was failing, he knew it, but spun it like it was just a "little bump in the road."

A Moody's current rating of DB as "investment grade" offers little reassurance to any intelligent person with a memory of the events that led up to 2008, particularly if the rating is solely based on things that DB executives have provided them or to which they gave Moody's access. Here's Moody's process: https://www.moodys.com/sites/product...gs_process.pdf It is not based on an independent audit, so if the "customer" wants to provide documentation that shows their profits last year were three times the size of the Universe, well, they can apparently do that. Moody's rating of DB as "investment grade" is worth a warm bucket of spit.

Similarly, relying on a CEO's mere statement that they have enough cash to pay their debt "four times over" hardly cuts it here, even if it is based on DB's quarterly financials. If they need a bailout, as is so urgently claimed in some quarters, it should be based not on information provided by some self-interested DB executive, but rather by an examination of their books by an independent auditor.

In the end, I generally could give a rat's ass if this or that company implodes. Companies fail all the time. But if there is any chance that the collapse of DB could adversely impact an entire region's economy, well, then, these self-interested assholes at the head of DB should just step the f*!k aside and/or the appropriate governmental entities should force them out, so that their books can be opened for independent examination. It would simply not be the first time that company executives have lied to investors and regulators; it will not be the last ... .

Bueno, muchacho ... . She gonna stay above $18, tho? Lol. I'll putz ... .

no sé, amigo....if the buyout rumors fizzle TWTR prolly drop back to $15 low, then crazy shit I read say they will run it up to $30....quién sabe?

DB gotta be too big too fail, but then it be just another rock in the eurozone paella, with the Brexit effects waiting to kick in, more nationalistic currents muddying the beautiful dream of "union", etc....maybe all come together for a perfect storm. Written in the stars, I'm sure. If you want to bet all blows over and DB grinds back up to $15+, long-term calendars are cheap & can sit in your book for months, something to look at ...

The other ones I considered doing that on were on more "solid footing" (a relative term, I know, when it comes to Euro banks) -- BCS and CS ... . BCS, for one, is "closer to zero." Lol.

FILLED the call side of TWTR DC shown above, puts were too high, don't want to risk more than 2 bits on the whole thing, perhaps TWTR floats up and those will come down.

Also filled a Dec/Jan CHK $9 calls calendar for 13c, basically long nat gas for the dead of winter, sure we'll get a cold one one of these years

i've not been able to follow ezone developments very much lately. Maybe just as well....if europe sneezes pretty hard I'm sure the US would catch a cold....

CZR>>7.65

http://suremoneyinvestor.com/2016/09...sweet-revenge/

on the TWTR. I'm resisting the urge to put more stuff on here, but my "click and send" finger is getting itchy.

I'm also in CHK as a long natty gas play via covered call. It's a somewhat bumpy ride with Carl Icahn bailing, something about some subpoena nonsense in connection with leasing or some such thing ... . But I assume the $1.1 bill senior note placement is somewhat good news ... . Anyhoo, in for the long haul ... .