The volatility indices have worked off their explosive moves from last week, but still remain at levels equivalent to their former 2yr highs. In environments like this, it typically means that premium is an expensive bet. Mix in the fact that earnings season is upon us and this makes premium for most individual stocks elevated as well.
I often say that in situations like this “less is more.” When option premiums are blown out like this, it makes buying options a lower probability bet. Once the volatility normalizes we start to creep back in, but in these situations I take less trades for that 1-2 week period of volatility normalization because it weighs heavily on premium you trade.
We’ve been talking about utilizing stocks that are slower moving instruments than we normally like. These low beta instruments will have cheaper premiums than what we normally trade, but will likely be expensive relative to themselves.
If the market continues to consolidate here, this may only last another week or so. In the meantime, if you are trading options, do so with shorter timeframes and purchase shorter dated options. Ideally, you could sell spreads here as a high probability alternative, or utilize short puts to enter stock positions or sell calls to protect the stocks you own.
In regards to the day, the Russell has the relative strength card again, but is at the 1090 wall. A break of this would be pretty constructive in the short term.
More later,
OA
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in the meantime, GMCR in the midst of working on the next leg up…been a good vehicle lately.
GMCR appears to be in a rising wedge, going back to April/May – I may look at puts if it reaches 146/147.
agreed, I think there will be a move to lock in profits prior to earnings.
Glad to be back in the states – what did I miss? Long 1/3 position in $VSLR in retirement account.
I am thinking TZA here as a hedge.
In PCLN 1150s for Oct 31 . With each passing hour and no new EBOLA news this one recovers quite nicely .
MGM 22.5s for Oct 31 , a two for the price of one trade . I get to see two hole cards ; WYNN’s earnings this week and MGM’s next week .
OK – I added it at 17.22
I see the blog is dead…
everyone is in a standstill mode cuz so hard to predict next big move.
Very similar to this blog back in mid-May. Maybe 10-15 comments per post.
yeah. i for one wouldv’e thought we have a small to medium pullback today but obviously the opposite has happened. so i’m lost for direction at this point. I put some hedges on Friday afternoon which are now underwater.
r u still in LULU
Yes.
speaking of which ZU still looking constructive
I just opened a tester put in RY. Would like to add more but with the market in no man’s land didn’t want to get too aggressive. Mostly thankful that I put a stop in instead of a sell order on my HOV. 12% rally so far to recoup some losses before flipping into a better name.
Would be nice to look at homebuilders. LEN, BZH, KBH all looking good. You recommended LEN last week and since it has been up a significant amount.
There are only a few you should buy if you like them. LEN is the leader here.
I have shorted a little SFUN. Trading very small positions at the moment cause it seems like a coin flip these days.
I got this week’s $11’s on Friday. The stock has dropped well from my entry but the bid / ask has gone extremely wide today. I guess that’s probably emblematic of the broader market uncertainty right now.
lol @ “these days”
Thoughts on GLD’s move today? Gapped up with very, very low volume. I’ve got some puts from last week.
Scary that GLD is moving up even when the market is moving up.
My 25 UVXY strikes sure would have saved my ass if i had bought Oct instead of Sept.Story of my trading recently.Throwing out IPGP as an idea on a dip. VXN still 22. GME won”t stay down. Congrats to Jeff on ATHM. Still in it?
Sold it Friday.
I am pretty sure we rally into the close. Might need to close my TZA for a small loss.
BIDU is interesting to me here to sell some call spreads.
Just sold ILMN Nov call for 49%…just realized they have earnings after the close. Too much for me to risk over earnings.
bought a December put on CMG and some AAPL put YOLO’s.
wow, expensive weekly CMG options. painful if they don’t move much on earnings, granted they exploded on last report.
500 wkly put on CMG selling for $55…seems ridiculous. but I haven’t enough to sell that open put.
People aren’t taking chances after NFLX – those were expensive, but they were still in the land of reasonable….
premium sellers winning in this environment. CMG earnings mostly a non-event, so far.
doubled up on my TZAs here @ 17.09
will there ever be a guide to the “chu’s”?
Is chub the bearish one?, bchu12 the bull? what about plain bchu? oh well I guess there’s a reason
Ahchuu the sneezer
stopped out of my TZA.
Updated Wave Roadmap:
… “Minor ‘a’ at 1898 and Minor ‘b’ at 1878. Minor wave c, to complete Int. wave A, should currently be underway. If Minor c = a, Int. A should end at the 1956 pivot. If c = 0.618 a, then Int. A should end at the 1929 pivot.”
Int A is the 1st of three waves in the current up leg. That means Int B brings us back down around 1900 and then Int C finishes this move around 1975. Then we get Major Wave C down to new lows.
NQ. I rolled a bet out to December $9 C’s after cashing in a 50% win on Friday. Some sharks look scared to be short. Small bet but could rip if shorts run for the exits. IBB puts $MU calls $UUP calls. Lotz of cash. cheers.
Never ever buy at the bottom ! Broksters hate when you do it!
Recording never uploaded. There’s a glitch in the matrix.
Did you try the Gotowebinar recording? The one that is linked in the upper right corner of the site? That one works…vimeo shows a blank screen, but there is another version up there.
short NQ 3924. First stab
Long Dang and more VSLR
Oh and JAKK
the shipper rally is under way, they got waxed big time.
short ES 1925.25 Still holding NQ
Added to NQ 3936 Taking a swing here.