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Debitspread

bear flag on AIG and subdued volatility: put debit spreadAIG currently is trading with an IV30 of 19.6, making its IV Rank 21.8. This low rank indicates that the options will be cheap, and encourages debit spreads, regardless of being bullish or bearish. These spreads will profit when volatility mean-reverts to higher levels. Because of this well-developed bear flag, we are expecting a continuation of the prior downtrend, thus reversing the immediate uptrend characterized by higher highs and higher lows. To profit off of this, we are doing a put debit vertical by longing the July 26th 54 puts and writing the 53s, for a max potential profit of 41 and capped potential loss of 59, per contract. This is particularly cheap because they expire prior to the expected earnings announcement on August 1st, '19. The break even price is 53.41 because it is being done for a debit of .58. There is max profit below the short strike K = 53.
NYSE:AIGShort
by LaurenTrading
SMG 90/95 bull call spread With the July contracts, a 90/95 bull call spread can be placed for a debit of 3.97. This places our break-even at 93.97 on the July 20th expiry. The max profit of $102 per contract occurs above the upper strike of the sold call at 95. We are bullish on both the technicals and fundamentals of SMG. The multinational corporation, known for its consumer fertilizers and pesticides and new expansion into hydroponic equipment for the marijuana industry, has been trading in an up-channel. 2019 Q2 earnings beat estimates, with EPS of $3.64 (.22 above forecasts) and a top line of $1.19 billion (greater than the estimated $1.16 billion). The biggest growth opportunity is in its Scotts' Hawthorne subsidiary, which provides various products (hydroponics, fertilizers and lighting systems) to the cannabis industry.
NYSE:SMGLong
by LaurenTrading
BA July 355/370 bull debit vertical spreadThis technically-driven call debit spread on Boeing entails buying a 355 call and selling the 370 call, both with standard july expiry. The cost of taking this position is a debit of 6.35, making the break even 361.33. This is slightly below the long term support levels, and the resistance of the upper boundary of the horizontal channel, which will become a support after it is penetrated. The lows from March 22nd and April 10th were both roughly 362. Once this was penetrated the stock has traded in a horizontal range. This support around 362 has been tested a couple times; this makes it stronger when it is finally broken through. Also, the 50 day simple moving average is at 365, and the 200 simple moving average is at 363, further strengthening this area of support. The maximum profit for this trade is reached at the strike of the written call, 370, and is the difference between the strikes minus the debit (15-6.35= 865/contract). This trade is 18.91 deltas positive per contract.
NYSE:BALong
by LaurenTrading
VIX Double Vertical Spreads for a move higher in VolatilityAfter reaching a low of 11.10 today, the VIX closed at 11.57. Having been in a low Vol Environment for a while, I believe that this bounce off of the S2 Pivot Point intraday today, can be a potential low for the index. I have chosen a synthetic long position to play this out, over the next 60 days. More specifically, I sold the Nov 2018 14/12 put credit spread for $1 per contract and bought the same expiration 15/17 call debit spread for $0.50 per contract, in one order. This gives me a 2R (2 times the risk I assume in potential profit), since I can lose $0.50 for every $1 I can make, as my max profit. I will close my position when any one of the following conditions come true: 1)My position gets to $0.90 per contract 2)The VIX reaches 20 (as this is a Fib level that will act as a resistance point, or 3)The spread gets cut in half, or $0.25 per contract. Happy Trading Lindosskier
CBOE:VIXLong
by lindosskier
XLK - Feb.'18 Exp. Put Vertical Debit Spread (Hedge)Trade details: 66/61 Put Vertical Credit Spread @ $1.82 Prob. of Max Profit = 4.90% Prob. of Max Loss = 29.12% Break-even @ $64.18 51 D.T.E. Trade plan: Straight up hedge against technology sector/semiconductor industry (NVDA + AMAT long put credit spread positions - both are linked below). Feb.'18 expiration chosen to focus on Feb.'18 earnings reports for both NVDA and AMAT in case of strong downward plunge in technology sector. Trade approaches 50/50 play from this point on since break-even price is the same as close price for the day. Expecting spread to expire worthless if price falls between break-even & $61.00 by expiration, but will take early profit (and re-establish position if necessary) if there is an early move to ~$62.85 level.
AMEX:XLKShort
by AtoHoward
COP - Feb.'18 Exp. Put Vertical Debit SpreadTrade details: 57.5/50 Put Vertical Debit Spread @ $3.01 Prob. of Max Profit = 10.86% Prob. of Max Loss = 34.02% Break-even @ $54.49 50 D.T.E. Trade plan: Entry by overbought status + indication of correction/mean reversion analysis. Expecting pullback to moving average (VWMA) before earnings report in Feb.'18 for profit on weakening uptrend as seen in both Daily + Weekly charts. Expecting to take quick profit at $53.70 level + will re-establish position if quick profit is possible. Expecting to hold spread through earnings + allow spread to expire worthless if reversal is strong. Adjustment will be made if the position goes strongly opposite past $56.40 resistance level.
NYSE:COPShort
by AtoHoward
Short on IWM with good R:R (Debit spread)Directional play on IWM. With an implied volatility rank of below 10 I decided to buy some options (Yuck!) I am basically betting that the price will go down below $137 in the next 35 days enough for us to take some profits. The good thing about this trade is that we have basically a 50/50 chance to make money (48% probability), but we have a nice Reward Risk ratio (1.5:1). The trade: Buy 138 Put Sell 136 Put Bought it for 0.80 per contract Max loss per contract = $80 Max Win per contract = $120
AMEX:IWMShort
by AlexanderGotay
TRADING IDEA: FXE MAY 20TH 111/JUNE 17TH 113 LONG PUT DIAGONALI don't frequently put on debit spreads, but here's an instrument in which I have a fairly firm directional bias and which, additionally, has extremely low implied volatility at this point in time, making it ideal for either a calendar or a diagonal, both of which benefit from expansions in volatility (which will occur in the instrument assuming further weakness in the Euro and/or Greenback strength). Here's how the setup plays out: (1) Going into expiry of the short option, price stays above the short put, at which time you generally roll it to create a long put vertical with the back month expiry; (2) Price breaks below your short option, at which time you take the entire setup off in profit when the opportunity presents itself, but prior to the expiry of the short put. There aren't really any metrics to present for this kind of spread, beyond the fact that this will cost you a 1.54 debit to put on ($154), which represents your max loss in the setup. This is because maximum profit will be dependent on how much the underlying moves for the duration of the setup ... .
AMEX:FXE
by NaughtyPines
Spy Weeklys In the Money,At the Money or Out of the Money?Spy Weeklys In the Money,At the Money or Out of the Money? What strike price is the best to trade for max bang for the buck? First you have to get the direction right and assuming you did that next you have to decide which strike price is the best to play for max profit in a short time period. Attached is a chart that shows the SPY trades we followed over 2 weeks that we were mostly out of the money with one trade at the start the SPY 191.50 CALL bought at $2.00 then sold at $3.85 for a 90% profit. We noticed that the out of the money option were up around 200% in one day. So the at the money was profitable but the out of the money options were noticeably more profitable. During the following 2 weeks we followed mostly out of the money options with remarkable profits. On Thursday March 3 2016 we followed 2 options bought on Thursday when we got a bottom signal. They were out of the money options, one option was SPY Mar 11 201 CALL bought at $.90 that had a high for the day of $1.74 on Friday for a 90% profit. We usually follow options with at least 2 full trading days to expiration to allow time for the option time to play out. But on Thursday we decided to also followed an out of the money option with less than 2 days to expiration which we called The Gambler it was a SPY Mar 04 200 CALL bought at $.40. We decided on the 200 strike because we wanted something that was out of the money but had a chance of getting in the money. It got to $1.36 for a high and a 240% profit. The bottom line is the out of the money options apparently have the greatest profit potential but you have to be aware of the risk involve especially as you approach expiration and the accelerated time decay on Thursday and Friday the week of expiration RISK DISCLAIMER Options involve risks and are not suitable for everyone. Option trading can be speculative in nature and carry substantial risk of loss. Only invest with risk capital. topandbottomtradesignals.net
AMEX:SPY
by GIFTEC
A VXX SHORT SETUPI virtually never short a VIX product. I am, after all, largely a premium seller and, as such, am already short volatility in the vast majority of my setups. So, by shorting a VIX product, I'd basically be "piling on" to what I already do. I also virtually never do debit spreads ... . However, with FOMC next week, I thought I would at least consider taking a VXX short position that takes advantage of any spike in volatility that occurs, since this is basically a one-off event. I mean when is the next time we're likely to see the Fed raising interest rates after six years of QE, TARP, and ZIRP? Well, hopefully never, but quite possibly not again for a couple of decades, at least. So, let's get to it. I actually looked at a wide variety of setups that take into account the fact that I am not going to be hovering over my keyboard in the days and hours leading up to FOMC and the days and hours thereafter waiting to pull the trigger on a VXX short when I "think" it has peaked ... . This "peak" can be incredibly fleeting, not to mention that my luck with "calling tops" is about the same as that of everyone else -- pretty darn poor. In any event, I want to attempt to take advantage of a VXX spike (1) without knowing in particular how high it will potentially go; (2) knowing that volatility will inevitably contract at some point in the future to a point below 20; and (3) all while defining my maximum risk. Here's the setup to do just that -- a long put vertical. As an example: Jan 15 VXX 19/21 Long Put Vertical (The 19 is the short; the 21 the long). Currently, the mid price for this setup is a .79 debit, and that is with the price of the underlying at 23.32, but I do not want a fill at this price. When and if price spikes, the cost to fill this particular spread will decrease and the spread will become cheaper to put on. The kind of "cheap" I am looking for is something in the vicinity of .07-.13 for the spread, but for simplicity's sake, I am going to put on a GTC order for the spread to be filled if VXX spikes, resulting in the spread's costing .10 to fill. If I do get a fill for .10, the break-even price of the setup becomes 20.90 (the price of the long strike minus the .10 debit) with a maximum profit potential of $190.00 (i.e., risking $10 to make $190). You can also naturally consider more accommodative setups that have a higher break even by moving the strikes up or use more than just one setup at different expiries that take advantage of a potential spike that is more and more profound (e.g., a Jan 15th 19/21 long put vertical for a .10 fill, a Jan 22nd 21/23 long put vertical for a .10 fill, a Jan 29th 23/25 long put vertical for a .10 fill, etc.). If you do multiple setups at different expiries, keep in mind the possibility that you may want to roll one or more of those setups if volatility doesn't contract in fairly short order (2-4 weeks), so you naturally don't want to go hog wild either with respect to the number of setups or the size of the number of contracts used in those setups ... .
CBOE:VXXShort
by NaughtyPines
2
GOING LONG VIX VIA DEBIT SPREADFrankly, I don't use debit spreads very often, since they require a certain degree of directional certainty which I ordinarily do not have. Additionally, they are not high probability plays in the vast majority of cases. However, I have a certain degree of certainty that volatility will increase from here and, ironically, the volatility in volatility is quite low, and in a low volatility environment, an options trader should move away from selling premium and into low volatility plays like debit spreads, calendars, and the like. Consequently, I am going long VIX here, risking 1 to make one on the notion that VIX will be >16 some time between now and expiration: Nov 18th VIX 15 Short Call/17 Long Call debit spread POP%: 50% Max Profit/Max Loss: $100/contract; $100/contract Break Even: 16.00 Notes: As an alternative, look to go long via VIX with a similar spread with your short call slightly out of the money and your long call slightly in or at the money. You can naturally also consider UVXY, but the bid/ask spreads on that instrument are usually wide (i.e., illiquid). I'll look to take this off at 50% max profit.
CBOE:VIXLong
by NaughtyPines
2