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Premium-selling

NFLX EARNINGS PLAYNFLX announces earnings on Tuesday 1/19 after market, so look to put on any premium selling play shortly before NY close. Here are two possible setups, which may have to be tweaked, depending on price movement in the underlying: Jan 29 80/128 short strangle Probability of Profit %: 77% Max Profit: $246/contract Buying Power Effect: ~$1041 Break Evens: $77.54/$130.46 Feb 5th 75/80/127/132 iron condor Probability of Profit %: 73% Max Profit: $103/contract Buying Power Effect: ~$397 Break Evens: $78.97/$128.03 Notes: I went out a little longer than I usually like with the iron condor, as I had difficulty on the put side getting the strikes (and credit) I wanted for the setup with the Jan 29 expiry. The Jan 29th short strangle is also a little wider than I usually like to go, as there is some "funkiness" with the strikes on the put side (they open up to five bucks apart at the 1 standard deviation line, unfortunately). Look to take these setups off at 50% max profit and redeploy the buying power elsewhere.
NASDAQ:NFLX
by NaughtyPines
NEXT WEEK'S EARNINGS PLAYS -- NFLX, IBM, GS, SBUX, AND OTHERSNext week is literally hopping with potential earnings announcement plays. I've tried to pick out the ones that (1) have > 70% implied volatility rank; (2) offer greater than a 1.00 credit ($100) for the "classic" one standard deviation short strangle setup; (3) have fairly good liquidity with options prices; and (4) offer weeklies, but there are also a few >.50/<1.00 credit plays that I might nevertheless play (e.g., CREE, SBUX), although I think I can afford to be picky here given the selection ... . PLAYS TO PUT ON TUESDAY CREE -- Tuesday, after market close. High implied vol rank/high implied vol, but <1.00 credit for a 1 standard deviation short strangle. IBM -- Tuesday, after market close. NFLX -- Tuesday, after market close. GS -- Wednesday, before market open. PLAYS TO PUT ON WEDNESDAY SBUX -- Wednesday, after market close. High implied vol/but implied vol <50% and <1.00 credit. PLAYS TO PUT ON THURSDAY SLB -- Thursday, after market close. I don't think I've every played this underlying. It's a tech company that provides support to oil and gas, and I've got plenty of petro plays on. Notes: There are also a couple of earnings plays that might be interesting to play via other methods. One of these that comes to mind is KMI. It's got a high implied volatility rank, high implied volatility, and liquidity. The problem is that the price of the underlying is currently $13.00, so you just can't get enough premium out of it via short strangle or iron condor to bother with it using one of those strategies ... .
NASDAQ:NFLX
by NaughtyPines
XOP SHORT STRANGLE IDEAWith an implied volatility rank of 76 and an implied volatility of 56, an XOP short strangle is a good premium selling play here, with the standard 45 day setup yielding about 1.00 in credit for only $275 or so worth of buying power. Here's the setup: Feb 19th 23/32 short strangle Probability of Profit: 71% Max Profit: $97 Buying Power Effect: ~$275 Break Evens: 22.03/32.97 Naturally, things may change come Monday open, so be prepared to tweak your strikes and/or fill price ... .
AMEX:XOP
by NaughtyPines
HES -- POST EARNINGS HIGH VOL PLAYWith a dwindling earnings calendar and some buying power to put to good use, I'm looking to go where the IVR/IV takes me. With an IVR of 74 and fairly decent IV of 43, HES popped up toward the top of the Dough "Notable Stocks" grid (sorted by IVR). Here's my set up: Dec 24 51/68 Short Strangle POP%: 75% Max Profit: $150/contract BPE: ~$597/contract BE's: 49.50/69.50 Notes: The underlying isn't the most liquid thing, so you may not get a fill at this particular price and might have to monkey around with it a bit. Me, I'm just going to enter the order and if it fills, it fills. If it doesn't, I'll look at it again next week to still if there's still premium in the play. As always, I'll look to take the trade off at 50% max profit so I can redeploy the capital elsewhere.
H
by NaughtyPines
2
TLT -- A LITTLE BIT HIGHER VOLATILITY, PLEASEIf for some reason, you don't have access to Dough's Grid (which sorts underlyings by Implied Volatility Rank or IVR), you can always use the historical volatility indicator to determine the quality of volatility in the underlying instrument. Higher historical volatility equals better premium. In this particular example, I'm using TLT, whose HV hit a high of 28.77 on or about July 10th. Volatility of greater than 70% of the high is considered pretty good for selling premium, and 70% of 28.77 is about 20.14. Right now, TLT's HV is sitting below 16 (about 56% of the high), so it might be best to wait to set up premium selling plays in TLT until the volatility increases to +20 ... .
T
by NaughtyPines
WEEK OF 9/28: NON-EARNINGS PLAYS FOR PREMIUM SELLING OPPSAlthough we are starting back into another earnings season, I'm just not all that fond of earnings plays; I prefer the relative boredom of index ETF trades or things like sector SPDR's for the generation of steady income as opposed to flash-in-the-plan earnings plays which are generally binary in nature. They either work out quickly and dirtily or go horribly awry such that you have to devote buying power to managing a tested side post-earnings, potentially for several options cycles going forward. Since I have a play already going in OIH (current IVR at 66), I'm looking to add either index ETF trades this coming week or, in the alternative, sector ETF trades that are not correlated to what I've already got on in my portfolio and that have sufficiently high IVR so that a premium selling play is attractive. Looking at the Dough Grid with the drop-down menu set to "TastyTrade", XLV is a possible candidate, with an IVR currently at 62 ... . POSSIBLE TRADE: Nov 20th 59/61/72/74 Iron Condor POP % -- 61% Max Profit: .61 credit/contract Buying Power Effect: 1.39/contract Break-Evens: 60.39/72.61 Delta: -2.36/contract Notes: The short put side of the setup is placed around the 1 SD; the long side, at the edge of the expected move to the topside for that expiration. Due to the price of the underlying, the spread of the wings is reduced to 2 strikes, although you can certainly expand the width to 3 strikes in order to harvest more credit from the trade. I wouldn't go wider than 3, however. Look to take off the entire setup at 50% max duration. In all likelihood, the strikes may require a bit of adjustment at NY York open to accommodate overnight, broader index price movement.
AMEX:XLV
by NaughtyPines
1