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SQ

THE WEEK AHEAD: SQ EARNINGS; SMH, XOP, GDX, GDXJEARNINGS: SQ (77/59) announces Wednesday after market close and has the volatility metrics I'm looking for out an earnings-related volatility contraction play -- implied in the 70th percentile or greater over the past 52-weeks and 30-day at or greater than 50%. Pictured here is an SQ April 17th 72.5/100 short strangle camped out around the 20 delta paying 3.55 on a buying power effect of 8.37 (42.4%) and delta/theta metrics of .66/7.78. For those high on defined, consider the 65/70/95/100, paying 1.58 (46.2% credit received as a function of buying power effect). EXCHANGE-TRADED FUNDS ORDERED BY RANK/30-DAY IMPLIED AND SHOWING THE EXPIRY IN WHICH THE AT-THE-MONEY SHORT STRADDLE IS PAYING >10% OF STOCK PRICE: SMH (73/30), May XLE (63/23), July USO (51/37), April XBI (48/30), June XOP (45/37), May FXI (40/23), August GDX (40/29), May GDXJ (38/33), May EWZ (26/27), June I didn't get an opportunity to do a ton last week beyond take off a few setups in profit, so this is probably an opportunity to build up theta pile in stuff that I don't have plays in currently and to add to stuff via delta under hedge that has experienced an up tick in volatility over the past several days. BROAD-MARKET ORDERED BY RANK/30-DAY IMPLIED AND SHOWING THE EXPIRY IN WHICH THE AT-THE-MONEY SHORT STRADDLE IS PAYING >10% OF STOCK PRICE: QQQ (59/23), September SPY (43/17), November IWM (42/19), September EEM (37/19), September In spite of the expansion of volatility over the last several days, broad market isn't paying fabulously in shorter duration, so if you're going to play, look to start out small, add small over time, and take profit somewhat aggressively. FUTURES: /GC (70/15) /CL (51/36) /NG (47/39) /ZS (43/19) /ES (42/17) /SI (33/89) /ZW (24/24) /ZC (23/13) VIX/VIX DERIVATIVES: VIX finished the week at 17.08 with the March, April, and May /VX futures contracts trading at 17.05, 17.33, and 17.09 respectively. It's tough to divine what /VX futures traders' thought processes are here, but it looks like they may be focused on the exogenous event of the year -- the expiry around the general elections, where there is a huge term structure "hump" from September (currently trading at 17.75) to October (20.55), with the remainder of the preceding structure being fairly flat in the interim. There is a mere .70 differential between the March contract price and the September one which I regard as unusually flat, which doesn't make for good term structure trades. Naturally, at some point, the term structure may adjust to a more "standard look," but in the mean time, look to add short to VIX derivatives (VXX, UVXY) on pops to VIX > 20% via short call vertical or long put vertical with a break even at or above where the underlying is currently trading and shooting for one-third the width in credit (if a credit spread; don't pay more than 2/3rds the width if a debit spread).
NYSE:XYZ
by NaughtyPines
2
$SQ Breaking Higher$SQ is finally breaking out to the upside after getting bullish comments from analysts. Square (NYSE:SQ) Cash app users would be willing to pay more than the current 1.5% fee to instantly transfer funds to a bank account, writes Macquarie analyst Dan Dolev. The average price users were willing to pay was 2.3%, according to a recent customer survey by Dolev. He estimates that raising the instant-deposit fee by 50 basis points "could result in $250M-$300M, or ~10% additional sales growth in 2021 versus consensus estimates." He rates Square at Outperform with a $105 price target. Square (NYSE:SQ) rises after Credit Suisse initiates coverage with an Outperform rating. Sets price target of $84; implies 21% upside potential vs. $69.29 close on Thursday. Bernstein analyst Harshita Rawat notes that payment processing themes to watch this year include new revenue streams, M&A, further digitization of cash, growing alliances with FAANGs, and fintechs entering China. Sees upside for Square (SQ +0.5%) near-term as "market gets comfortable with 'underlying' margins pre-preinvestments and GPV improvements in '21"; keeps Market Perform rating. Stephens analyst Brett Huff upgrades Square (SQ +0.8%) to a Overweight from Equalweight after the mobile payment company changed its pricing to a "better setup." He sees the price increase on merchant deposits adding to transaction net revenue and may result in lower churn benefits. Square, Inc. provides payment and point-of-sale solutions in the United States and internationally. The company's commerce ecosystem includes point-of-sale software and hardware that offers sellers to payment and point-of-sale solutions. It provides hardware products, including Magstripe reader, which enables swiped transactions of magnetic stripe cards; Contactless and chip reader that accepts Europay, MasterCard, and Visa (EMV) chip cards and Near Field Communication payments; Square Stand, which enables an iPad to be used as a payment terminal or full point of sale solution; Square Register that combines its hardware, point-of-sale software, and payments technology; Square Terminal, a portable payments device that replaces keypad terminals, which accepts various payment types, such as tap, dip, and swipe, as well as prints receipts; and managed payments solutions. The company also offers various software products, including Square Point of Sale, Square Appointments, Square for Retail, Square for Restaurants, Square Invoices, Virtual Terminal, Weebly, Square Dashboard, Square Loyalty and Marketing, and Square Payroll. In addition, it provides Cash App, which enables individuals to electronically send, store, and spend money; Caviar, a food ordering platform for restaurants to offer food ordering, pickup, delivery, and catering to their customers; and Square Capital that facilitates loans to sellers based on current payment and point-of-sale data. Square, Inc. was founded in 2009 and is headquartered in San Francisco, California. As always, trade with caution and use protective stops. Good luck to all!
NYSE:XYZLong
by OptionsGains