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Matthew Whiz Buckley
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Matthew Buckley is the founder and CEO of Top Gun Options LLC and a Managing Partner at Wealth Creation Investing LLC. Matt was formerly the Managing Director of Strategy for PEAK6 Investments, L.P., one of the largest volatility arbitrage options trading firms in the country. He was the founder... More
My company:
Top Gun Options
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Top Gun Options Intel Brief
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  • “Range Bound Google”

    Strategic Mindset: With the FOMC announcement of further easing, the market has finally realized that this is bad news instead of good news. Stating the obvious, the FED believes economic conditions in the U.S. (and overseas) call for further extension of asset purchases by the FED to help lift our sagging economy. This is not good news by any stretch and only adds to our Bearish strategic mindset.

    Target: Google (NASDAQ:GOOG) trading at $577.51

    Commit Criteria: GOOG IV (Implied Vol) is slightly elevated relative to its HV (Historical Vol). We're looking to take advantage on the 'sell on the news' reaction to the FOMC action with a high probability quick strike trade on GOOG that expires tomorrow.

    Charts compliments of www.trademonster.com/tgo

    Looking at the 3 month and 20 day charts we can see that GOOG has found a channel with coming pressure to the downside.

    3 Month Chart:

    20 Day Chart:

    We feel 585 is a near term top, certainly for 2 trading days, barring unforeseen positive news - which seems to be in short supply, even for tech behemoths like GOOG.

    Tactic: Sell 15 Jul 585/590 22 Jun Bear Call Spread for a credit of $.61

    Tactical Employment: A Bear Call Spread (credit spread) is where an investor simply sells an upside call at a strike they do not believe the stock will hit during the life of the trade, while simultaneously buying an upside call further out of the money to act as a hedge to minimize risk and loss should the underlying rally.

    • Sell to Open 15 Jun 22 585 Calls for $1.05
    • Buy to Open 15 Jun 22 Calls for $.42
    • Net credit of $.61 (GOOG will most likely open lower and we will seek to get filled on this spread, even if it is lower than .61)
    • Max Gain: $915 73% probability of achieving max profit
    • Max Loss: $6,585 15% probability of sustaining max loss. According to Top Gun Options trading ROE (Rules of Engagement) we will not risk more than 5% of the model portfolio on any one trade. We are a little north of this amount in the Primary Model Portfolio but I am comfortable with this risk due to the high probability of success. So our max loss is defined from the outset.

    Midcourse Guidance: We will let this trade fly down range and manage throughout Friday as needed. Theta is our friend and is literally decaying by the minute after we put this spread in our Model Portfolio.

    Eject Criteria: We will close this position if we incur a loss of 50% of our Max Loss, or $3292. We want to live to fight another day. As always at Top Gun Options, we close the position whenever the Commit Criteria change. We believe that the rest of the week will see sideways trading with not much to spark the market and see more downside pressure than room to the upside.

    Disclosure: I am short GOOG.

    Additional disclosure: We hold this position in our Primary Model Portfolio.

    Tags: GOOG, options
    Jun 22 12:39 PM | Link | Comment!
  • Top Gun Options Advanced Bullish Trade On Volatility

    Strategic Mindset: In the Top Gun Options Advanced Model Portfolio we are Market Neutral with possibilities of Surges in Volatility.

    Target: VXX trading @ $16.49

    Commit Criteria: The VXX is very unlikely to drop below 14, especially given the current chaotic market conditions. VXX Implied Volatility is overpriced relative to its forecast volatility of 19.03% over the trade period. We are looking for possible price movement but for it to stay above $14.00 until the exit of this trade.

    NOTE - The $50 strike Calls in the spreadsheet analysis below are just dummy values to make the spreadsheet work. They are not part of the trade.

    Tactic: Opening 50 VXX July 2012 Bull Put Spreads (strikes [13/14]) for a $0.23 credit

    Tactical Employment: Bull Put Spread

    - Selling to Open 50 VXX Jul 2012 $14.00 Puts

    - Buying to Open 50 VXX Jul 2012 $13.00 Puts

    - Net Credit: $23.00 per Bull Put Spread for a total of $1150.00

    - Max Gain: $1150.00

    - Max Risk: -$77.00 per Bull Put Spread for a total risk of -$3850.00

    Mid-Course Guidance:

    We will be watching for a price movement near the short 14 strike. As the short strike is threatened we will adjust the Bull Put Spread as necessary.

    Profitability Target:

    We will wait for this Bull Put Spread to expire worthless taking the $1150.00 credit as profit. If the VXX surges up in the near term we may choose to close this trade early in the Advanced Model Portfolio, taking a smaller, but faster profit.

    Exit Tactic: We will wait for this Bull Put Spread to expire worthless, adjusting as necessary.

    Disclosure: I am short VXX.

    Tags: VXX, vix, spx, spy
    Jun 20 8:56 PM | Link | Comment!
  • Top Gun Options Advanced Trade

    Strategic Mindset: The Top Gun Options trading team remains Market Neutral with possibilities of Surges in Volatility.

    Target: CRUS trading @ $28.50

    Commit Criteria: This is a solid, high probability trade to add to our portfolio. One of the specific reasons I targeted CRUS was the fact that its price movement has been un-correlated to the market. This will be an advantage if we have a broad market collapse next week. CRUS Implied Volatility is overpriced relative to its forecast volatility of 14.73% over the trade period. We are looking for possible price movement but for it to stay within its $23.00 to $36.00 price range until the exit of this trade.

    (click to enlarge)

    Tactic: Opening 20 CRUS July 2012 Iron Condors (strikes [20/23/36/39]) for a $0.48 credit

    Tactical Employment of Iron Condor:

    - Buying to Open 20 CRUS Jul 2012 $39.00 Calls

    - Selling to Open 20 CRUS Jul 2012 $36.00 Calls

    - Selling to Open 20 CRUS Jul 2012 $23.00 Puts

    - Buying to Open 20 CRUS Jul 2012 $20.00 Puts

    - Net Credit: $48.00 per Iron Condor for a total of $960.00

    - Max Gain: $960.00

    - Max Risk: -$252.00 per Iron Condor for a total risk of -$5040.00

    Mid-Course Guidance:

    We will be watching for a price movement near the short strikes. As the short strikes are threatened we will adjust the Iron Condor as necessary.

    We don't want trade expectancy dropping below 2.00%. Based on this we have two price targets at which we need to consider an adjustment. CRUS trading below $25.13 and above $31.66 are triggers for adjustment.

    Profitability Target:

    We will wait for this Iron Condor to expire worthless taking the $960.00 credit as profit in our Advanced Model Portfolio.

    Exit Tactic: We will wait for this Iron Condor to expire worthless, adjusting as necessary.

    Disclosure: I am short CRUS.

    Additional disclosure: We hold this position in our Advanced Model Portfolio

    Jun 08 4:37 PM | Link | Comment!
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