Intel: Replacing The Stock In Case Of A Market Decline [View article]
White if I wasn't concerned about the broad market and economic impacts I likely would have done a different strategy but am too concerned about those two things to want to hold long shares at this point. It's not like my prior calls in the stock are bad and didn't make enough to move away it or to buy it lower.
Intel: Replacing The Stock In Case Of A Market Decline [View article]
None of the calls between aug and January offered the same downside protection as my trade. If we move lower quickly then it could be the opportunity to buy the calls or call spreads to pair with the short puts.
VXX: Near Term Bull, Long-Term Bear [View article]
Tweeted a couple days ago that VXX 7/20 expiry $16 strike calls were trading for $0.35. That would be the next call sell. Sorry for the late update on here.
USO And Crude Oil: Time To Become A Bull Again [View article]
Joe
Never really looked at it but it has options even if they are really illiquid that provides a good reduction of risk or yield enhancement. Liquidity or volume is pretty low as well.
The way I would probably go about approaching valuations methods on that would be very much like a business acquisition versus traditional stock valuation methods. But don't really know much about it other than a quick glance.
USO And Crude Oil: Time To Become A Bull Again [View article]
Geoffrey
Each option contract is 100 shares.
When you are long options you pay out cash to buy them so there is no margin required.
Short option contracts due require margin requirements that change in price. However the only option contract I was short that was unhedged was the $25 put. I assigned a MVAR (maximum value at risk) of $25 per share, thereby that is your maximum risk and if you set aside (mentally) $2,500 in your require then you will not have any issues. However, the margin requirement for the short put was less than $500 per contract the last I checked.
USO And Crude Oil: Time To Become A Bull Again [View article]
Whitehawk
Well since its pretty much impossible to predict exactly what is going to occur on the prompt and prompt + 1 roll over each month until January 2014 its pretty much a wasted effort in crude oil. It would be different for different commodities but you have crude oil being traded by a ton of different investors unlike other commodities. If you want to present your month by month roll forecast for prompt and prompt plus one crude through 2014 then go ahead.
We all know and I have written that USO experiences contango. I did make a mention about the 6/1 difference between prompt and Jan 2014 contract. It was not currently significant but it is likely to grow. Is it going to be significant enough to make my trade a bad one? No. I think there are bigger potential problems in crude oil than contango for being long-term bullish on USO.
If conditions actually start to occur that there is going to be a significant contango then as I typically do, there will be an update to the article via the comment section or a new article.
UNG: A Bearish Options Trade For The Fall Decline [View article]
Skemp
Your strategy is not a bad one but does carry higher margin requirements than my trade, $200 for the bear call spread plus 2 naked short calls (margin requirements likely were $350 yesterday on the strikes) where as mine was an overall one naked short call and had flexibility of adding additional short calls instead of doing it all up front.
I guess it depends on how bearish you wanted to be or how much flexibility left. I usually prefer to stay pretty flexible just in case really fluke events (low probability but high price impact) occur.
Apple: Good Products But A Risky Stock [View article]
outright long $550 puts for $97.95 or $9,795 was the recommendation with the call butterfly.
Those puts are at $110 bid right now. I would hit that.
Book the $12.05 in profits.
Buy $520 strike puts for $92.
Your reducing your net debit in the trade by over $5, booking profits of $12.05 and still have bearish exposure but $30 lower per share.
Overall a wise move in my opinion. If earnings are bad and we decline massively you can exit out the puts to cover all of the costs in the trade plus profits in your back pocket and have that butterfly call spread free.
Will write an updated article later this week explaining the move further in detail and any other moves.
Because you have to store the gas or use the gas. That is not free unless you own your own facility which still does not make it free as you lose opportunity cost of selling the space to someone else.
Intel: Replacing The Stock In Case Of A Market Decline [View article]
Intel: Replacing The Stock In Case Of A Market Decline [View article]
VXX: Near Term Bull, Long-Term Bear [View article]
One could look at buying back the short $19 call out in January 2013 to eliminate risk in the trade structure originally proposed.
VXX: Near Term Bull, Long-Term Bear [View article]
VXX: Near Term Bull, Long-Term Bear [View article]
VXX: Near Term Bull, Long-Term Bear [View article]
VXX: Near Term Bull, Long-Term Bear [View article]
The trader can now sell 7/6 expiry calls for next week, $16 strike collects $0.33. $17 strike collects $0.14.
$17 strike would still remain my target given the shortened week next week.
If VXX continues to trade low the $17 calls on normal July expiry could be sold next week rather than the weeklies.
USO And Crude Oil: Time To Become A Bull Again [View article]
Never really looked at it but it has options even if they are really illiquid that provides a good reduction of risk or yield enhancement. Liquidity or volume is pretty low as well.
The way I would probably go about approaching valuations methods on that would be very much like a business acquisition versus traditional stock valuation methods. But don't really know much about it other than a quick glance.
USO And Crude Oil: Time To Become A Bull Again [View article]
Each option contract is 100 shares.
When you are long options you pay out cash to buy them so there is no margin required.
Short option contracts due require margin requirements that change in price. However the only option contract I was short that was unhedged was the $25 put. I assigned a MVAR (maximum value at risk) of $25 per share, thereby that is your maximum risk and if you set aside (mentally) $2,500 in your require then you will not have any issues. However, the margin requirement for the short put was less than $500 per contract the last I checked.
USO And Crude Oil: Time To Become A Bull Again [View article]
Well since its pretty much impossible to predict exactly what is going to occur on the prompt and prompt + 1 roll over each month until January 2014 its pretty much a wasted effort in crude oil. It would be different for different commodities but you have crude oil being traded by a ton of different investors unlike other commodities. If you want to present your month by month roll forecast for prompt and prompt plus one crude through 2014 then go ahead.
We all know and I have written that USO experiences contango. I did make a mention about the 6/1 difference between prompt and Jan 2014 contract. It was not currently significant but it is likely to grow. Is it going to be significant enough to make my trade a bad one? No. I think there are bigger potential problems in crude oil than contango for being long-term bullish on USO.
If conditions actually start to occur that there is going to be a significant contango then as I typically do, there will be an update to the article via the comment section or a new article.
UNG: A Bearish Options Trade For The Fall Decline [View article]
My bad, got confused with another trade I had on that was a 1:2. The 1:2 was on my mind lol.
UNG: A Bearish Options Trade For The Fall Decline [View article]
Your strategy is not a bad one but does carry higher margin requirements than my trade, $200 for the bear call spread plus 2 naked short calls (margin requirements likely were $350 yesterday on the strikes) where as mine was an overall one naked short call and had flexibility of adding additional short calls instead of doing it all up front.
I guess it depends on how bearish you wanted to be or how much flexibility left. I usually prefer to stay pretty flexible just in case really fluke events (low probability but high price impact) occur.
Improvement In Consensus Doesn't Always Help Share Price: An Apple Options Play [View article]
Apple: Good Products But A Risky Stock [View article]
Those puts are at $110 bid right now. I would hit that.
Book the $12.05 in profits.
Buy $520 strike puts for $92.
Your reducing your net debit in the trade by over $5, booking profits of $12.05 and still have bearish exposure but $30 lower per share.
Overall a wise move in my opinion. If earnings are bad and we decline massively you can exit out the puts to cover all of the costs in the trade plus profits in your back pocket and have that butterfly call spread free.
Will write an updated article later this week explaining the move further in detail and any other moves.
What Is Contango? [View article]
Because you have to store the gas or use the gas. That is not free unless you own your own facility which still does not make it free as you lose opportunity cost of selling the space to someone else.