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RHT Earnings Trade

RHT opened trading around $87 today. My diagonal put spread is worth about $0.45. Less than my target profit because the move up was stronger than I anticipated. However with my cost so low I have the luxury of delaying exit and just see if RHT pulls back I can squeeze more out of this spread.

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Discussions on option strategies designed to produce income. Covered calls, selling puts and more advanced options income strategies. Learn options trading with a community of fellow traders.
FSLR interesting pattern

FSLR got kicked out of S&P500 due to $6.1B capitalization rule. Hence recent weakness in the stock, including today's 5% drop.

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Question on TSLA vertical spreads

@Chen-Hubert an iron condor is a spread that benefits from non-volatility. It does not like the stock moving. In this particular case your 260 short put is losing money faster than 295 call because the put has higher delta.

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Portfolio protection is crucial to building wealth in the Market. And options are the best method to protect your investments. Learn how to use options to fortify your nest egg against Market downturns, Black Swan events. Defensive options strategies designed to hedge risk.
What is the best hedging strategy to play an Earnings Report

There are many more hedging strategies that are available for investors to choose from. But hedging in general has one goal that is to reduce the loss in times of volatility in the market.

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Option Trading Strategy Results: 30-Dec-16 Weekly Expiration

It was generally a good week for volatility sellers in the options market for the weekly expiration of 30-Dec-2016. This was especially true for calls; winners were far more prevalent for puts and at-the-money bets, but losers outpaced winners across the board.

As could be expected during a holiday period, the market lacked major catalysts during the week. Profit taking led the major averages to close out 2016 with a three-day losing streak, drifting off their recent highs.

For the week, the Dow dropped -0.9%. Meanwhile, the Nasdaq slipped -1.5% and the S&P 500 tumbled -1.1%.

This was the whimper that ended a bang of a year though. The year as a whole saw the Dow jump +13.4%, the Nasdaq climb +7.5% and the S&P 500 advance +9.5%.

For the final week of the year, unhedged ATM bets returned winners 41.9% of the time, leading to an average loss of 6.6%. The call side is where the real blood-bath occurred. Only 4.6% of unhedged 25-Delta Call positions came back winners and the average loss was 79.6%.

Winners were more prevalent for 25-Delta Put bets. Unhedged positions here were winners 33.9% of the time during the week - still generally a loser 2 out of every 3 times - but the average return was positive at +23.9%.


VanEck Vectors Junior Gold Miners ETF (GDXJ) -- Gold mining stocks were big winners on the week. Gold prices suffered a decline in the wake of Donald Trump's election as president, but bounced back during the final week of the year. This rise boosted gold miners, especially during a rally on Thursday.

As such, the GDXJ, a gold-mining ETF, was one of the standout performers on the call side during the week. Unhedged 25-Delta Calls for GDXJ had an average return of +700%. Unhedged ATM Straddles returned an average of +126.1%.

iShares Nasdaq Biotechnology (IBB) -- Sticking to the ETF theme, biotech stocks did particularly poorly during the week. This was evidenced by a steady decline in the IBB, a biotech sector ETF, which started the holiday-shortened week with an initial advance but then lost ground steadily through the rest of the week. 25-Delta Puts for IBB had an average return of +589.8%, while ATM Straddles returned +108.7%.

Hedging Comparison

It was a mixed bag for hedging during the week. Generally, it was best not to hedge, except on the call side.

Once-hedged positions were the saving grace for the 25-Delta Call bets, turning a significant loser during the week into a winner. However, the effect was the opposite on the put side, turning a winning position, on average, into a losing one.

Once-hedged 25-Delta Calls had an average return of +18.4%, compared to a loss of -79.6% when unhedged. Daily hedges weren't as helpful, but did work to cut the losses, with an average loss of -17.2%.

Once-hedged 25-Delta Put positions had a negative return of -64.3%, compared to a positive +23.9% when un-hedged. This just got worse when hedged daily. The average loss for a daily hedged 25-Delta Put was -94.2%.

For ATM Straddles, once hedging had little impact, turning an average loss of -6.6% when un-hedged into an average loss of -6.1% with single hedging. On average, daily hedging was a mistake, however. The average loss expanded to -24.8% with this strategy.

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Some traders believe that volatility is the most important factor in option pricing. Discuss all things volatility here. Agree, disagree, debate and learn options valuation, volatility and pricing.
VIX up, Gold up - This selloff is real

Writing this on Moday before US market is open. The selloff feels real as I watch VIX finally shake off the slumber and jump to 15. Also confirming the move Gold is up over 1%, Global markets are all in red. S&P500 futures are down 0.8%. How to play this? For a day or two hedge you should buy a bearish leveraged ETF, like SPSX or SRTY. there are many other choices there.

VIX chart

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Volatility Skew getting very steep

Yep the vol skew did not lie. Market has broken down , SPX is down 1%. For those who watch the market and know how low volatility has been lately it is a large move.

Skew indicates probability of large moves

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Reviews and questions on option tools, software and options brokers.
Fidelity lowers commissions!

Schwab and optionsXpress follow suite in lowering their commissions structure:

Screen Shot 2017-03-17 at 12.19.15 PM.png

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Interactive Brokers exits Market Making biz

IB is the best broker hands down as it comes to order execution and commission costs. Unfortuately, their platform is overly cumbersome.

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Discussions on trading in commodities options, index options and options on futures. Discover new opportunities for profits.
How Commodity Trading Accommodates the Economy

The exchange of commodities is vital to determine global prices. Typically, it follows the basic economic principle: lower supply means higher prices. Without commodity trading, a standard price for a specific product would be hard to establish as sellers would focus on arduous search for potential buyers.

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Hedge funds find plenty of willing sellers in oil: Kemp - Reuters News

Oil is selling off aggressively for the last 2 days:

Oil futures price chart

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Frequently asked questions on how to use General help. Announcements regarding our community
FOMC 2017 Meeting Schedule

Happy trading to everyone

The FOMC holds eight regularly scheduled meetings during the year and other meetings as needed. Links to policy statements and minutes are in the calendars below. The minutes of regularly scheduled meetings are released three weeks after the date of the policy decision. Committee membership changes at the first regularly scheduled meeting of the year.

FOMC 2017 Meeting Schedule

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2016 and 2017 Schedule Calendar, Stock Market Holidays

@OPRAnut Thanks for posting! I know e can rely on you to keep us updated on all regulatory stuff. Happy holidays to you !

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Tired or in the mood for a lighter fare? Anything and (almost) everything can be discussed here except Stock options and Mr. Market
More From Backstage WallStreet - Mutual Funds

Still Institutional investors are better informed then crowd. Recent example is the last job report - institutional were buying one day before the job report while the crowd was selling


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Reading Backstage Wall Street

By Josh Brown and enjoying it very much. Posting some pearls here:

When you realize that you are riding a dead horse,
the best strategy is to dismount.
—Sioux Indian proverb

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