Break In - VXX trade

After a run up - for example
on 2/25 VXX moved from 21 to 25
on 2/26 openup and closed down high of 26.89 closed around 24.50.  So we are in contango have leverage vxx put spread. In a slight chance that it might shoot again we do a ratio spread.

so march  option  on feb 26th
Put spread - March 22 - Mar 20(.VXX130316P22-.VXX130316P20) for 30 cents
This can be profitable in next 3 days it would give 60 cents.

In case the vxx again rises the other side would be -.VXX130316C27+2*.VXX130316C29
for 15 cents. It could be sold in next 3 days for 10 to 15 cents.


DANGERS  - this trades need to be move immideately or else it can be painful to come out of the spread specialy the one with ratio spread.

Same could be done on 2/22

for - -.VXX130316C26+2*.VXX130316C28
and   .VXX130316P20-.VXX130316P18

Lesson 1 - come out quick if there is good profit.


There was a simillar opp on 12/24 Vxx truned down from a good runup 28 to 33. On 24th red.
 its was closing  red at 32.

So trade would be jan put spreads - 29/27 for 40 cents
and -1*34 and 2*37 ratio spread for around 30 cents.

AAPL going to 400 in next 3/4 week - 9th march

As per Cobras chart I am assuming appl reaches 400 in next few weeks.

Here are the option plays -

for apr 05 we have 28 trading days.

.AAPL130405P420-.AAPL130405P400-.AAPL130405P390+.AAPL130405P370

This can be baught for around 3/ 3.50 dollar ..too expensive may be we dont need that much time. Let see if we think it can move in 3 weeks.

.AAPL130328P420-.AAPL130328P400-.AAPL130328P390+.AAPL130328P370

this is also 3/3.50 dollar

A better play would be for 2 weeks We can get it around 1.50.  This will be a better play. Less money at risk decent chance if appl make a down move. We profit max if it moves anywhere between 423 to 405. So thats like 5 to 7 percent down move.

.AAPL130322P425-.AAPL130322P415-.AAPL130322P410+.AAPL130322P400

Trading High Momentum

In case we are not in a dowturn and market wants to go higher its best to pust some pair trade in both direction.

One of the stock which will move higher aggressively with market is NFLX. Thers is a option play here.

.NFLX130316C200-.NFLX130316C210-.NFLX130316C220+.NFLX130316C240  for 1.19 on march 03 -2013.

If the market dips and NFLX goes down to 180 from 189.37 it can considerd buy @ around .60 cents.


In case market is targeting 1585 by april we can also think about april options.

Trade back test - on 1/23 or 1/24

.GS130316P130-.GS130316P120-.GS130316P115  if you were betting on negative outcome you could get this for 50 cents.

if you had +ve expectation

.GS130316C150-.GS130316C160-.GS130316C165+.GS130316C170  for 1.70

or .GS130316C155-.GS130316C160-.GS130316C165+.GS130316C170 for .55 cents.

we need to trade highly liquid and market dependant stocks to make money this way.

So if the market is going higher best option as of now is Goog and NFLX


Goog for april calls -
.GOOG130405C810-.GOOG130405C820-.GOOG130405C830+.GOOG130405C840 for 2.0

or march 16 th call
.GOOG130316C810-.GOOG130316C820-.GOOG130316C830+.GOOG130316C840  for 2.70
or
.GOOG130316C815-.GOOG130316C825-.GOOG130316C830+.GOOG130316C835 for 2.21

Instead of doing this complicated options trade we can also buy little longer term spread.

VXX option to trade

I am wondering if we can use VXX calls/put calendars to utilize volatility.

So to try we must have some ground rules which I am investigating as we go.

1. One option to explore is if VXX rises by 20 percent than we buy put every 10 percent rise after that.

so on dec 28 VXX was at 35.43  raised from 28. So we have 7.43 point rise. Its  about 25 percent rise.

- so trade would be buying 2x jan 35 put  and selling 1x feb35 put.

OR

- so trade would be buying 2x feb 35 put and selling 1x april 35 put. (This will give it more time for trade to work out)

Trading AAPL through straddle and strangle

Seems like 7/18/12 was a narrow day  its wednesday..there are 2 more days to expiry
we have to see what we can get in first 15 mins
OK price is at 607  and 605 straddle are for 9.10
and 610 are for 9.0
price is at 607.50 and strangle 605/610  is for 6.50

lets see at end of day -  next day price is still at 610 and all of them lost almost 2 dollars each.

within same day 605 got the most is around 8.50
next day best price is around 9.0

610 straddle can get max value is 9.70

so on a day where price does not move at all this will happen.  on this day it hardly move for 5 dollars.

Trading Earnings with options - PCLN

Priceline (PCLN) reports earnings on August 7th.
The Street expects:

• Revenue: $1.35 billion
• EPS: $7.36
• Q3 revenue guide: $1.82 billion

In Q1 Priceline reported solid results with robust international revenue growth of 58%, excluding FX impact. Hotel room nights sold was up 47% y/y and Bookings.com increased its number of properties by 55% over the quarter to 210K.
Management guided 26-31% y/y increase in gross travel booking, in which international gross travel booking is projected to achieve 32-37% y/y increase and domestic gross booking to increase 5-10% y/y. Revenue is projected to increase 18-23% y/y and non-GAAP EPS of $7.2-7.4 per share.


In first 10 min on PCLN we can buy

700/700 stradlle for 20/21 dollar  this we can probably exit at 22/23
695/700 strangle for 17/18 dollar this around 20 dollar.


On 2/28/2012 earnings

630 stradlle -(price is already up 40 dollars so IV is out of it)
we can buy it for 17.50


For PCLN - tomorrow 8/7/12 I will try to do a bearish butterfly.   640/620/600 for around 2 dollars..Not sure if we need to take the call side of the trade. Market is looking extended an as per cobra we might get some pull back. Also redman from ibank has a good article about PCLN. PCLN genrally move 40/50 dollars on earnings announcement.

Also planning to trade FAS butterfly. Market is extended and might take a 88/84/80 put calls. hoping for some sell of rest of the week.

Trading Earnings with options - CLR

CLR - Continental Resources Inc (CLR) has been an independent oil and gas exploration company since 1967, though the company only went public in May of 2007. It has reserves totaling 134.6 MMBoe, 77% of which are filled with oil (the rest with natural gas). 82% are located in the Rocky Mountains. Continental's reserves are concentrated in regions that have seen little attention from larger, publicly-traded companies because of the high cost of developing them.


Trade research - Earning 8/9/2012 at 9am  earning conf call.

Earning date Feb 23 -2012  - No Direction bias and we will like to see how it could be traded through options.
On 23 price opened between 91.50 and 92.50.  Once the price is at 92.50 best to take March strangle 90/95. This shows a spread of 4.60/5.40 but a middle price will work.

March 90 put - 2.70
March 95 call - 2.25
Total - 5.0 $

We had earning at 10.0 am we can have an easy exit around 6.0 $(5.90 - 6.30)

At 8.41 CLR price hit 90.0   we can buy straddle 6.90 /7.40
March 90 put -3.90
March 90 Call- 3.40

at 10 am it will hit 9/9.60 spread.



For 11/3/2011 earning day

CLR - 60 to 61
straddle 60 is between - 5.55 and 5.95.  Not sure if 5.75 will get hit for say 5 options.

same day exit 6.65 /7.00  -- so easily we can get a 10/20 percent hit. profit stop at 6.75 will get it.

Not researching 8/4/11 as it was volatile august period.


Last earning analysis of 2/8/11  - this was low range day. earning at 9am. at 8.30 amprice was around 62.50. so a strangle attempt.

60 put/65 call at 1 to 1.25  spread. easy purchase at 1.15. 
 we can exit probably at 80/90 cent. there was not much move at all. so this trade is a loss.

Next post will research PCLN -