Strategy Archives - Cboe Blogs

  • Market News | Trader Talk | Strategy | Sep 3, 2015, 3:57 PM

    Earnings Next Week - 9/8 - 9/11

    Earnings Next Week - 9/8 - 9/11

    Next week is a holiday shortened week and sort of between earnings seasons as well, but we do have two companies with Weeklys available reporting.  Probably the most exciting name is LULU.  Also note this history PANW is less than the standard 12 quarters as the company has only been around long enough to report 11 times.  

  • Market News | VIX | Trader Talk | Futures | Strategy | Trade Ideas | Aug 29, 2015, 1:19 PM

    The Week in VIX - 8/24 - 8/28

    The Week in VIX - 8/24 - 8/28

    I’m depending on my aging mental capacity in lieu of spending the time to go through the last four years of VIX recap blogs for the following statement.  I have no recollection of a shift in the VIX term structure curve that replicates what shows up below.  VIX lost value on the week, while all the futures contracts moved higher.  Last Friday, spot VIX ran up quickly at the end of the day, but the futures remained at lower levels.  To get back to a more ‘normal’[...]

  • Strategy | Aug 26, 2015, 2:16 PM

    Surviving Market Volatility Again

    Surviving Market Volatility Again

    This past week was a difficult one for markets.  That is probably an understatement, as the SPX 500 fell a stunning 5% during the week, the Dow Industrials dropped more than 530 points, or more than 3%.  It was the worst week in nearly a year and set the indices back to losses in 2015.  Seems like a big move, right?  It was 'only' 3%, but to put that into context - in 1987 the Dow Industrials dropped a similar amount, or 508 points.  But that was a massive crash, falling[...]

  • Market News | VIX | Trader Talk | Strategy | Aug 25, 2015, 6:21 PM

    Trade in Which I Get a Black Eye, but Escape a Worse Black Eye

    Trade in Which I Get a Black Eye, but Escape a Worse Black Eye

    It was a black eye I gave myself, of course.  If this blog were all sunshine and lollipops - well, that would be great.  I'll work on it.  For now, it's not happening. So last week I got it into my head to sell some UVXY 55 calls, thinking that strike was unlikely to hit.  Under "normal" market conditions, that would be a reasonable belief.  As everyone and their kid's kindergarten teacher knows by now, the market has had a "correction."  I got sent[...]

  • Market News | Strategy | Aug 21, 2015, 11:48 AM

    The Eurekahedge Report highlights impressive YTD performance of Relative Value Volatility Managers

    The Eurekahedge Report highlights impressive YTD performance of Relative Value Volatility Managers

    As noted in our previous blog post, CBOE® and Eurekahedge announced the launch of four new benchmark indexes that measure the performance of hedge funds that employ volatility-based investment strategies. The four new indexes: CBOE Eurekahedge Short Volatility Index CBOE Eurekahedge Long Volatility Index CBOE Eurekahedge Relative Value Volatility Index CBOE Eurekahedge Tail Risk Index According to Eurekahedge’s August monthly newsletter, The Eurekahedge Report, the newly created CBOE[...]

  • Market News | Strategy | Aug 11, 2015, 12:21 PM

    The Bond Market: The Tail that is Wagging the Dog

    The Bond Market:  The Tail that is Wagging the Dog

    A study done in 2011 showed the global bond market is nearly triple the size of global equities.  I am quite sure it is even bigger today, but according to McKinsey, in 2010 there were 212 trillion in capital stock and bonds made up 75% of that number.  Hence, the enormous size of the bond market gives heed to investors looking for safety and income, but are ultra-sensitive to changes in interest rates.  We see rates increase when inflation rises, but they decline or stay low when[...]

  • Market News | Strategy | Aug 4, 2015, 12:05 PM

    The Fed and the Mindset for a Downturn

    The Fed and the Mindset for a Downturn

    I can hear it now from someone reading the title:  'A HA!  this guy is finally bearish after all this time -- I knew he would come around'.  That couldn't be further from the truth, in fact the bearish label is completely inaccurate.  I don't like labels, as when we describe ourselves bullish or bearish that puts us in a specific mindset unable to be flexible.  Hence, when we change our minds and decisions with changing markets our tactics are questioned.  In other words,[...]

  • VIX | Education | Strategy | Trade Ideas | Aug 2, 2015, 5:17 PM

    July: Tricky by Anyone's Standards

    July:  Tricky by Anyone's Standards

    Editors note – we would like to welcome Meredith Kelley Zidek as a new contributor to the CBOE Options Hub.  Meredith is a private investor whose interests include equities, options, and commodities.  She began trading equities in 2007, and since then has cultivated interests in corn, energy, and most recently, index and equity options. Almost all of her trading, which can be seen on grapestrades.blogspot.com, involves short options on volatility-related instruments.  She studies[...]

  • Market News | Strategy | Jul 30, 2015, 1:53 PM

    New Appeal for BXM Index and Buy-write Strategies in 2015

    New Appeal for BXM Index and Buy-write Strategies in 2015

    In a recent news article in Bloomberg, Callie Bost noted this year’s relatively strong performance for the CBOE S&P 500 BuyWrite Index (BXM), and she wrote -- “Traders Score With Buy-Write Options Strategy Tuned to U.S. Calm.  Traders selling calls on stock holdings are beating the S&P 500 for the first time since 2011. The torpor in U.S. equities is proving a bonanza for traders employing an options tactic designed to capitalize on dead markets. …  ‘A churning[...]

  • Strategy | Jul 30, 2015, 11:49 AM

    Options Strategy: The Installment Collar

    Options Strategy: The Installment Collar

    The collar can be expanded to create a truly creative variety. The traditional collar (own 100 shares, sell 1 covered call, and buy 1 put) can be turned into a long-term protective version: buy 100 shares sell one very short-term covered call, maximizing annualized income as the result of time decay, picking a strike higher than the cost of your stock buy one long-term put (8-10 months) This accomplishes a relatively high rate of return without the need to replace the put. The short call expires[...]

  • Market News | Strategy | Jul 29, 2015, 12:23 PM

    Facebook Earnings Today - Possible Options Strategy

    Facebook Earnings Today - Possible Options Strategy

    When a trader is making a trade based upon an upcoming earnings report the first thing that they will look at is the at the money (ATM) straddle in the expiration cycle that is closest to expiration. The earnings report for Facebook (FB) is being released this afternoon on July 29th at 4:00 pm ET, immediately after the close. There are weekly options that expire two days later on July 31st. With FB trading at 95.50 let’s take a look at the FB Jul 31st 95.5 calls and puts. The market for the[...]

  • Strategy | Jul 29, 2015, 9:56 AM

    Annualizing Covered Call Returns For Consistency

    Annualizing Covered Call Returns For Consistency

    When writing covered calls, it's important to accurately compare one expiration to another, to make certain that your analysis is accurate based on both rate and time. You can compare annualized returns under the following guidelines: Make all yield comparisons to the strike. Use the strike for consistency, based on the rationale that if exercised, the strike will be the price at which you sell shares. Alternatives are to base the analysis on your stock basis or current price, but both of these[...]

  • Strategy | Jul 28, 2015, 10:01 AM

    Options Strategy: Swing Trading With Variable Weighting

    Options Strategy: Swing Trading With Variable Weighting

    Using options to focus more on either uptrend or downtrend is an effective method for augmenting the swing itself. The strategy assumes that you have an opinion about the prevailing direction of movement in the underlying, and that momentum confirms your opinion. So as a starting point, you can coordinate a weighting decision by checking some of the best momentum oscillators like RSI or MACD. There are numerous methods for weighting one side or the other. On the bottom of the swing, bullish weighting[...]

  • Education | Strategy | Trade Ideas | Jul 15, 2015, 4:01 PM

    Trade Analysis - Selling $SVXY Puts

    Trade Analysis - Selling $SVXY Puts

    Editors note - we would like to welcome Meredith Kelley Zidek as a new contributor to the CBOE Options Hub.  Meredith is a private investor whose interests include equities, options, and commodities.  She began trading equities in 2007, and since then has cultivated interests in corn, energy, and most recently, index and equity options. Almost all of her trading, which can be seen on grapestrades.blogspot.com, involves short options on volatility-related instruments.  She studies the[...]

  • Market News | VIX | Trader Talk | Strategy | Jul 13, 2015, 8:35 PM

    RUT Alternative to an IWM Put Spread

    RUT Alternative to an IWM Put Spread

    Every Saturday morning my ritual includes grabbing the latest issue of Barron’s and turning directly to the Striking Price column which is regularly authored by a good friend of CBOE Steve Sears, who is credited with coining term ‘fear index’ for VIX. This weekend another good friend of CBOE, Bill Luby the chief investment officer of Luby Asset Management and the publisher of the VIX and More blog site (www.vixandmore.com) was the guest author of the Striking Price column[...]