Trade Ideas Archives - Cboe Blogs

  • Put the Short Premium in the Bag

    Put the Short Premium in the Bag

    The tale of October happens to be the tale of my friend, "Mr. G," and what he did to turn $39,727.47 on September 30th into $56,239.25 on October 31st.  How's that for some trick-or-treat plunder? Here is the breakdown, separated by types of trades, of which there were only a few.  I'll number the types and show the dates and entry and exit points. 1. The greatest number of trades were made by selling short shares of TVIX on different dates between September 22nd and October 23rd,[...]

  • Trader Talk | Trade Ideas | Nov 1, 2015, 5:11 PM

    Earnings Next Week - 11/2 - 11/6

    Earnings Next Week - 11/2 - 11/6

    We have a heavy week again for earnings.  So far my crack staff (me) has only been able to compile numbers for Monday and Tuesday next week.  I'll follow up with the balance of the calendar on Monday to give option traders that like to trade around earnings a little lead time.  As always the numbers below represent the biggest gain, loss, average move (without taking direction into account), and what the stock price reaction was for the previous quarter.  All numbers represent[...]

  • Market News | VIX | Trader Talk | Trade Ideas | Nov 1, 2015, 3:30 PM

    The Week in Russell 2000 Trading - 10/26 - 10/30

    The Week in Russell 2000 Trading - 10/26 - 10/30

    I’m still playing some catch up from school work and travel which caused me to take my eye off the ball with respect to the markets.  It happens and when it does I’m always surprised by something that occurred while my mind and body were elsewhere.   The big surprise for me this time around was the disconnection between small and large cap stocks that happened over the past couple of weeks. Over the last two weeks of October the Russell 2000 (RUT) was basically unchanged[...]

  • Trader Talk | Trade Ideas | Oct 26, 2015, 2:13 PM

    Earnings This Week - 10/26 - 10/30

    Earnings This Week - 10/26 - 10/30

    Due to travel this blog is going up a little late, apologies all around.  All the numbers below represent 3 years of data, except for those in italics (TWTR, BABA, and GPRO).    

  • VIX | Trader Talk | Trade Ideas | Oct 19, 2015, 3:40 PM

    Closing a Volatility Short + Selling an Inverse Volatility Strangle

    Closing a Volatility Short + Selling an Inverse Volatility Strangle

    Let's check back on the progress of a trade last mentioned two posts ago.  This could be described as one of my favorite games ever, formally called "shorting the ultra-long volatility."  I've dabbled in both TVIX and UVXY recently, and the October 6th post illustrated some meat carved off the bone from the eleven-ish level on TVIX down to $9.48, when I just could not resist taking a bite.  To the tune of $651. Never one to be happy with a clean plate, I loaded the plate[...]

  • Market News | VIX | Trader Talk | Futures | Trade Ideas | Oct 18, 2015, 12:36 PM

    The Week in Russell 2000 Trading - 10/12 - 10/16

    The Week in Russell 2000 Trading - 10/12 - 10/16

    Large cap stocks gained and small cap stocks were lower last week with the Russell 1000 (RUI) moving up by 0.77% while the Russell 2000 (RUT) dropped 0.26%.  For the year RUI is down 1.25% and RUT has given up 3.52%. The implied volatility differential finished the week with the CBOE Russell 2000 Volatility Index (RVX) at about a 20% premium to VIX which is pretty close to the average level for this year.  For the moment the risk perception for small cap stocks is at levels[...]

  • VIX | Trader Talk | Education | Futures | Trade Ideas | Oct 17, 2015, 12:05 PM

    The Week in VIX - 10/12 - 10/16

    The Week in VIX - 10/12 - 10/16

    It has been a while since I’ve started out saying we had a parallel shift in the VIX curve.  That’s what we got last week as the market calmed down a bit and the S&P 500 advanced.  The October contract settles on the open this coming Wednesday and went out at about a point premium to spot VIX which has been the norm over the past few years when VIX has been in the mid to low teens. The short dated curve shifted a little more into contango last week.  It[...]

  • VIX | Trader Talk | Education | Futures | Trade Ideas | Oct 17, 2015, 6:57 AM

    The Week in Volatility Indexes and ETPs - 10/12 - 10/16

    The Week in Volatility Indexes and ETPs - 10/12 - 10/16

    VIX closed under 16.00 for the first time since all the hubbub that occurred in late August as the S&P 500 continued to recover last week gaining 0.90%.  Among the four S&P 500 focused volatility Indexes VIX was the biggest loser shedding almost 12%.  I had been keeping a close eye on VXV as the 3 month time frame that VXV measures comes after the December FOMC announcement.  VXV fell a bit relative to VXMT (6 month volatility) which may be a FOMC indicator and may also be[...]

  • Market News | Trader Talk | Trade Ideas | Oct 16, 2015, 10:20 AM

    Earnings Next Week - 10/19 - 10/23

    Earnings Next Week - 10/19 - 10/23

    Next week brings us to the meat of earnings season with almost 60 companies that have weekly options available for trading reporting next week.  With a couple of exceptions (AAL & GOOG) the history below represents the stock price reaction in response to earnings for the past three years.

  • Market News | Trader Talk | Trade Ideas | Oct 8, 2015, 11:00 AM

    Earnings Next Week - 10/12 - 10/16

    Earnings Next Week - 10/12 - 10/16

    Alcoa reported this week which is the unofficial beginning of earnings season.  Next week several financials release numbers which should be interesting considering the continued inaction by the Fed.  As always the numbers below represent stock price reaction to earnings for the last 3 years.

  • VIX over 20.00 Streak Ends at 30 Days - So Now What?

    VIX over 20.00 Streak Ends at 30 Days - So Now What?

    Even the VIX tourists were paying attention to the long running streak where VIX closed over 20.00.  The run ended at 30 today with VIX finishing at 19.54.   This was not nearly as fun as watching Pete Rose in the summer of 1978, but for some of us, it was quite a ride.  When Pete didn't get a hit on August 1st he was asked what he would do tomorrow, his response, "I guess start another streak".  Unfortunately we can't stick a microphone in front of VIX and ask what[...]

  • Market News | Trader Talk | Education | Trade Ideas | Oct 4, 2015, 7:30 AM

    The Week in Russell 2000 Trading - 9/28 - 10/2

    The Week in Russell 2000 Trading - 9/28 - 10/2

    For the second week in a row large cap stocks outperformed small cap stocks by about 1.5%.  The big difference this week was that the Russell 1000 (RUI) was higher while the Russell 2000 (RUT) lost value.  The previous week RUI lost less than RUT, but both had pretty lousy weeks.  For the year RUI is now down a little more than 5% while RUT has lost just over 7.5%. The CBOE Russell 2000 Volatility (RVX) index finished the week at a little over a 10% premium to VIX.  This lack[...]

  • Market News | Trader Talk | Trade Ideas | Oct 2, 2015, 12:34 PM

    Earnings Next Week - 10/5 - 10/9

    Earnings Next Week - 10/5 - 10/9

    Of the companies reporting next week my favorite to watch is YUM! Brands (YUM).  About half their sales come from China and in my mind this is one of the best ways to get an idea what is going on in that part of the world.  As always the numbers represent the last 12 earnings announcements.

  • VIX | Trader Talk | Trade Ideas | Oct 2, 2015, 12:29 PM

    I'm Way Out on the Ice

    I'm Way Out on the Ice

    Let me get right down to numbers, since there will be a lot of numbers amongst the words. In the last post I detailed a bunch of long calls, and an update on those is overdue.  In review:  I had allocated a large (to me) (when it is a risky proposition) amount of money toward seven of the December SVXY calls at the 40 strike, paying about $12.30 each for them (translated to real cost:  $1,230.00 each or $8,610 in total - I'm rounding and ignoring commissions here) when SVXY was about[...]

  • VIX | Trader Talk | Education | Futures | Trade Ideas | Sep 27, 2015, 2:20 PM

    New White Paper Discusses Volatility as a Small Cap Portfolio Hedge

    New White Paper Discusses Volatility as a Small Cap Portfolio Hedge

    A new white paper from our partners over at Russell Indexes Research discusses the merits of using futures on the CBOE Russell 2000 Volatility Index (RVX) to hedge small cap risk.  In the paper “RVX futures as a hedge for small cap-specific risk” Barry Feldman covers volatility products that are currently available to hedge downside risk in equity portfolios and then goes on to compare using VIX futures and RVX futures to hedge a small cap focused portfolio. Feldman uses the market[...]