Archive | Bonus Trades

Follow-up on Barclays

Tuesday, January 22, 2013


Early last month I reviewed some of the fundamental arguments for Barclays (BCS) and looked at the volatility environment in the stock to suggest a trade idea ("

Bonus Trade: UTHR Put Vertical

Friday, June 3, 2011


I’m experimenting with a relatively conservative system of selling put vertical spreads for income, and I wrote up one such trade for SeekingAlpha yesterday. Here are a few key excerpts: One of the stocks getting hammered in this week’s sell-off is United Theraputics (UTHR)…. The stock is oversold on the daily chart and sporting an implied volatility of 81% for July options. Current share price is in the support range from the November/December 2010 consolidation. The July…

Steelcase and the Rise of the Worker

Monday, April 25, 2011

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Sitting all day is really, really bad for you, even if you aren’t fat or unhealthy. That’s the main thrust of recent coverage from the Times and NPR on research done into the health effects of reduced physical activity, especially sitting. Sedentary time sounds downright dangerous: This is your body on chairs: Electrical activity in the muscles drops — “the muscles go as silent as those of a dead horse,” Hamilton says — leading to a…

Bonus Trade: SPY November Butterfly

Monday, November 8, 2010


Our paid newsletter strategies are predicated on the expectation of mean-reversion (with risk-management rules for containing losses in trending markets)—in implied volatility as well as in price of the underlying. But when we find ourselves in a strong bullish trend, it's often desirable to both increase delta and decrease vega. One great way to do this is with butterflies...

Bonus Trade: SPY October/November Calendar Spread

Friday, September 10, 2010


We kicked off the October expiration cycle for our Calendar Options newsletter yesterday with the following trade: Day limit order Buy to open 4 SPY Nov 112 puts Sell to open 4 SPY Oct 112 puts for a net debit of $1.42 or better. This morning, the position is still mid-priced around $1.42. Note that 4 contracts per leg is our base position size. Trading whole-number multiples of the base size ensures that adjustments will not result…

The Next Shoe to Drop in Banking

Wednesday, August 19, 2009


The financial sector of the U.S. economy has had nearly a year to address the problems that exacerbated the crisis last fall. But many observers think that the banks haven’t done enough, and that another round of trouble may be developing for the sector. I will outline some of those concerns and then suggest some ways to use options to profit if there is indeed another shoe to drop in banking. The Thesis The primary obstacle facing large banks is…

A Pause in Treasury Yields

Thursday, June 18, 2009

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A Bloomberg item out this morning wonders whether long-term Treasury yields have moved too far, too fast: The CHART OF THE DAY shows the difference between the yields on 10-year Treasuries and the year-over-year consumer price index, known as real yields, over the last 20 years. The gap approached 5 percent yesterday, the most since it was above 5 percent in December 1994, signaling bond investors concerned about inflation have pushed yields too high too quickly, according to Michael Shaoul,…

Long Vega Plays for a Market Breakout

Friday, May 29, 2009


As pictured below, equity indexes have been highly range-bound since the end of April.  That trading range has been between about 470 and 510 in the Russell 2000, and 865 and 930 in the S&P 500. I doubt that this range is likely to persist for much longer. Fans of technical analysis will note that SPX and RUT are caught in the narrow space between their respective 50- and 200-day moving averages: a break above or below either average…

Volatility Tracker Lifts All Boats

Monday, April 27, 2009


Volatility Tracker for April 26, 2009 As the equity rally stalled, implied volatility indexes rose across the board last week. [2] And given last week’s broad decline in IV indexes as well, we will watch for evidence of high correlation among these very different asset classes (oil, gold, currency, equity). Note also the divergence in short term IV indexes and the volatility futures term structures of the Nasdaq 100 and Russell 2000: while the former rose on the week, the…

The Banking Miasma

Monday, March 9, 2009


Citigroup (C) and Bank of America (BAC) are both trading at less than 90% of their peak value, and for several good reasons, not least of which is the possibility than on any given Monday, shareholders may find themselves holding worthless shares. An article this weekend in Barron’s (“Banking’s Evil Twins? Not Exactly“) claims that BAC is the stronger of the two, and that it may thrive where C doesn’t.  However, it’s not at all clear from…


Jared Woodard specializes in trading volatility as an asset class. With over a decade of experience trading options and other volatility products ... Read More


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