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 ("

Warped, Frustrated Old Banks

Thursday, December 18, 2008


Mr. Potter: [to George Bailey] Look at you. You used to be so cocky. You were going to go out and conquer the world. You once called me “a warped, frustrated, old man!” What are you but a warped, frustrated young man? A miserable little clerk crawling in here on your hands and knees and begging for help. No securities, no stocks, no bonds. Nothin’ but a miserable little $500 equity in a life insurance policy.…

Quieter Times Ahead at P&G

Thursday, November 6, 2008


So, option activity in Procter & Gamble (PG) has been extremely high for days now, first ahead of earnings, and now in advance of their merger with Folgers.  The stock is 16% off its recent lows, and has been unusually volatile over the past two months along with the rest of the universe. The interesting thing here, though, is that with all this unusually high option activity, you might expect implied volatility to be hitting new highs as well. …

Sleepy Nasdaq

Tuesday, August 12, 2008


Here are some data that have us thinking this afternoon: maybe the Nasdaq doesn’t resume its parabolic move from here. There are certainly plenty of short term reasons for Nasdaq bulls to frown and doze off for awhile: the QQQQs are up over 7% in 7 days.  Money flow has been stagnant.  The ADX line is only barely ticking up, and RSI readings at various periods are all inching toward overbought.  The McClellan Oscillator (attached) may have peaked, and even…

Ryanair: Airline, or Energy Bear Fund?

Monday, July 28, 2008


Ryanair (RYAAY) is down about 25% today after it warned that it would miss expectations for Q1 and would probably post a loss for 2008.  The reason?  They deliberately refused to hedge their exposure to oil prices… Ryanair said last year that it would not hedge against the rising cost of oil last year, unless fuel prices fell below $100 a barrel. …oh, until now, that is: However on Monday, O’Leary said the airline was now hedged 90.0%…

Selling Premium on the Uncertainty in Oil

Thursday, July 24, 2008


The inverse relationship between oil prices and equity markets still seems intact: as crude has sold off over the past week, markets have lifted, and some analysts have even tried charting an hour-by-hour mapping of the correlation.  While we’re long-term bullish on oil (how could anyone not be?), we don’t anticipate an immediate or intense turn around in crude prices.  At the same time, while the price of oil could certainly drift a bit lower, we don’t foresee any catalysts…

A Better Way to Play With Materials (XLB)

Sunday, July 13, 2008


The Striking Price column in this weekend’s Barron’s features John Marshall from Goldman, who suggests an “opportunity to buy volatility” in the S&P Materials sector via the tracking ETF (XLB).  He makes the bearish case for XLB, arguing: 1) that the materials sector is particularly vulnerable to any slowdown in global growth, 2) that the ETF components include some less resilient names, and don’t feature the best of breed like POT and MOS, and 3) that hedge funds are…

Exiting XLE Iron Condor After Some Good Defense

Wednesday, June 18, 2008


We published the following bonus trade for our members back on May 2: Buy to open XLE June 70 put Sell to open XLE June 72 put Sell to open XLE June 90 call Buy to open XLE June 92 call for a net credit of $0.47 or better. Anyone following this trade should have already exited – remember, we want to be out of any front month short options by Monday of expiration week at…

Taking Lehman Profits

Tuesday, June 17, 2008


Back on June 4, we suggested some relatively conservative ways to play the potential downside in Lehman Brothers (LEH). Since we published that piece, the stock has dropped more than 13% to 27.20, and with earnings now behind us it’s time to revisit these positions. LEH July 40/42 call vertical – we initially sold this vertical for a credit of $0.34. You could buy it back right now for about $0.05, locking in a gain of 17.46% return…

How to Play a Lehman Collapse, Conservatively

Wednesday, June 4, 2008


In the days following the Bear Stearns collapse, Lehman Brothers was the favorite target of speculation for traders, especially those who missed the BSC and wanted their own chance to watch some cheap out of the money puts turn into real paper. After it looked like LEH had pacified the concerns of critics, they’re back in the news as everyone on the street suspects the company is in a real double-bind: If Lehman announces to investors that it…

Participate in the Rally with a Broken Call Condor: Followup

Tuesday, May 13, 2008


Back on April 9, we published a bonus trade for our members that allowed them to participate in the rally that ensued, but with absolute downside protection.  We brought in a $0.20 credit upon opening the position, and you could sell it to close today for about $0.32, which means this trade returned $0.52, for a 28% return on capital risked.  Not too shabby. The broken call condor was constructed like this: +1 SPY May 141 call…


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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