YUM! Brands has been regarded for some time as a play on discretionary spending in China – as part of the shift from exports to domestic consumption. Given that framing, YUM investors are pretty sensitive to changes in data coming out of China. After the market close on Thursday, YUM guided lower on Q4 sales in China. Half of the operating profit in the third quarter came from China, so a forecast for a 4% drop in same-restaurant sales…
Tuesday, July 31, 2012
Here’s a question we received recently from a client, asking about the relationship between the vertical spreads we trade in the ETF Trend Options strategy and the iron condors associated with our core product: I have been trading these ETF Trend Option spreads for a while now. Some of them wind up as de facto put/call condors. Can you explain the fundamental differences between your regular iron condors and these de facto ETF condors? Except for the…
Thursday, February 2, 2012
Historically, two of the most successful approaches to trading have been trend following and option selling. Trend following and momentum investing are strategies known to just about everybody, and option selling (i.e. collecting the volatility risk premium), while not quite as famous, is hardly a closely-held secret. Usually, these two approaches are treated as strangers. Momentum/trend traders are conceptually long volatility in that they are willing to accept small, frequent losses from choppy markets in order to reap gains…
Friday, January 6, 2012
We’re closing the put side of the January iron condor we rolled from our Dec/Jan double-diagonal, to free up margin for a February entry trade later this afternoon. Day limit order Buy to close 2 SPY Jan 114 puts Sell to close 2 SPY Jan 107 puts for a net debit of $0.04 or better. Note that the 2 contracts specified above represent our entire stake in the Jan 107/114 put vertical portion of this position.
Tuesday, October 18, 2011
We’re unwinding our October portfolio starting with the upside risk from the adjusted BF#1, as follows: Day limit order Sell to close 1 SPY Oct 127 calls Buy to close 1 SPY Oct 125 calls for a net debit of $0.33 or better. Note that the 1 contract specified above represent our entire position in the Oct 125/127 call vertical.
Thursday, August 18, 2011
Technical indicators are weak across the board, so we’re closing this last calendar position, as follows: Day limit order Buy to close 2 SPY Aug 116 calls Sell to close 2 SPY Sep 116 calls for a net credit of $3.08 or better. The 2 contracts specified above represent our entire position in the Aug/Sep 116 call calendar. We plan to let the short Aug 119/125 call vertical expire worthless.
Friday, June 10, 2011
We’re reducing our risk this morning by closing the put side of our adjusted June butterfly hedge, as follows: Day limit order Buy to close 2 SPY Jun 127 puts Sell to close 2 SPY Jun 123 puts for a net debit of $0.94† or better. Note that the 2 contracts specified above represent our entire position in the June 123/127 put vertical. By closing just the put side of this position, we’re cutting our delta in half—so…
Tuesday, April 13, 2010
With only three days to expiration and KO trading above support at our current risk-management threshold of $54.90, it looks like the only way to avoid riding the expiration-week gamma bull is to unwind this position. That’s going to take two steps. First, we’re selling the put vertical we bought Thursday: Day limit order Buy to close 1 KO Apr 52.5 put Sell to close 1 KO Apr 55 put for a net…
Thursday, April 8, 2010
After rallying to $53.78, KO has pulled back some, and a close above $54 looks all but impossible…however, indicators on the 30- and 60-minute charts are flashing buy signals. Risk-management and disciplined application of trading rules always trump technical analysis, so we’re going ahead with an adjustment to cut our delta exposure–but instead of rolling down to a more bearish calendar position, we’re going to hedge with a put vertical, as follows: Day limit order Buy to open 1…
Thursday, June 18, 2009
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,…
Jared Woodard is a registered commodity trading advisor who specializes in trading volatility as an asset class. With over a decade of experience trading options, futures ... Read More
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Monday, December 3, 2012
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