Your Inside Source for Options Information

February 19, 2018

Featured Interview

Options Insider Radio Interviews: Talking Strategy with Russell FTSE Indexes

Posted March 4th, 2016

In this episode, our roving reporter Mark Sebastian is on assignment at the CBOE Risk Management Conference, where he sat down with Pat Fay from FTSE Russell Indexes.

They discuss:

• Exploration of ETFs/ETNs based on various strategies
• Relative value trading; RUT vs. SPX
• FTSE 100 & FTSE China 50 futures contract at CME
• Cash options products coming soon at CBOE
• Where should Russell put its index efforts?
• New developments at FTSE and Russell

 

Upcoming Economic Reports

A preview of what may move the market this week

Options Insider Radio Network 

Episodes you may have missed from Options Insider Radio last week

Option Block 692: Mixing Things Up A Bit

Posted February 16th, 2018

Trading Block: Is the VIX "Whistleblower" just more noise or it there some teeth this time? Volatility's awakening spurs record long position in VIX futures.

Strategy Block: Discusses legging into OTM vertical call spreads

Odd Block: More JAN 2019 50 "Catastrophe" puts in Tesla Motors (TSLA), long-term put love in Community Health Systems (CYH), and calls trade in Radian Group Inc. (RDN).

Mail Block: Options question of the week

It's been a rocky week for the markets. People are understandably scared and confused. That raises the question: Which product are you most concerned about over the next 30 days? Which product would you not touch with a 10-foot pole?

• VIX
• SVXY
• SPY
• Bitcoin: XBT, BTC, etc.

Listener questions and comments:

• Comment from Matt Williamson - Good guesses and discussion. It's much simpler. $5 covered calls trading for $4.30. Again, why? How? Buy the $5 put and arb for 15% ROI!...Sure. I bought some 15s, some 20s, some 5s. Guess no one is concerned about a 97% correction over the next year...
• Question from J3dingle - Hi Mark, In yesterday's Option Block, you said you personally took an options position in SVXY. I was curious, if you could say, what kind of position a pro takes. Thanks, Joseph
• Comment from Scott Somer - Another day another day with a very large sell off heading into the start of the Option Block and an up move in the S&P Futures during the "Trading Block" #OptionInsiderRadio #OptionBlock #GreasyMeatball #RockLobster...If we get a Rule 80B Sell off, that will finish off $SVXY unless second month VIX Futures are north of 40.
• Comment from MrMagoo? - There are no regulators working under Trump. It's a free for all with HFTs eating retailers for lunch.

Around the Block: How will VIX run going forward? S&P closed three points above the 200-day moving average. Can we make another run at the all-time highs?

 

Trading Tech Talk 62: Exploring the Nexus of Machine Learning, AI and the Options Markets

Posted February 16th, 2018

Mark is joined by co-host Matt Amberson, Principal at Option Research & Technology Services (ORATS).

CTO Interview: Our gest today is Michael Mescher, Founder of Gammon Capital.

He discusses:

• What is Gammon Capital?
• You've talked a lot about the dangers of selling volatility and how short vol managers aren't worth their fees. What are your thoughts on the maelstrom of the past week? How have your funds fared over the past week?
• Machine learning is a hot buzzword these days, but what are some of the practical applications that you're seeing in the financial markets right now? Is it ready for prime time or still in the nascent phase?
• Unsupervised learning/ fundamental strategies?
• Supervised learning / quantitative strategies?
• Classification vs. Regression problems
• Hiring machine learning specialists vs. Products specialists
• 90% of the world's data was created in the past two years. Is that an opportunity or a terrifying statistic?
• Testing models on out-of-sample data vs. carefully constructed back tests?
• Should managers be concerned that the robots are coming to take their jobs and their clients?

The Inbox: Listener questions and comments

• Question from BLAL9 - What do you see as the outlook for AI and machine learning in the financial management space going forward? I see a lot of smoke but is there much fire? Are there many funds currently using it to generate alpha right now?
• Question from Tonc - What are the best ways to invest in blockchain right now?
• Question from Mark Kalis - How are comps getting the edge on us in trading? Is it just pure correlation trading?
• Comment from tDok3 - No debate to be had there. It's a simple & foregone conclusion. Higher fees ==> lower participation perhaps goal for CB market manipulation
  In response to tweet: Are exchanges shooting themselves in the foot by continually hiking market data fees?
• Question from See16 - Can you please do a deep dive into smart routers on a future program? They are the secret sauce of the market these days, but no one really seems to understand how they work. Shedding some light on the otherwise dark world of routing would be a great service.

 

OICs Wide World of Options 46: How To Get Started in Options and Investor Services

Posted February 15th, 2018

WWoO 46: How To Get Started in Options and Investor Services

Host Joe Burgoyne welcomes back Dan Sheridan who will discuss what investors need to know about trading options. Then on Profiles & Perspectives, Ed Modla of OIC's Investor Services team provides some historical context to OCC's role in the industry.

 

Options Playbook Radio 196: Short-Term WYNN Butterfly

Posted February 14th, 2018

We are back to the playbook this week and taking a close look at Wynn Resorts. There is a lot of volatility in the stock these days with the CEO in the news quite a bit these days. We are looking at a very short-term butterfly. You can find more on page 104 of The Options Playbook, which is always available on OptionsPlaybook.com, in on the Amazon Kindle edition.

Specifically:

• Why a very short-term trade?
• What is the desired outcome?
• What about the stock going ex-dividend?
• Setting up the trade
• Why use puts?
• Selecting strikes
• What is the cost?
• When to get out?
• Looking at net theta versus net delta

Do you have a question that you want answered on a future episode? Send them to Brian at theoptionsguy@invest.ally.com, or to the Options Insider at questions@theoptionsinsider.com.

 

Option Block 691: The Calm After the Storm

Posted February 14th, 2018

Trading Block: One week later, how is everyone doing? SPY is back in rally mode. VIX back in the mid-20s. It's been a wild week for CBOE. Stock took a hit, threatened $100, now rallying up 4%. Earnings this week include APRN, before the bell tomorrow. ATM straddle $0.65, approx. 20%. Volatility's awakening spurs a record long position in VIX Futures

Odd Block: Review from 2/8: Someone unloading calls in (UNP), Pre earnings action in Under Armor (UAA).

Mail Block: Options question of the week

VIX is moving like crazy today. It's already blown past 23 and is threatening 35. So let's dial up our $VIX threshold for extra #ZombieApocalypse fun. You buying or selling these levels? Quite Simply: Where will $VIX close on Friday?

• 21% - Crazy Town: 30-35
• 22% - ZombieApocalypse: >35
• 19% - Crazy: 25-30
• 38% - Mildly Crazy: <25

Options question of the week, part two: It's been a rocky week for the markets. People are understandably scared and confused. That raises the question: Which product are you most concerned about over the next 30 days? Which product would you not touch with a 10-foot pole?

• VIX
• SVXY
• SPY
• Bitcoin: XBT, BTC, etc.

Listener questions and comments:

• Follow-up from Matt Williamson - Disclosure time: I'm in those FB $5.00 calls. But why??? I think Mike will see it first...No, you were actually close with your box theory. I just think Mike be the first to slap his forehead.
• Question from JohnnyBananas1 - If you buy a put option and the strike price is $5 and the drops to $3. Is it still worth $ even if it's 3$ under...even though my strike price is 5$?? So if the stock price is $7 drop to 5(strike). But end up going to 3 and my option is worth ~$4?...so I don't have to sell if I reach my strike price? Is the same with call options? That's what confuses me is the strike$. #learning
• Question from Chris T. - The most I can lose buying SVXY is the price I pay, correct? So can I buy it ~$10 and treat it like a lotto ticket call?

Around the Block: Earnings! Blue Apron, Under Armor. Can we get back into positive territory for the year in the S&P? Can we get three days of up? Or a couple of days of "not up so much"?

 

 

This Week in Futures Options 90: The Revenge of Volatility

Posted February 12th, 2018

Topics this week include:

• Indices
• Crude
• Bitcoin
• Winners: Soybean meal, EuroDollar
• Losers: WTI, Heating Oil

Futures Options Feedback: Listener questions and comments

• Question from Jill - What happened to S&P skew after this week's selloff?
• Comment from Volvic - Liked all the rates talk. More of that please.
• Question from El Nino3 - Are the skews between eMini, SPY and SPX all correlated?
• Question from McNuggins - Fun show! Maybe bring back the crazy trade of the week? Like the gold trade. Thanks.

 

Volatility Views 293: The Great XIV Debate, Continued

Posted February 12th, 2018

Volatility Review: The great inverse volatility ETP debate continues. Are they "Frankenproducts" that shouldn't exist? Or are they performing as advertised, but the investing public simply doesn't understand them? Maybe there's a third camp? VIX Cash: Spiked to 46.34 on Tues - Quite possibly the craziest week in VIX history.

Kevin's Weekly Rundown

• VIX Options: ADV - 983k, VIX call/put: 2.8
• Commodity Volatility
• Bitcoin has been moving in lockstep with the market.

Volatility Voicemail: Volatility flash poll
XIV is headed to the graveyard. But, as of this writing, $SVXY is still trading. Do you still have confidence in this product? Quite simply - do you think $SVXY will still be trading at the end of the year (12/31/18)?

• Yes
• No
• I'm hiding under the bed

Options question of the week:

VIX is moving like crazy today day. It's already blown past 23 and is threatening 35. So let's dial up our $VIX threshold for extra #ZombieApocalypse fun. You buying or selling these levels? Quite Simply: Where will $VIX close on Friday?

• Crazy Town: 30-35
• ZombieApocalypse: >35
• Crazy: 25-30
• Mildly Crazy: <25

Listener questions and comments:

• Question from Chris T - The most I can lose buying SVXY is the price I pay, correct? So can I buy it around 10 and treat it like a lotto ticket call?
• Comment from Scott Somer - Another day another day with a very large sell off heading into the start of the Option Block and an up move in the S&P Futures during the "Trading Block" #OptionInsiderRadio #OptionBlock #GreasyMeatball #RockLobster
• Question from Lamina - $VIX cash is trading above the futures right now. How is that possible? Isn't the cash value derived from the futures?

 

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This is when you can access the LIVE shows this week:

Thursday:

Option Block LIVE at 3pm Central

Friday:

Volatility Views LIVE at 12pm Central

This Week in Futures Options LIVE at 1:30 Central. As always, you can join in the fun at http://mixlr.com/options-insider/