NaughtyPines

THE WEEK AHEAD: BBBY, KRE, VIX

CBOE:VIX   Indeks Ketidaktentuan S&P 500
With the trading year winding down here, I'm not keen to pile into a great number of trades, but there are a few underlyings that may be worth playing here if holiday frivolity just doesn't provide you with enough and/or you're just a hard core trading addict that has to put something on in order to satisfy your need for market engagement ... .

BBBY             announces earnings on 12/20 (Wednesday) after market close. With an implied volatility at the high end of its 52-week range (63-ish percent as of Friday close), it may be worth a premium-selling play. As it stands now, the Dec 29th 20.5/25.5 short strangle (~22 delta) is paying .81/contract at the mid, implying that any defined risk play (i.e., an iron condor) with that strangle as its "body" won't pay one-third the width of the wings and is therefore not worthwhile.

Alternatively, the underlying is probably small enough for a short straddle, with the Dec 29th 22.5 paying 2.50 and the comparable defined risk iron fly (18.5/22.5/22.5/26.5) paying 2.08 with a max risk of 1.92/contract.

For those willing to take on potential assignment risk, the Dec 29th at-the-money 22.5 pays 1.18 with a break even of 21.32 (5.5% ROC ), although it may be slightly more worth it to go out to the Jan 19th expiry to take in 1.45 for the same striked short put with a break even of 20.98 (6.9% ROC ) (Dec 29th implied's at 73.3% versus Jan 19th's 63.3).

KRE's implied is in the top third of its range over the past 52 weeks, but I'd like the implied to be higher (26% as of Friday close; I like exchange-traded funds to be north of 35% to consider playing them). That being said, the Jan 26th 55/63 short strangle (~20 delta) is paying 1.05 at the mid with a greater than 70% probability of profit metric.

As always, I've got my eye on VIX             and its "little buddies," VXX             , UVXY             , and SVXY             . While I will certainly put on short setups in VXST/VIX ratio pops to >1.00, I'm not counting on anything huge happening here volatility-wise before the end of the year. UVXY             , for example, has done nothing but trundle lower to repetitive all-time lows in light of a bit of risk bleeding out of the market here with tax reform passage being painted as "pretty much a sure thing" by the end of the year. Consequently, I'll probably just confine myself to putting on my weekly long put vert, at this point in VXX             , since UVXY             appears doomed for a near- or sub-10 print by year-end, at which point it may become a little bit harder to work due to its size ... .

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