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 ... .
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 ... .