Open Position Summary

A tough day for my long calls today. I added 4 more positions, all calls, to my portfolio. 15 underlying's in total now. P&L is up slightly at +$22, however, this is mainly due to the gains from the $CYH strangle. Only 4 out of the 15 are profitable (26%) so I'm lucky the losses aren't worse.

TradeOpenDaysP&L
VIAV Long Call24-May-1616-30
CYH Long Strangle25-May-1615210
HBI Long Strangle31-May-169-65
ANF Long Put31-May-16934
RF Long Call1-Jun-168-40
ATVI Long Strangle2-Jun-167-8
CY Long Call2-Jun-167-38
GOGO Long Put6-Jun-163-30
VLO Long Put6-Jun-16334
RBS Long Call8-Jun-161-20
WLL Long Put8-Jun-1610
PBI Long Call9-Jun-160-40
GGAL Long Call9-Jun-160-10
MT Long Call9-Jun-160-25
PLD Long Call9-Jun-16050

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Unbelievable Volume in $RBS

Unbelievable volume going through the $7 strike for $RBS!

The entire June and July months only have 2,700 outstanding open interest combined yet 80,000 contracts traded through the $7 strike price. 40k in June and 40k in July.

However, both implied and historical volatility is fairly high at 55% but the volume traded is very significant.

RBS Volatility

Still, I am placing an order to buy the July $7 strike. I will keep you posted on the updates.

Two New Trades for 2nd June

Long $11 Calls in $CY and Long Put Spread in $ATVI.

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$RF Long $10 Calls

RF Chart for 1st June

Bought 10 calls of the June17 expiration in $RF on the open. There is massive interest in the $10 strike that I noticed in my option scans. Only two and a half weeks to go but the volatility is relatively low.

$VIAV Making a Perfect Start

VIAV Chart for May 31st

Bought 10 $7 June17 call options on VIAV due to a volume alert on the option scanner. So far, the stock's path is picture perfect.

16% Return for May Expiration

In total I made $169 in profits using around $1,000 in risk capital for the trades closed out on the May expiration.

I took positions in 12 stocks for 14 trades in total, as I made two adjustment trades in MRO and ETE. VALE was the biggest winner with a gain of $360 and the biggest loser was EMC, losing $160.

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$LC CEO Dumped

$LC Stock Tanks 35%

Massive volumes went through the $8 puts in the weeks leading up to Lending Clubs dismissal.

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From +$300 to -$100

Market Close May 9

Net P&L continues to slide, down after today's session to -$110. Not much action on the options currently showing gains and the options that are out-of-the-money continue to bleed value due to time decay. The lesson for these type of earning announcement trade ideas is that I should get out in the days post announcement instead of waiting for option expiration.

I took on a new position today; long $10 HIMX call, which expires this week. They release earnings Thursday.

Open P&L -$110.

TradeOpenDaysP&L
EMC Long Put13-Apr-1626-140
ETE Long Call19-Apr-1620155
MRO Long Call19-Apr-1620-71
KEY Long Call20-Apr-1619-72
MS Long Put20-Apr-1619-65
VALE Long Put21-Apr-1618153
JNPR Long Put21-Apr-1618-24
KMI Long Call28-Apr-1611-92
IPHI Long Call29-Apr-1610-45
NG Long Call29-Apr-1610-60
MRO Short Call29-Apr-161052
CTL Long Put2-May-16795
HIMX Long Call9-May-1604
Read more...

May 9, Top 10 Option Volume Opportunities

SymbolTypeStrikeExpirationVolumeOpen Int
RIGPut91606179,364633
LCPut51605206,410607
SYFPut281606177,505771
JWNCall52.51606175,218588
TEVAPut52.51605134,283606
TEXCall251605207,4071,152
WFTCall616061712,5171,978
WFMPut291606175,062937
SNICall651605203,624682
VRXPut281605132,972564

Full list available from Option Scanner Pro

Make Time Decay work for you

Time Decay Graph - shows the erosion of value accelerates past the 30 days mark

As options approach their expiration date, their value can erode quickly. If you're long out of the money options then this effect can be quite dramatic; you can lose money even when the market moves in the right direction.

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HRB Move an Inside Job?

HRB Stock tanked on Wednesday the 27th after the company reported a disappointing tax season. Outlook remains bleak for the stock and their next report is due out in June.

However, it appears someone knew of the pending downward move in the stock.

Option scanning tools showed that the $23 put option had significant volume trade the day before the stock plummeted. 19k options traded through one strike, which saw the puts outnumber the calls traded by 5 to 1. The next day, HRB drops 13.56%.

The Puts rose 386%

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Using the Delta to Hedge Options

Delta measures the theoretical change to the value of an option as the underlying changes. This means the option's value is tied to the underlying by the amount of "delta" the option theoretically has. Traders can then offset the risk of the opiton by trading an appropriate amount of shares in the underlying security

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Pricing Options with the Binomial Model

The Binomial Model is the model of choice for American styled options - that is, those options where you can exercise any time up until the expiration date. Even though Black and Scholes was the original option pricing model, the Binomial Model is probably more widely used than B&S.

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Option Pricing

There's lots of programs out there that will charge you a monthly fee for a calculator that prices up option contracts. Not here!

I've put together a little something in Microsoft Excel that just does this, plus prices up all of the Option Greeks.

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Option Combinations

Browse our comprehensive dictionary of option combination strategies. Learn how option combinations give you the ultimate flexibility with your investment decisions.

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Scan thousands of stocks and ETFs for profitable option opportunities in minutes. Option Scanner Pro will tell you where the huge option volume action is taking place.

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