Trade Ideas | March 20, 2018

March 20, 2018

 

Implied volatility has, obviously, come down since the "crash" back in early February. That means that opportunities are not plentiful right now, and that you should be very selective on what you trade and you should dial down risk.

 

Here's what's on my radar as of today, but I would wait until after tomorrow's Fed meeting before doing anything:

 

$FB - This stock is experiencing some headline risk because of a data "breach," "leak," or whatever you want to call it. There are increasing concerns over privacy of information and that is causing a fear among investors of increased regulatory oversight, which may affect Facebook's advertising business. The stock is becoming quite oversold which gives me a reason to have a long bias, but I don't want to catch a falling knife. I think a Bull Put spread is in order over the next couple days as the dust clears, so to speak. Make sure to be trading contracts that expire before earnings in May.

 

$BABA - This company reports earnings I assume in early May, since they last reported in early February. This stock is known to take some wild 20+ point swings but ultimately trend nowhere and just chop around. Implied volatility is currently just above the 50th percentile and I'm thinking about a small iron condor for either the April or April-27 expiration, depending on liquidity. Again, waiting for tomorrow's Fed meeting, although unless some big change happens, I don't see Alibaba being materially affected.

 

$EEM - This is the iShares emerging market ETF. Price action today has been interesting; as of writing, it's well off the highs of the day but still up > 1%. Again, IV is just above the 50th percentile and I have no reason for a directional bias, so I would want to trade a small risk delta neutral strategy or an Iron Condor.

 

 

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