Trade Ideas | 9/5/18

September 5, 2018

I'm back from vacation with more trade ideas! Some of these ideas are "good-to-go" and others are more "wait-and-see," and I'll denote that as necessary. All of these ideas pertain to the October expiration. Charts can be found in the gallery below.

 

$EWZ - IV is extremely high in the Brazil ETF right now and the options are liquid so there's no reason you shouldn't be trading this. Right now an Iron Condor with short strikes around ~0.20 delta will give you a range +\- 13% ish away from the market and for a good net credit. 

 

$USO - While IV percentile is still above 60 for $USO, looking at the past year's IV levels, I wouldn't say that it is "high." Regardless, I think an Iron Butterfly at these levels is a decent enough trade.

 

These next two ideas are for stocks with options that have what I call "nickel ticks," meaning that the options are priced in intervals of 0.05, not 0.01. If this bothers you, stay away, but if you don't mind...

 

$INFY - IV is also high in this stock while the price is fluctuating near the highs. I think this is a good candidate for an Iron Butterfly, since the breakevens will be above recent highs and below recent support levels, albeit slightly.

 

$ITUB - Italy is trading in tandem with emerging markets at the moment, so this trade is similar to the one in $EWZ. However, because IV is so high, it's hard to ignore. I would say only trade this if you want more exposure to emerging market IV without sinking it all into one trade, as in $EWZ or $EEM.

 

Now, here are some stocks to watch and how I would position:

 

$AMD - extraordinarily overbought, perhaps the fastest rising stock in the market right now. Wait for some weakness before positioning Delta short. If you're feeling confident, buying OTM puts instead of a put debit spread ATM will result in greater returns if the stock corrects hard.

 

$AAPL - the world's first trillion dollar company is showing no signs of slowing down - yet. When there is some weakness in $AAPL, I'd sell premium and be Delta neutral. Doing it now would be ill-advised because there is certainly a reason to have a directional bias. However, I don't think any pullback would be long-lived, so I don't recommend any kind of short position here.

 

$VALE, $BABA, $EWW - IV is high in these but the stocks are near some key support levels. Wait for a bounce before going delta neutral.

 

 

 

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