Trade Ideas | 9/12/18

September 12, 2018

Here are your trade ideas for the day, broken down by category:

 

High Implied Volatility, Delta Neutral

 

$PM - This stock has been getting beat up, and IV has risen because of that. Today though, the stock is up 4% as of writing and could be bucking the trend, but I doubt it. I would wait a day or two for the price to settle before selling an iron condor for either October or Oct-26 expiration.

 

$GDX - A similar story to be told about the gold miners ETF. Downtrend causing increasing IV, big up day today, wait a day or two for the price to settle before selling an Iron Butterfly or what I call a "tight" Iron Condor, where you sell both the ATM call and put in order to better center the ULP between the breakevens of the position and be more Delta neutral.

 

 

Low Implied Volatility, Delta Neutral

 

$XRT - this ETF is trading sideways near the 52 week highs. IV is very low in the 9th percentile. My research has shown that selling Iron Butterflies in very low IV is a profitable strategy. The net credit taken in for the Oct-26 spread is pretty good, seeing that the breakevens lie above recent highs and below recent lows.

 

$XOP - this ETF is trading sideways but in a different way than $XRT. There is more movement day to day, but overall, the price has remained around 41.5. IV is low but not crazy low, either way, and Iron Butterfly or "tight" Iron Condor should suffice here, with a good breakeven range, as long as oil doesn't surge to new highs.

 

 

Directional Trades

 

$INTC - semis are getting beat up as of late, but when selling gets extended, there is usually a contrarian opportunity. Today we're seeing bullish action in the stock while being quite oversold and trading below the lower Bollinger Band. In my experience, this signals a reversal to at least the 20 day moving average. The ITM/ATM debit call spread looks good for such a move.

 

$WDC - again a story of a downtrend getting a bit overdone. This stock put in a fresh 52 week low today roughly 50% below the 52 week high reached in March of this year. Yikes! Anyway, the stock is having a big up day today, is oversold on RSI, and trading at the lower Bollinger Band. I think a short term reversal to 60 could happen, but because IV is quite high at the 70th percentile, I think selling puts would be a better choice over buying calls.

 

 

 

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