Articles from the Experts

Option Block 419: The Great Weekly Option Trading Debate

Trading Block: The market off just a fraction. Call option trades target return of $100 US crude oil. Options traders getting paid following Buffett to Kraft takeover.

Odd Block: Calls trade in EOG Resources Inc. (EOG); puts trading in iShares Emerging Markets ETF (EEM), and; puts trade in Market Vectors Semiconductor ETF (SMH)  

Xpress Block: Alex discusses many of the functions in the OX mobile platform.

Mail Block: Listener questions and comments

• Question from Joseph Anthony - I appreciate your input on the following issues. I know that I am not alone in dealing with these questions. I continue to be confused on which weekly strike to choose when trading for a one or two day hold. I realize if issue does not move in my desired direction by Tuesday afternoon I risk theta decay and it increases rapidly as week progresses toward expiry. My thoughts in trading weeklies is to trade the ATM or most liquid on Monday and Tuesday. Trade one strike in the money on Wednesday and Thursday and trade two strikes in the money on Friday. I have read many articles recommending to trade DITM options (+-90) for a close to $1 for $1 effect. But the DITM are often quite illiquid and expensive. My model generates 75%+ success rate in choosing issues that move according to my projections and I choose to use weekly options to trade a small universe (AAPL, AMZN, GOOGL, AND NFLX) but I am still struggling to definitively choose the "right" option. My model is predicated on an immediate move and if it does not transpire in a bar or two I tighten my stop or exit. I am looking to trade naked or use strips and straps in order to implement my models signals. Thank you in advance.

• Question from NJay - What should I be using to value my index options properly, the cash index or the actual underlying futures? Thank you for all your insight.       

Around The Block: Earnings today (before the bell): ConAgra Foods, Lululemon Athletica Inc., Accenture, Cosi, Inc. After the Bell: GameStop Corporation.  Friday: BlackBerry Ltd, Carnival Corp.

Option Block 417: Big Boy AAPL and Crazy VIX Settlement

Trading Block: The Dow welcomes Apple. Informed traders prefer options says academic research. Options market sees bottom in gold with urgency on hold at Fed.  Earnings today (before the bell): Lennar (LEN); after the bell: Nike.

Odd Block: Unusual traders in Sina Corp. (SINA)

Xpress Block: Alex discusses covered writing strategies

Mail Block: Listener questions and comments

• Question from Mark Brant - Thanks to the crew for a great show and for answering my question! When the cat was away the mice did play! ...@Options Do block trades show up on the retail brokerages position ledgers as volume and OI... AAPL 1M ATR is at the top of its 20yr range so I bot April straddles for way less!
• Question from Nico - Do I need to understand the Black-Scholes formula to trade options?
• Question from James Mile - I am currently reading the options books by McMillan and Natenberg (thanks for the great suggestions). The latter chapters of some of these books get pretty deep into the mathematical underpinnings of the options market. I have to wonder if most of the people who are trading these products really understand this stuff. Do you share my concerns that there are potentially millions of people out there slinging calls and puts that really don’t understand how any of this stuff works? Great program. Glad OX/Schwab is a supporter of such fine content.

Option Block 415: How to Play the Lottery

Trading Block: Nasdaq enters energy futures trading to compete with CME, ICE. Lumber Liquidators’ stock soars after company offers business update. Shake Shack gets burned: Stock falls 7%. Earnings today before the bell Dollar General reported record fourth quarter and full year 2014 financial results. After the bell includes Aeropostale Inc. and ULTA Beauty.   

Odd Block: Calls go up Steel Dynamics, Inc. (STLD), combos trade in Pinnacle Entertainment, Inc. (PNK), and combos trade in International Business Machines (IBM)

Xpress Block: Alex discusses the OX Idea Hub.

Strategy Block: Some fun stories about not playing the lottery.

Mail Block: Listener questions and comments

• Question from Mark Brant - Do block trades show up on the retail brokerages position ledgers as volume and OI?
• Question from Fred - What is the best way to use an option to speculate on the S&Ps intraday movement?

Around the Block: Watching the sovereign 10-years, VIX, higher Dow. What about the price of oil? Will the contagion spread? Fed. Fed. Fed. Can we get off the road to nowhere?

Option Block 413: When Not To Use Options

Trading Block: A quiet day on the street today. ISE preps third options exchange. Expect more volatility in oil says Exxon CEO. NASDAQ near 5000 amid ECB plans, big pharma deal. Earnings today include: Costco, Kroger.

Odd Block: Calls roll in T-Mobile US Inc. (TMUS), big moves in Canadian Solar Inc. (CSIQ), and OTM puts trade in Inc. yet Corporation (INCY).

Xpress Block: Alex discusses the OX Virtual Trade Account and Schwab Mobile

Mail Block: Listener questions and comments.

• Question from Alejandro Vergoza - When is it right to use options and when is it right to use the stock instead?
• Question from Jay - If the market is really falling out of bed what are some good strategies to take advantage of that movement while also minimizing option decay?
• Question from Fred - Is there a problem in the options market with novice options traders not understanding the risks they are taking? Do you think that will that lead to regulatory action down the road?

Around the Block: Earnings tomorrow includes Staples. February jobs report comes out on Friday. Can non-farms save the bulls?