Articles from the Experts

Option Block 363: The Last Train to Pallookaville

Trading Block: The market rallied about half a handle. Putin talks up the street. Bonds: TLT & IEF. Berkshire A crosses $200,000 a share. Red Robin taking it on the chin today.

Odd Block: Some unusual activity in TSRA, NM, and NKTR

Xpress Block: The social networking triplets (Twitter, LinkedIn and Facebook) were all active today. Amazon surprisingly active as well.

Mail Block: Listener questions and comments

• Question from Everett: Really enjoy the show, and find it incredibly useful in helping break down the complexities of more technical trades.  That said, is it possible to point to 3 key technical-focused factors that you believe to be the most important factors for consideration when trading biotech options around a catalytic event (E.g FDA marketing approval). I doubt an example is necessary, but to clarify, I don't mean examining the strength of the company’s clinical trial submissions in anticipation of an FDA decision; rather, are there 3-5 stock/options-focused factors (E.g. implied volatility, Delta, Vega, etc.) that you would recommend analyzing in anticipation of trading options around a biotech's upcoming catalytic event?  I recognize these factors might be different based on the strategy one chooses to employ, but if possible, what would say those 3-5 factors should be just generally, if I am willing to employ a diversity of strategies? Thank you in advance for your time and consideration, Everett
• Question from Joe: Option Block Question: Greetings.  My question deals with order fulfillment on a spread.  During the wild few days that TWTR had a few months back the IV shot through the roof, the vol skew went way out of whack, and it was possible to put on long spreads for even money or credit...but I had to leg into the spread because my broker said "I could not get filled for even money on a spread."  Which leads to my question, how are the smaller lots (I usually trade 10-50 contract lots) handled on the market with respect to their fulfillment?  Logic and the current state of technology leads be to believe that like strike prices are grouped together and sold on the market in order to obtain a better leverage when trying to obtain a sale price.  If this is not the case, how does fulfillment take place with spreads?
• Question from MrLami: Hello...What parameters can one use to scan for unusual options activity real-time (OR) what is the thought process behind it (I can use my intellect or practice for how I can start spotting these myself)? Is there a way to receive alerts for "Unusual Activity" section on this website?

Around the Block: Bonds. US global affairs. Ukraine and Iraq.

Option Block 361: The Happy Bottom

Trading Block: A little bit of a down day on the street, but nothing like last week. Zynga and Groupon after the bell. ZNGA closing south of the 3 handle. VIX futures trading below the VIX cash. Grains and wheat options and the Russia embargo.

Odd Block: Combos trade in Flotek Industries Inc. (FTK), puts trade in Gerdau SA (GGB) wheel trade.

Xpress Block: LULU has been running hot, but cooled down during the day. Three-to-four leg tickets coming in September. IdeaHub adding 8 names into premium harvesting. What is we see of a Whaley product?

Mail Block: Listener questions and comments

• Question from Reuben Brooks - A few months back, on one of your shows, I think option block, Uncle Mike from RCM was talking about some kind of special offer for individuals in the "wealth accumulation" phase. You jumped in and pointed out that we listeners would be "stupid" to not take advantage of this. So, I am trying to not be stupid. I was not able to follow up right away on that (and in fact I have fallen behind on my podcasts), but I would like to find out more. Can put me in touch with Mike? If you have any other resources for me, i would love to hear it. I am 25, an engineer, I am intrigued by active trading but a bit dubious of technical analysis, and trying to find more edge, and use options to exploit that (either long-term or short-term). Have been trading options in 1 lots to learn. Your podcasts have been a HUGE help in blasting through the steep initial learning curve.
• Question from Christian C Caropolo - If you buy an option on a company that ends up merging or being bought out with another. What happens to the option you own?
• Comment/Question from Kaiserdog76: Thanks for the Option Block update today. Missed Longo’s presence but Sebastian did a decent job. Worlds shortest Odd block, but after looking on the web page I found the "Juicy" unusual activity I crave!! That VNDA trade is intriguing. There are some heavy OTM open interest in VNDA all over the strikes and going well out into the future. I do love me some Bio-Tech!  So today I have two stories for you. One of failure and one of success. Let’s start with the failure. Back when PBYI was around $49-50ish I had bought 100 shares in small chunks. When the stock popped to $70 I thought how smart I was and sold every last share. For a decent profit. I know you are thinking well how is that failure? That 4-5 thousand dollar investment would be worth over $20,000 now, so yeah. It can be hard to sleep at night FML for real. My second tale is a much happier one. I own shares on WIN and love the dividend and super well defined uptrend the stock has been in for quite some time. I wanted leverage though. So I took the proceeds from my dividend on WIN and financed some OTM call options on WIN. Well on Tuesday when WIN announced the IRS had "Okayed" them spinning some of their assets into a REIT. WIN popped and I realized over a %1,200 percent gain that day. Now I was able to sell those calls and lock in some fantastic profit all while not selling a single share. So you win some and you lose some I guess. Thanks for everything you guys do! Love the underground radio!! Mark- Kudos again for covering Barclay's and the HFT shakedown that has been going on. It is the biggest thing no one seems to be talking about. Please keep it coming!
• OX Question - Maker / Taker goes away in the UK. Are we next?

Around the Block: What will the US do, and how will it affect the markets?

Option Block 359: Thursday, Bloody Thursday

Trading Block: A bloody day on the street. A default, a bankruptcy, and bad Fed news. Massive FLEX trades went up today. Professor Whaley and the VIX term structure

Odd Block: Revisiting a position in iShares MSCI Taiwan Index (EWT)

Xpress Block: Alex discusses about the changing metrics in portfolio margining and the risk tools.

Strategy Block: Uncle Mike highlights his strategy using the Long SPY Long Oct 190 Put

Mail Block: Listener questions and comments.

Question from Steven, San Diego, CA: Listing to the July 24th show on the 25^th. So, with the benefit of hindsight, I can you see the majority of the activity in AMZN being discussed was pretty much completely wrong.  It was down, not up, and way past the expected move. So that brings me to the question. Is there any study or statistical evidence that shows that the unusual activity should be followed? Or should be faded? Really think the retail crowd are chasers, which works until it doesn't. The trend is your friend? Bah-humbug! It makes for interesting press, but is it really actionable? Rather than glorifying, would your listeners be better served to be cautioned on this topic rather than enticed? Love the show. Sometimes customer of the Pit and RCM because of the show.

Around the Block: Non-farm payrolls: could it possibly turn around the market?

Option Block 356: CME and NFLX Earnings Rundown

Trading Block: A relatively quiet day on the street, after a crazy week. Earnings so far: NFLX after the close, CME (the stealth Apple) after the close. Positioning for Apple tomorrow.

Odd Block: Call buyers trade in Steel Dynamics (STLD), call spreads buyers trade in Orexigen Therapeutics, Inc. (OREX), calls buyer trade in Crocs, Inc. (CROX), call spreads, rolls selling Dec, buying March trade in CytRx Corp. (CYTR).

Xpress Block: Herbalife taking a pounding. News on The Walk Limit tool.

Strategy Block: An expiration day lesson from Uncle Mike Tosaw and how to avoid unnecessary weekend risk.

Around the Block: A quick earnings review in CME, NFLX. MSFT and APPL tomorrow. On 7/24: AMZN, F, GM.