Articles from the Experts

Option Block 321: Old School Bullish Paper

Trading Block:  A big selloff on the market today. Angela Merkel yells at Putin. A big day for the banks. The numbers are in! $21.64B derivatives traded in 2013. $12.22B of futures. $11.7B in equity names. VXST options coming in April. More exchanges are on the way - for better or worse.

Odd Block: Some very interesting paper in IRDM, AG, TSM, and XRAY.

Xpress Block:  Three new OX products are nearly ready for release, IRIS - Integrated Rapid Information System, Idea Hub for Schwab mobile and Idea Hub for Futures.

Mail Block: 

• Question from Illin' - Are the new Mt. Gox IOUs essentially the first Bitcoin derivatives?
• Question from Joseph Riggs - Has OX ever thought about creating its own options product, that it could then promote to its customers? Is that even possible (legal), or are new products the sole domain of the exchanges? Is that why there are so many? They are all trying to get into the new product biz. 
• Question from Ian Getz -  Basic question, is there HFT in the options market as there is in the equities?

Around the Block:  Still keeping an eye on Ukraine, as well as China banking. There might be some quite literal weekend risk. 

Option Block 319: Why Would Anyone Do That?

Trading Block

Indexes are at the same level as this morning but the S&P 500 could hit another record close. VIX high on the continuing drama in Ukraine. Staples falls on disappointing quarterly numbers. Federal Reserve data released on Thursday. Ukraine and Nat Gas. Jobless claims Thursday - Nonfarms Friday. 

Odd Block

Puts trade in James River Coal Company (JRCC), puts trade in CommonWealth REIT (CWH), buy-write traders in MeetMe (MEET) and long close in SPDR KBW Regional Bank ETF (KRE)

Xpress Block

Alex clears up the confusion caused by the upcoming dividend of the Qs. Soda Stream lit up the tape late in the session.

Mail Block

Question from J. Charles - My question for the all-star panel is about analytics platforms. I have heard you guys mention a variety of different suites, live LiveVol. I pretty much just use my brokers tools and they work fine for me. I can pull up the options chains, click on the strikes and options I want to trade, click on the option to enter a trade and all that stuff. I can also pull up skews and research. It really does the job for me. What is ti that these other platforms offer you that would be worth paying $200+ a month in extra fees? Sorry but I am no an OX customer - although the show is pulling me in that direction. Hope that does not hurt my chances of being featured on the program.

Comment from Bryan Nic - @Options Just pulled up OB on your app. Hundreds of episodes waiting for me. Thats serious streaming goodness. Commute is covered now. Thx.

Question from Avent - Bought 50 ZNGA Mar 5 calls for $.17 last month. They are sitting around $.60 now. What should I do - sell? Sell half and let the rest ride? Roll to April 6 calls for $.28? Take the stock and then write covered calls against it? I am still mildly bullish on ZNGA, but worried about a near term correction.

Question from Phillip Gregory, Dallas, TX - I like your advice about writing puts to get long stock. But I keep hearing people warning me about gap risk. What exactly are they talking about? Is this something unique to options or are limit stock orders just subject to gap risk?

Option Block 317: The Old Goldman Bait and Switch

Trading Block: A mild rally on the street today. JCPenney on the move, jumping as high as 26%, its greatest one-day percentage gain in least 30 years! Tesla announced on Wednesday its big expansion plans will be partially funded through a $1.6 billion bond issue. Goldman’s investor day study.

Odd Block: Call buyers in American Axle and Manufacturing (AXL), both calls and puts trade in CBL & Associates Properties, Inc. (CBL).

Xpress Block: Some hedging going on: VIX call buying, SPDR put buying. Customers seem to be getting nervous.

Mail Block: The all-stars will take your questions now.

• Question from Concerned Spreader: I have a question for the mail block on the option block program. I would like to know if there is a special procedure for entering ratio-type spreads on the OX website. Whenever I try to enter any spread trade, from the XSpreads ticket, it always defaults to the same size for each leg. When I try to change that, it gives me a popup saying that each leg must be the same size. I wanted to buy some calls but did not have enough capital in my account to also sell the equal number of puts to finance them. So I wanted to trade what amounted to a risk reversal on a ratio. I tried simply adding a leg to my call trade ticket without success. I tried the combo, straddle, butterfly and condor tabs in the XSpreads ticket also with no luck. I suppose my only alternative is to execute the legs separately and then incur multiple ticket changes. Perhaps OX need to ass a ratio tab to the XSpreads ticket? Please let me know if I am missing something obvious.
• Question from NTaleb - Why do you think so much options unusual activity is focused on calls instead of puts? There are just as many negative surprises as positive surprises lurking out there.
• Comment from Chitim - Just used the app to listen to option block during my flight to San Fran. Always had problems streaming your stuff on my HTC One because Android sucks for streaming podcasts. But this worked like a charm! I downloaded it ahead of time and it was ready to go when we took off. Definitely preferable to the inflight movie. Also, why does Andrew always sound so surprised to be on the show? Keep them coming!

Around the Block: There is a disconnect between realized and implied vol. Russian tough talk. SPX closing high…why can’t people accept the market at this level? Is it time to sell S&P? Volatility in the sovereign debt market is astounding.  Astounding!

Option Block 315: The Great Iron Fly Vs. Condor Debate

Trading Block: Market up 0.5%, Facebook buys WhatsApp for $19B, and Groupon takes a wild ride after hours

Odd Block: Put buying in Veeco Instruments Inc. (VECO), puts trade in iPath S&P 500 VIX Short Term ETP (VXX), put spreads trade in EcoLab Inc. (ECL), and put spreads trade in iShares MSCI Emerging Markets (EEM) ETF.

Mail Block: Alex wanted another go at Snowbird's question from last week.

• Question from Infimy - What is the ASPs favorite options analytics suite?
• Comment/Question from Hack3 - Bitcoin imploded after you guys trashed it on Options Block. Coincidence?
• Question from John King - @Options Could you discuss preference of Iron Fly to regular butterflies, ICs, etc? Always neutral or OK with one side in money? Timing?