Aug 30, 2013
Option Block 272: Presidential Rope-A-Dope, or Bags of Money
Trading Block: Labor Day weekend is nearly upon us. VIX cash above the 16-handle. Jobless claims are down, as expected. HFT and algos appear to have had a negligible impact on the vol of major futures contracts.
Odd Block: Puts trade in Garmin ltd. (GRMN) Calls buyers in Taiwan Semiconductor Mfg. (TSM).
Mail Block:
- Question from Mike - I have been watching Dollar General for a while. What do you mean by the seller could be using an up-tick in volatility going into earnings for a better sale?
- Question from Tim C. - Is it true if I sell a time spread that OX will margin me as if I am naked short the longer-term option? If so I do not understand that? Why wouldn’t they treat it like a spread until the nearer-term option expires?
- Question from Avega - Why would I ever trade a back spread? Why waste money on a reverse ratio - say 3x2. Then I am just net long one contract - can I just save money and buy the one?
Around the Block: Watch out for the weekend risk! Perhaps scoop some cheap premium on friday. Syrian developments?