Volatility Trading Digest - Smooth Sailing 2.0, Volatility Opportunities
Volatility Trading Digest - Smooth Sailing 2.0, Volatility Opportunities
IVOLopps
Trend Continuation
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First among many such companies in the trend continuation category this week, we have a quality manufacturing company with extensive international business that benefits from the declining dollar.
Direct from the "Options Data Analysis" and the "Rankers & Scanners" sections of our home page we offer this ìStock Trend Analysisî suggestion as a regular feature for your consideration. The selection criterion includes an Exponential Moving Average, Relative Strength Index and the Chaikin Money Flow indicator and more.
Trend Continuation
Caterpillar Inc. (CAT)
CAT is scheduled to report earnings October 21. The analysts' consensus estimate is 1.08 compared to last year's actual earnings of .64. The Historical Volatility is 21.61 and the Implied Volatility Index Mean is 32.76 for an IV/HV ratio of 1.26. Compared to some previous quarters the implied volatility has not risen very much as the stock has broken out above resistance at 72.50. As trend continuation trade, consider this long call spread.
In the event of a sell off after the report use a close below the last pivot at 76.51 as the
SU (stop/unwind).
iShares Silver Trust (SLV)
In this post, we discussed Silver Wheaton Corp. (SLW) 26.63 as the long side of a hedged pair trade. Since then the iShares Silver Trust has gained upside momentum and is now performing better. Consider this precious metals continuation idea with a Historical Volatility of 20.74, up from 16.67 last week, and an Implied Volatility Index Mean of 31.13, up from 28.23 last week. The put-call ratio is a bullish .32.
Use a close back below the gap at 21.64 as the SU (stop/unwind). A close below this level would also be a close below the current upward sloping trendline from the August 24 low of 17.48.
Las Vegas Sands Corp. (LVS)
With a Historical Volatility of 38.98 and an Implied Volatility Index Mean of 49.36 for a favorable IV/HV ratio of 1.27, consider these two put sale ideas with good edge.
Use a close below the current upward sloping trendline at 33 as the SU (stop/unwind).
Here are two in the budding agriculture sector that broke out Friday to the upside. There is a good chance they will correct from the breakout highs so waiting a few days may be worthwhile.
Mosaic Co. (MOS) HV 38.02, IVXM 44.62, IV/HV ratio 1.17
Use a close below the last pivot at 57.95 as the SU (stop/unwind).
PowerShares DB Agriculture (DBA) HV 24.11, IVXM 24.30, IV/HV ratio 1.01
Use a close back below the last pivot at 26.57 as the SU (stop/unwind).
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