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Volatility Trading Digest: Event Related Spreads & Put Sales

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Event Related Spreads

Expecting an upside bias we set up our RT Spread Scanner and found some possible suggestions in the oil and gas sector that we are now calling event related due to the supply uncertainty from the problems in the Gulf of Mexico.

Here are three long bull call spread ideas.



 



 
Event Related Put Sales

Here are three more that are in or related to the oil and gas sector with implied volatilities high enough to make interesting put sales.

 






If you consider implementing the put sales be prepared to take the stock by assignment in the even they close below the strike prices on expiration. In this event, the plan would be to sell calls against the long stock.

Trend Continuation

Here is one that has just broken out above its previous high.

Las Vegas Sands Corp. (LVS)

 

The recent breakout may be related to the media attention created by the scheduled grand opening of the Marina Bay Sands in Singapore on Wednesday June 23. If so, it could pull back and retest the breakout at 26. While the implied volatility is now declining here is another put sale idea.

 

An alternative strategy would be to combine this put sale with a bull call spread.

There is support in the 24 area that could be used as the SU (stop/unwind) in the event of a decline. Another strategy would be to take the stock by assignment in the event it closes below 24 on the September expiration and then sell calls against the assigned long stock.

 
Technology Value

Some value opportunities are beginning to appear in the technology sector. If this group is about to turn around here are two interesting call spread ideas to consider.

 

With a bullish put-call ratio of .25, you could use a close below the last pivot at 9 as the SU (stop/unwind).

 


With a very bullish put-call ratio of .20, you could use a close below support at 9 as the SU (stop/unwind).