The Option Block

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 360: Return of the Voice

Trading Block: Some of the Thursday selloff coming back into the market. Where could the VIX go in the next few weeks? VXST trading below the VIX cash.

Odd Block: Ratio roll calls in Select Sector SPDR Financials (XLF), a ratio time "Tosaw Stupid" in SM Energy Co. (SM), size ITM call buyer with stock in AmerisourceBergen Corp. (ABC), and closing call roll in NQ Mobile (NQ).

Xpress Block: A little technical hiccup with Idea Hub. Amazon got a lot of attention today.

Strategy Block: Doing stuff - put spreads, managing risk and staying bullish.

Around the Block: Earnings still left: Activision, Groupon, and Disney. All on 8/5.

Option Block 228: Mini Mania

Interview Block: Today's Guest: Kevin Davitt, Global Execution & Futures Broker at RCM. RCM will be hosting a webinar this Thursday night.

Trading Block: There was a bit of a selloff in the market due to news coming out of Cypress, which is rekindling fears of a Europe crisis. Today is the day: Mini contracts begin trading today. What is the OX procedure and policy for Minis?

Odd Block: Ratio strangle trades in Neonode, Inc. (NEON), put buyers active in Globe Specialty Metals, Inc. (GSM), puts trade in Reality Income Corp. (O), and calls trade in Swift Transportation Co. (SWFT).

Xpress Block: Cypress, Minis and Gold were all popular topics today at OX. When will we see Minis in the Idea Hub?

Around the Block: Watching a silent rally in Apple. VIX cash creeping up. Cypress still making headlines. Minis and their affect.

We’re back with another episode of The Option Block brought to you by tastytrade.

On this episode, we:

• Debate the latest in the markets
• Talk about the most active equity options for the day including RIOT, MSTR, MARA, COIN
• Look at earnings season volatility including HD, MARA
• Examine the latest unusual options activity in IAG, JOBY
• Discuss hedging a portfolio with index options and the importance of beta
• And much more

With your hosts:

• Mark Longo, The Options Insider Media Group
• Andrew "The Rock Lobster" Giovinazzi, The Option Pit
• “Uncle” Mike Tosaw, St. Charles Wealth Management