Live: Wednesday, March 14, 2018

3/14 – 2:10 p.m. New York time

I entered one position, on X, and exited none.

3/14 – 11:30 a.m. New York time

I have entered a bear position on X. Of the other two symbols under consideration, S has an overly low price, around $5, and RRC somewhat low, below $20.

3/14 – 9:55 a.m. New York time

I have six potential trades leading up to earnings announcements, and I also have a problem.

The six are HAS, PSX, RRC, S, VRTX and X, all of which publish earnings between April 23 and May 2. My goal is to take advantage of the pre-earnings volatility in order to profit from directional options vertical spreads.

The problem is that the metrics I have used to distinguish higher implied volatility from lower implied have broken down. My practice has been to compare IV to the annual range and the most recent movement. The rapid market declines of late January into February produced IV spikes. Therefore, by comparison with those highs, all symbols that I’ve checked have relatively low IV.

What is to be done? For now, I’m turning to an alternative measure: The level of implied volatility compared to other prospective trades; that is, a sort, with the highest IV at the top.

By that measure, the top three prospects are X, RRC and S, and they shall be my focus for potential trades today. By coincidence, those three also are the symbols that have IV above 40%, and also have the highest volume.

It seems to be a reasonable compromise to meet changed circumstances.

By Tim Bovee, Portland, Oregon, March 14, 2018


Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.

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