I shall do a full analysis of PAY as a potential earnings play. I am passing without analysis on GDXJ; the implied volatility is too low for my taste.
I shall be keeping an eye on Dough posts with the goal of shadowing those I find interesting. It is part of my December learnings project.
The Federal Open Market Committee meets this week, the first such gathering since the election, to announce its decision on interest rates: Raise them, or let them stand?
I’ll be considering two prospects on Monday: An earnings play on PAY and a volatility play on GDXJ.
Tim Bovee, Portland, Oregon, Dec. 10, 2016
Utilities Select Sector SPDR Fund (XLU)
Update 1/9/2017: This trade, shadowing one on Dough, proved to be winner. Implied volatility fell through the period I held the position. That, combined with time decay, produced the profit.
Shares rose by 0.6% over 31 days, or a 7% annual rate. The options position prduced a 110.5% yield on debit for a +1,301% annual rate
The trade shadows one placed by Dough trader Fauzia. Implied volatility is lower than I do with my own trades, but let’s give it a try.
iShares China Large-Cap ETF (FXI)
Update 1/4/2016: FXI fell over the period I held this position, and as expiration approached the trend was moving toward a loss. I exited for a profit, although a slim one, of 5.1% of the maximum potential.
Shares declined by 4.9% over 26 days, or a -69% annual rate. The options position produced a 1.5% yield on debit for a +22% annual rate.
The Goldman Sachs Group Inc. (GS)
Update 1/9/2017: GS’s implied volatility did indeed fall, although the price traded within a narrow range.The lower IV combined with the working of time decay in my favor produced a tidy profit.
GS shares rose by 0.9% over 31 days, or a +10% annual rate. The options position produced a 110.5% yield on debit for a +1,301% annual rate.
GS has relatively high implied volatility after a sharp price rise over the past month and I’m looking for an IV reversion to the mean.
I’ll be looking at GS as a volatility play. See Friday’s Prospects for my reasoning.
By Tim Bovee, Portland, Oregon, Dec. 9, 2016
I’ll take a look at GS as a volatility play. It stands below the 50th percentile of its annual range, but at the peak (so far) of its most recent broad movement.
I have no earnings plays coming up after the close on Friday or before the opening on Monday.
By Tim Bovee, Portland, Oregon, Dec. 8, 2016
Out of 62 earnings announced scheduled from Dec. 12 through Dec. 16, I have identified six that I shall look at further on their respective action days.
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