What do I do next week with $AAPL $VXX $UVXY $IBB $GOOGL and $SPY?

This week on Options Action, the traders and the ChartMaster talked about a few new names and then reviewed a few old trades. 

AAPL – Dan Nathan is short term bearish on AAPL but really is bullish in the longer term recommending a selling a naked put, specifically the March 16 150 put for about $2 or $200 per contract. 

I like this, but I can’t trade naked short puts in my retirement account with limited margin so I’ll have to do it as a spread. I could sell the 150 put with the Mar 16 expiration date and buy the March 23 140 put option for $70 to create a credit spread of $130.  

I know this is being a bit cute but buying the 140 put that expires one week later gives me a bit more flexibility in managing the trade. No matter if I was to buy the !40 put expiring on Mar 16 or the next week I will be required to put up $1000 in margin requirements for each contract spread.  (the difference between 150 and 140). 

$USO – these guys are bearish and bullish on the dollar. I agree, but I had sold my USO position last year as Fidelity informed me they were going to charge $300 per year to generate K1’s on MLPs starting in 2018 and USO was the only thing that I had that qualified as an MLP. 

However, I do own SCO (short crude oil) which comprises a whopping 0.3% of my speculative portfolio and is down about 37% from purchase. I had bought it as a hedge and will sell it if there is a big drop in the USO. 

$SPY – Mike Khouw recommended a trade in the SPY buying a March 16 275/265 put spread for $265 per contract spread.  

Again, I like this but I think I would use a calendar put spread buying the March 16 275 put for $511 and selling the Feb 16 175 put for about $300. This will cost you about $211. With my trade if on Feb 16 the SPY is above 272 you can roll the short call a total 6 times between then and Mar16. Great trade providing this downturn is short. 

$GOOGL – Mike had a GOOGL call spread he put on last week buying the Feb16 1185/1270 call spread for $2650. 

I put on something different, and I’m glad I did. I bought a butterfly that expires in March, a month later. I bought the 1210/1270/1300 call butterfly for $1,428. Mine will break even at 1225 on March 16. Mike’s will break even at 1211 on Feb 16. I’m glad to have that extra month. I could sell mine now for about $400 but will probably give it some time and maybe sell a credit spread before that date. 

$IBB– Dan had bought a March 120-135 call spread last week for about $225. I am already long quite a few calendar call spreads and a fewer number of calendar puts, so I didn’t add anything. I may add an iron condor tomorrow to extract some extra value from the calendar spreads I have. 

Tomorrow should be interesting! 

Do you have any questions about options or specific names? Send me an email or leave a comment.