Striking Options: Earnings Season Starts and Crude Oil Rallies

[Music] welcome to striking option the show reveals the options you have to better navigate markets I'm Jeff Kilburg and I'm joined today by Scott Fowler hey there Scott Jeff how are you well I'm doing great happy New Year to you 2019 is upon us it's really easy to see how stocks have bounced since Christmas Eve that dreadful Christmas Eve what is this do – is this just an oversold market or is there more I I think there's a lot to it I mean there's still a lot of risk headlines out there but we did have a massively oversold market technicals maybe took hold there and now we'll see what happens coming up into earnings season interesting you bring up earnings season I also want to have a quick comment for me on the Fed Fed seems to change policy a little bit a little more flexible possibly in 2019 is that right that's certainly what the speak was you know a few weeks ago and we'll see if they hold to that if that you know a little bit more that dubbers stance really takes hold all right Scott let's get his first flight around all right let's do it earnings season soon well you hit the nail on the head we are certainly interested to see this earnings season a lot of expectations JPMorgan kicking off any season for the bank's next Tuesday how are you approaching earnings season Scott you know Jeff I'm really looking to capture the recent bounce that we've seen in the e-mini S&P 500 and a way to potentially do this is by selling a week three which is January 18th expiration call spread in the e-mini S&P 500 so what I would be doing is I'd be selling the 2600 strike week 3 call and buying the 2650 week 3 call ok this spread would allow an investor to collect about 15 ticks or about 750 dollars well I really like the way you're defining your risk here and it's also interesting to see the way you're approaching the markets we just saw those oversold conditions to Christmas Eve and now potentially we're talking about overbought condition this call spread that you're selling really defined your approach and it's interesting you price this trade example out on the e-mini S&P 500 trainer in 2574 and that Ed the Moneyball was still just a tick under 20 what are your thoughts about volatility here so volatility I think is still it's a little bit low off of the rally that we've seen I think that's going to tick up a little bit we'll see what happens moving forward fantastic shout and please remember these are trade examples not trade recommendations let's move into the second lightning round absolutely let's do it oil slick you want to talk about volatility holy smokes we have seen just tremendous and sensational volatility and crude oil retesting $50 table what are your thoughts are in the oil patch wow we have really seen that rally come off the bottom there and you know it's really coming down to is it supply is a demand what what is going to take over here but it's really the volatility that we've seen it's anyone's guess know you bring up a great point and we're seeing that the money volatility at nearly 50 so the way I want to approach this trade example Scott it's a little different mentality 2018 we saw so much exaggeration in any specific futures contract that we saw it was always exaggerated so even though I don't think above $50 in crude oil will be sustainable short term I do want to buy a call spread and the cross spread I'm looking at is the week three January 18th expiration next Friday just like yours I want to buy that 52 call and I want to sell that same expiration week 354 call this call spread is is going to be 370 dollars to purchase but at the end of the day that wti February contract was trainer on 49 33 and I see the fact that just in case everything defies logic like it in 2018 we'll see a little more exaggeration in this move Jeff that you just hit the nail on the head you know 2018 everything did defy logic so you know if we do see that continued increase in crude I really like the way you set that up all right Scott well thanks for joining us here in 2019 we also want to thank you for tuning a striking options and please tune in every week is we will continue to strike options

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