Latest news with #optionsTrading
Yahoo
21 hours ago
- Business
- Yahoo
Amazon Ratio Spread Targets A Profit Zone Between 190 and 200
A put ratio spread is an advanced option trade and generally not suitable for beginners, but it can have its place within an option portfolio. It is generally considered a neutral strategy, although it has the ability to make a profit in up, down and sideways markets. Unusually Active Put Options Signal Long Straddle Opportunity After Zoetis Downgrade Geopolitical Volatility Puts Iamgold (IAG) on the Radar for Risk-Tolerant Bulls Amazon Ratio Spread Targets A Profit Zone Between 190 and 200 Get exclusive insights with the FREE Barchart Brief newsletter. Subscribe now for quick, incisive midday market analysis you won't find anywhere else. Yes, it can make money no matter which way the market goes, the key is the timing! The strategy involves buying a number of put options and selling more put options further out-of-the-money. The trade is placed when the trader thinks the underlying stock will be stable or slowly move lower and finish around the short put strike at expiry. A fall in implied volatility will benefit the trade and it can also be profitable if the stock moves up early in the trade. The big risk with the trade is a sharp move lower early in the trade. Let's look at an example using Amazon (AMZN). Amazon Ratio Spread Example Buying the July 18 put with a strike price of $200 for around $2.50 and selling 2 of the July 18, 195-strike puts for around $1.70 would create a put ratio spread. As we are selling 2 contracts at $1.70 the trade results in a net credit of $0.90 which is $90 premium. This is the maximum gain above a stock price of $360. Basically, all the puts would expire worthless and the trader keeps the $215 premium. A tent-shaped profit zone exists between $190 and $200 with the maximum gain occurring at $195 and is around $600. This is what the trade looks like as of today: You can see the main risk in the trade is a drop in price early on. The blue line is the profit and loss at expiration and the purple line is the T+0 line. T+0 just means 'today'. So, we don't want the stock to get into the profit tent too early. What about in three weeks' time? How does the trade look then? Looking a lot better for any price above $195. One advantage of this trade type is it takes advantage of option skew. Notice the contract we are buying has lower volatility (65.16%) than the contract we are selling (64.45%). Buy low, sell high. Not that the trade starts with a delta of 9, which means the initial position is roughly equivalent to being long 9 shares of AMZN stock, although this will change as the trade progresses. Company Details is one of the largest e-commerce providers, with sprawling operations spreading across the globe. Its online retail business revolves around the Prime program well-supported by the company's massive distribution network. Further, the Whole Foods Market acquisition helped Amazon establish footprint in physical grocery supermarket space. Amazon also enjoys dominant position in the cloud-computing market, particularly in the Infrastructure as a Service space, thanks to Amazon Web Services, which is one of its high-margin generating businesses. Amazon has also become a household name with its Alexa powered Echo devices. Artificial Intelligence backed Alexa is helping the company sell products and services. The company reports revenue under three broad heads' North America, International and AWS, respectively. Amazon targets three categories of customers - consumers, sellers and website developers. The Barchart Technical Opinion rating is a 56% Buy with a Weakening short term outlook on maintaining the current direction. Long term indicators fully support a continuation of the trend. Summary This strategy should move fairly slowly, unless there is a sharp drop in the stock price. As the trade involves naked options, it is not recommended for beginners. You can do this on other stocks as well, but remember to start small until you understand a bit more about how this all works. Mitigating Risk With any option trade, it's important to have a plan in place on how you will manage the trade if it moves against you. A stop loss of $200 might make sense in this scenario. If Amazon is below $195 near expiry, there will be assignment risk If you have questions on this strategy, please let me know. Please remember that options are risky, and investors can lose 100% of their investment. This article is for education purposes only and not a trade recommendation. Remember to always do your own due diligence and consult your financial advisor before making any investment decisions. On the date of publication, Gavin McMaster did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Sign in to access your portfolio
Yahoo
3 days ago
- Business
- Yahoo
Implied Volatility Surging for Opera Stock Options
Investors in Opera Limited OPRA need to pay close attention to the stock based on moves in the options market lately. That is because the July 18, 2025 $2.5 Call had some of the highest implied volatility of all equity options today. Implied volatility shows how much movement the market is expecting in the future. Options with high levels of implied volatility suggest that investors in the underlying stocks are expecting a big move in one direction or the other. It could also mean there is an event coming up soon that may cause a big rally or a huge sell-off. However, implied volatility is only one piece of the puzzle when putting together an options trading strategy. Clearly, options traders are pricing in a big move for Opera shares, but what is the fundamental picture for the company? Currently, Opera is a Zacks Rank #5 (Strong Sell) in the Internet – Content industry that ranks in the Bottom 13% of our Zacks Industry Rank. Over the last 60 days, no analyst increased the earnings estimates for the current quarter, while one has dropped the estimates. The net effect has taken our Zacks Consensus Estimate for the current quarter from 29 cents per share to 27 cents in that period. Given the way analysts feel about Opera right now, this huge implied volatility could mean there's a trade developing. Oftentimes, options traders look for options with high levels of implied volatility to sell premium. This is a strategy many seasoned traders use because it captures decay. At expiration, the hope for these traders is that the underlying stock does not move as much as originally expected. Check out the simple yet high-powered approach that Zacks Executive VP Kevin Matras has used to close recent double and triple-digit winners. In addition to impressive profit potential, these trades can actually reduce your risk. Click to see the trades now >> Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Opera Limited Sponsored ADR (OPRA) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research Sign in to access your portfolio
Bloomberg
4 days ago
- Business
- Bloomberg
Israeli Shekel's Calm Under Threat as Options Signal Turmoil
Options traders are bracing for the Israeli shekel to experience wilder moves than at any time since the start of the Gaza war in 2023 — a hedge against any breakdown in the resilience it's so far shown against the nation's multiple ongoing conflicts. Implied volatility, a bet on currency turbulence reflected in one-month derivatives, jumped to the highest since March 2023 this week, surpassing levels seen when Hamas attacked Israel in October that year and triggered a multi-front conflict. That's left the shekel as the most volatile currency in the world, excluding the Russian ruble, according to Bloomberg rankings.
Reuters
12-06-2025
- Business
- Reuters
Top Wall Street bank pitches options play to ride potential Indian rupee rally to 83
MUMBAI, June 12 (Reuters) - Goldman Sachs' sales and trading desk is recommending an options play on the Indian rupee that will pay off if the South Asian currency rallies to 83 per U.S. dollar over the next nine months. The call — effectively a bet on a 3% appreciation in the rupee from its current level of 85.50 — is underpinned by India's improving macroeconomic fundamentals, a revival in foreign inflows, lower oil prices, and the potential for a U.S.-India trade deal. The rupee has lagged behind its Asian peers this year, showing little response to the dollar index's more than 9% decline. Goldman Sachs is recommending buying a 9-month USD/INR binary put option with a strike price of 83. A binary put option is a type of digital option that pays a fixed amount if the currency pair settles below the strike level at the expiry of the contract. "We chose 9-month tenor for the trade as INR typically tends to appreciate during India's financial year end", which concludes on March 31, according to a sales note from Goldman Sachs. In support of their constructive outlook on the rupee, Goldman Sachs analysts highlighted that India's GDP growth accelerated to 7.4% year-on-year in the March quarter from 6.4% in the previous three months. Their monthly activity tracker indicates that consumption remained robust in April. The investment bank's note pointed to a return of foreign equity inflows, with over $4 billion flowing into Indian equities over the past two months. Goldman expects this trend to continue and potentially accelerate, driven by improving corporate earnings. The possibility of a U.S.-India trade deal and lower oil prices could be other catalysts for the rupee. Goldman said that a rollback of the 10% reciprocal tariff would be seen as a positive development for Indian risk assets and the rupee. While the U.S. had initially proposed a 26% levy on Indian shipmemts, the country-specific tariffs have been paused until July 8. On oil, Goldman's commodities research team expects Brent crude to average $60 for the remainder of 2025 and fall to $56 in 2026. Lower energy prices are a net positive for oil-importing countries like India and could support the rupee.
Globe and Mail
31-05-2025
- Business
- Globe and Mail
Quant Signals Point to High-Probability Trades in UNH, CVX and SOUN This Week
In the film 'Enemy at the Gates,' an early scene set in the midst of the Battle of Stalingrad shows the classic Soviet meatgrinder attack: essentially, it's an attempt to overrun enemy positions with massive scale, irrespective of the cost. Because this brute Russian logic applies throughout the underlying society, it's a human rights catastrophe. But applied to data? The statistical implications are impregnable and that's the beauty of the Playmaker forecasting model I've been using over the past month-and-a-half period. Fundamentally, the discipline of trading — specifically options trading — focuses on probabilities. Because the framework is short term and defined, the emphasis is less on the 'why' of a particular asset or security and more on the 'how': how much, how fast and, most importantly, how likely. Generally, there are two ways of approaching the probabilistic dilemma. The standard American or western approach is to attempt to find signals and patterns in the continuous scalar signal that is the share price. Here, stochastic calculus and partial derivatives are deployed to estimate future price ranges. However, with the advent of artificial intelligence, analysts no longer need to estimate probabilities; they can directly count the datapoints in brute fashion at blistering scale and speed. But in order to make data comparisons across vast ranges of time, it's important to compress this demand profile into its most elemental, binary form. And that's what the Playmaker does, count tens of thousands of market breadth datapoints — or sequences of accumulation and distribution — to identify highly probabilistic trades. I'm not here to tell you why I think these stocks may move higher. Frankly, that's irrelevant. No, I'm letting the data guide the discourse. Below are three stocks to put on your watchlist for the coming week. UnitedHealth (UNH) Let's start with a controversial idea in the form of UnitedHealth (UNH). The healthcare giant has just about hit every branch of the ugly tree. You don't need me to rehash the same tired narratives. What you might not be aware of is that from a market breadth perspective, UNH stock may be signaling a reversal pattern. In the past two months, UNH stock has printed a '4-6-D' sequence: four up weeks, six down weeks, with a net negative trajectory across the 10-week period. In 66% of cases, the following week's price action results in upside, with a median return of 2.88%. Should the 4-6-D sequence pan out as projected, UNH stock could potentially reach over $310 within a week or two. What makes this setup so intriguing is that, as a baseline, the chance that a long position will be profitable over any given week is only 54.49%. Therefore, the 4-6-D shifts the odds firmly in favor of the bullish speculator. With the above market intelligence in mind, I'm looking at the 305/310 bull call spread expiring June 20. This transaction involves buying the $305 call and simultaneously selling the $310 call, for a net debit paid of $260. Should UNH stock rise through the short strike price at expiration, the maximum reward is $240, or a payout of over 92%. Chevron (CVX) Thanks to widescale societal changes combined with economic challenges, circumstances have not been favorable for the oil industry. Since the start of the year, supermajor Chevron (CVX) has struggled for traction, with CVX stock losing almost 6%. For context, the benchmark S&P 500 — which isn't exactly storming up the charts — is up half-a-percent. Still, market breadth data provides a different impression of the hydrocarbon juggernaut. In the past two months, CVX stock printed a 3-7-D sequence: three up weeks, seven down weeks, with a net negative trajectory across the 10-week period. Notably, this relatively rare pattern generates a 70.27% probability that the following week's price action will rise, with a median return of 2.6%. On Friday, CVX stock closed at $136.70. If the implications of the 3-7-D pan out predictably, it may soon reach over $140. Now, Chevron exemplifies why a Barchart Premier membership is worth its weight in gold. With Premier access, traders can drill down the available bull spreads for the June 20 expiration date. Specifically, the 138/140 bull spread is enticing because $140 is a legitimately rational target and the payout is robust at over 104%. In my opinion, the aforementioned spread is favorably mispriced. SoundHound AI (SOUN) I don't mean to rehash an idea that I already discussed just a few weeks ago. Still, SoundHound AI (SOUN) is awfully intriguing because of its relatively low share price and high popularity among retail traders. This presents on occasion a favorably combustible mix that, if timed correctly, could generate significant gains in a short period. A few weeks ago, I mentioned that SOUN stock had printed a 3-7-D sequence: three up weeks, seven down weeks, with a net negative trajectory across the 10-week period. At the time, I mentioned that the pattern generated a 58.33% probability that the following week's price action will result in upside, with a median return of 13.58%. This time around, we're back at a similar juncture with a 3-7 sequence. However, the twist is that the 10-week period has resulted in a positive trajectory. The 'U' iteration of the 3-7 has materialized only six times since SoundHound's public market debut. And in all six cases, the following week's price action swung higher, with a median return of 15.08%. Generally, I take 100% success ratios with a huge grain of salt. Still, the 3-7 sequence, whether of the up or down variety, ultimately favors the bulls. If you're willing to play the numbers game, the 10/11 bull call spread expiring June 20 is awfully tempting.
