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Year: 2020

Trade ideas

Today’s trade idea for option traders: Axalta Coating Systems (trade closed)

trade idea for option traders

It’s not the best known stock held by Warren Buffett’s Berkshire Hathaway. Axalta Coating Systems operates in two segments – performance coatings and transportation coatings. The COVID-19 pandemic led to a dramatic slump in industrial activity. Hence, sales alone in Axalta’s performance coatings declined 36% in the second quarter. However, the good news is that its markets seem to be recovering. CEO Michael McGarry referred to “strengthening demand for our automotive original equipment manufacturer and general industrial coatings.”

The stock is up more than 55% in the last six months, and the recent Q3 2020 earnings showed a company in recovery mode. This gives us an opportunity for another trade idea to collect option premium which I will show you in this article, folks.

 

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Trade ideas

Today’s trade idea for option traders: MGM Resorts International (trade closed)

trade idea for option traders

MGM Resorts was another victim of the Covid19 pandemic and the lockdown (like the most casino stocks). And with its most important areas like Las Vegas, Macao, etc., casinos seem now to have a long way to to reach the profit levels before the pandemic. But since the positive news from Pfizer and Germany’s Biontech, casino stocks are beginning to recover.  Also, The American Gaming Association points out in its Commercial Gaming Revenue Tracker for Q3 2020, that the gambling industry is recovering better than assumed. At least, the sports betting and iGaming are chipping in to mitigate the losses from table gambling. Maybe this recovery phase ist just a brief one as new lockdowns are possible again. But for option traders, there opens an short term opportunity for an option trade on MGM. 

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Trade ideas

Today’s trade idea for option traders: Sinclair Broadcast Group (trade closed)

trade idea for option traders

During the Corona crash in March – April 2020 the stock of Sinclair Broadcast Group (SBGI) fell from $30 to around $12. After the two-months-recovery the stock began to move sideways and is swinging around the level of $20. In spite of the negative earnings announcement in Q3 2020 (an operating loss of $4.18 B) there nevertheless comes a certain momentum upwards which gives to option traders an opportunity for a new trade on Sinclair Broadcast Group. So let’s dive into it, folks.

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Options

What is IV Percentile and how to use it?

Although the IV Rank is a very useful tool to determine whether the implied volatility of a stock or commodity is high or low, it has a weak spot. This weak spot occurs for example always when the implied volatility spikes and generates outliers. This happens, for instance, during a crash. In this case you would get wrong conclusions considering only the IV Rank. The other weak spot of the IV Rank is that with this tool you can also get false conclusions although there are no outliers. One prominent example for this situation is the value of the VIX, the Implied Volatility Index. To make it better understandable, let’s first take a look at some examples. After this, I will continue with the answer for the question: “What is IV Percentile and how to use it?”. (more…)

Options

What is IV Rank and how to use it?

what is iv rank and how to use it, iv rank, what is iv rank

One of the most important data for an options trader is the implied volatility. The higher the implied volatility the higher would be the price of an option. But using the implied volatility as a naked figure has a weak spot. When you take a random stock and take a look at its implied volatility, would you be able to determine whether it’s high or low, especially compared with the volatility of the past? Actually, you wouldn’t. Maybe you would be indeed able to do this when you observe a stock for a longer period of time. But this would apply just to one stock and not to every stock or commodity. And here comes a solution which is called the Implied Volatility Rank or just the IV Rank. (more…)

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