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Call Options Plays
Put Options Plays
Strangle Options Plays
VIX None CVX

New Calls

CBOE Volatility Index - VIX - close: 23.95 chg: +0.51 stop:

Company Description:
The CBOE Volatility index or VIX measures implied volatility for the broader market and is commonly referred to as a "fear gauge" for the market.

Why We Like It:
If you really think the market is going to bounce for the next week or two (or three) then don't buy calls in the VIX - at least not yet. If the market does bounce then the VIX will trend lower. On the other hand if you do think the market is going to bounce but want some sort of hedge in case the market crashes then consider buying some calls on the VIX. When the market sells off sharply the VIX tends to spike. At significant market bottoms, when investors are throwing in the towel, the VIX tends to spike to 30 or more. Right now the trend in the VIX is higher. Even though the DJIA is at new relative lows and the SPX is nearing its lows for the year the VIX is saying we aren't anywhere close to a bottom yet. We are suggesting call positions but consider this a highly speculative position, especially if you choose to buy the July calls. We would prefer the August 30s, which gives us more time.

We have two targets. First target is $29.50. Second target is $34.00.

FYI: We're not listing a stop loss. This is a lottery ticket style of play. Either we "win" if the market sells-off or we don't win.

Suggested Options:
We are suggesting the July or August calls. Keep in mind that Julys expire in less than three weeks.

BUY CALL JUL 25.00 VIX-GE open interest=76158 current ask $1.60
BUY CALL JUL 27.50 VIX-GY open interest=72946 current ask $0.95
BUY CALL JUL 30.00 VIX-GF open interest=98137 current ask $0.55

-or-

BUY CALL AUG 27.50 VIX-HY open interest=36402 current ask $1.45
BUY CALL AUG 30.00 VIX-HF open interest=43463 current ask $0.95
BUY CALL AUG 32.50 VIX-HZ open interest=14488 current ask $0.65

Picked on June 30 at $ 23.95
Change since picked: + 0.00
Earnings Date 00/00/00
Average Daily Volume = n/a million
 

New Puts

None today.
 

New Strangles

Chevron - CVX - close: 99.13 chg: +1.33 stop: n/a

Company Description:
Chevron Corporation is one of the largest integrated oil and gas companies on the planet.

Why We Like It:
I still think that oil is going to see some significant swings this summer and that's going to move the oil stocks. CVX has been under performing oil lately but shares have been consolidating sideways for more than a month. The range is narrowing and that suggests a breakout sooner rather than later. We're suggesting a strangle to capture any big moves in CVX over the next two months. The puts cost more than the calls so you will have an uneven number of contracts as you try to keep your investment balanced on either side of the trade. We would try and open positions in the $99.00-101.00 zone.

Suggested Options:
A strangle involves buying both an out of the money call and an out of the money put. We don't care what direction the stock goes as long as it moves one direction. If it moves far enough one side of our trade will rise enough to pay for the entire trade and make a profit.

We are suggesting the August options below. Our estimated cost is $2.20 (based on these prices we need 2 calls per 1 put). We want to sell if the puts $3.85 or if the calls hit $1.90. More aggressive traders may want to aim higher.

BUY CALL AUG 110.00 CVX-HB open interest=1771 current ask $0.55
-and-
BUY PUT AUG 90.00 CVX-TR open interest= 384 current ask $1.10

Picked on June 30 at $ 99.13
Change since picked: + 0.00
Earnings Date 08/01/08 (confirmed)
Average Daily Volume = 13.3 million
 

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