Option Block 564: Winter Is Coming

Trading Block: Dow drops amid weak China data and rate fears. Will it be a cold winter? Will that spike energy prices? WTF Fed? Airline earnings Odd Block: Calls and puts trade in Johnson Controls Intl (JCI), call buyers in Blackstone Group LP (BX), calls trade in Tenet Healthcare Inc (THC) Strategy Block: Mike Tosaw discusses income strategies. Mail Block: Listener questions and comments Question from TraderOnki Re: ULTA Guidance Increase - Wednesday Close: 238.97 - Thursday morning news: Ulta Beauty (ULTA) announced that is expects to report third quarter EPS of $1.35 to $1.38, up from prior expectations of $1.25 to $1.30. - Thursday Open: 246.35 - Stock traded as high as 266.74 (over 10%) as I write this 13:20 EST Looking at the yesterdays OI and Vol books - Oct 21 240 calls traded 1,066 contracts - Oct 21 230 puts traded 993 contracts - Oct 14 230 puts traded 680 contracts By looking at todays OI things I can say about yesterdays Vol - Most of Oct 21 240 calls were opening trades - Most of Oct 21 230 puts were closing trades - Most of Oct 14 230 puts were opening trades Would you please share some of your thoughts and conclusions about these trades? Do you think it was just a wide long strangle? Why do you think they closed the Oct 21 puts and opened more Oct 14 puts? Were they more certain about the timing of the news and wanted to decrease their insurance by buying cheaper puts??? Thank you in advance for your time. Question from Meravol - Interesting piece in current Modern Trader about selling break-even strangles. Have you seen? What are your thoughts of this technique? Is it me or are there new techniques for selling strangles all the time that always tend to blow out? Aren't you better off selling IC or IB due to limited risk? Around the Block/This Week in the Market: Oct 14: PPI, Retail Sales, Consumer Sentiment Earning Highlights this week: Friday - Citigroup, JP Morgan, PNC Financial Services, Wells Fargo