Published: Aug. 30, 2013, 5:09 p.m.
Option Block 272: Presidential Rope-A-Dope, or Bags of Money
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Trading Block:\xa0 Labor Day weekend is nearly upon us. VIX cash above the 16-handle. Jobless claims are down, as expected. \xa0 HFT and algos appear to have had a negligible impact on the vol of major futures contracts.
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Odd Block:\xa0 Puts trade in Garmin ltd. (GRMN) Calls buyers in Taiwan Semiconductor Mfg. (TSM).
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Mail Block:\xa0
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\n- Question from Mike - I have been watching Dollar General for a while. What do you mean by the seller could be using an up-tick in volatility going into earnings for a better sale?
\n- Question from Tim C. -\xa0Is it true if I sell a time spread that OX will margin me as if I am naked short the longer-term option? If so I do not understand that? Why wouldn\u2019t they treat it like a spread until the nearer-term option expires?
\n- Question from Avega - Why would I ever trade a back spread? Why waste money on a reverse ratio - say 3x2. Then I am just net long one contract - can I just save money and buy the one?
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Around the Block: Watch out for the weekend risk! Perhaps scoop some cheap premium on friday. Syrian developments?