Option Block 381: AMZN Sinks while MSFT Soars

Trading Block: A mild day on the street.  Stocks rally after 3M, Caterpillar profits beat estimates. Exclusive: U.S. stock options markets agree to need for trading halts on big moves. Earnings Report.

 

Odd Block: Puts trade Cisco Systems, Inc. (CSCO), calls trade in ZIOPHARM Oncology Inc. (ZIOP), and buy-write trades in SPDR S&P Metals and Mining ETF (XME)

 

Xpress Block: It’s time once again for the Trading Patterns guessing game!

 

Mail Block: Listener Questions and Comments

• Question from George Orsos - Dear Sir or Madam, I would like to ask you to inform me about the cash account. I heard that a trader, who has cash account, can trade unlimited number of day trade even if his or her fund is bellow $25 000. Is it correct? I look forward to your response.
• Question from Tony - Mark, love the show. I was lucky enough to have a fairly significant weekly put spread position in DIA this week (long puts at 166-167 and short at 161-162.5). I was making good money on Wednesday and ran into a problem. The bid ask spread on my long puts were so wide, I could not close out, roll or adjust the trade. I thought about buying futures contracts to hedge my delta risk and suck out the theta. Is there any other strategy to adjust or hedge a successful trade without getting haircut on the executions? Should I just calculate the extrinsic value add a spread and put in a limit order for the long leg? Is it always harder to close out a spread trade in a volatile market...i.e. if i want to close a spread trade does one person have to want to enter the same trade? Or can the trade go to two counter parties?

 

 

Around the Block: More earnings around the corner.