More names

Vol *did* act as a short-term leading indicator - more precisely, when I showed lots of attractive names, the market was ready to start moving.

This week, there are 4 more additions:

1) DUK
2) EIX
3) EXPE
4) VIP

Vol as a predictive tool

Over the last year or so that I have been tracking the performance of my vol picks, I have found something interesting - I find more ideas when the market is about to make a significant directional move, and less when it is about to quiet down. For instance, in late Jan, I could not find any names of any profitable significance, and the set of interesting names has been sporadic since then.

Well, imagine my surprise, then, when today I find a veritable bonanza of vol names. Here is the list:

1) TEVA
2) PBCT
3) BIIB
4) TXN
5) ANF
6) NOVL
7) GT
8) ADCT

That's a lottery, so to speak. Not to mention the various ToTY's that have shown up every once in a while.

Here's to more volatile markets in the days and weeks ahead, when, ostensibly, the markets really should be quieting down for the summer!

Biotech bonanza

2 more excellent candidates for profitable option investing are BIIB (Biogen Idec) and BMRN (Biomarin Pharmaceutical).

BIIB is likely to exhibit a $10 move, and BMRN about $6. On a percentage basis, these moves are quite large relative to the implied vol, so the options are a buy.

ToTY 3

yes, its early, but good, liquid macro volatility trades don't show up too often. Bovespa vol was a winner, because the index moved up strongly in a short period of time. This ToTY, however, will require a slightly longer timeframe (possibly 3 months or slightly more), but the rewards should be pretty good.

And the idea is - Buy GBP (British Pound) vol. Implieds are near 10%, and over 3 months, we need only a 4% move to breakeven - the likely move is a minimum of 6.5%, and a maximum of 11%, by my work.

Back of the envelope, then, the likely fair vol is 16 at a minimum, or a gain of 6 vegas. Enough to qualify as a ToTY.

TEVA

is reporting tomorrow. Either tomorrow, or within the next month, TEVA looks ready to move to new highs or to as low as 38. The downside potential is measurable - the upside, less so.

QCOM

Intermediate term volatility in QCOM is cheap, and the stock is ready to move to either 56 or 32ish - a big move from the current 42 level.

Since this trade may take somewhat longer than usual, I am going with July vol.

Bovespa

The ETF for Brazil - EWZ has made a new all-time high. The ToTY has done reasonably well, and its time to unwind the entire position into this spike.

ToTY update

Bovespa Vol has been a winner. We have had a 10% straight up move in less than a month. Whether there is more room to go or not is debatable, hence, its time to take partial profits.