Skip to main content

The following options trade has a weekly expiration, not monthly. WEEKLYS are options that are listed with approximately one week to expiration.

Here is some info from the CBOE on weekly options that might prove useful.

I feel like every morning for the last year or so I have to comment on "euro worries." The nagging doubt about sovereign debt (our own too) is a real weight and it saps the global growth story. If Caterpillar (CAT) is selling tractors, can things be that bad? The floods are not helping (not diminishing the tragedy there) either, so for a market looking to set new highs for the year there are scant new reasons. Our great earnings story has pretty much played out for the first quarter and most investors are awaiting the results of the natural disasters on this quarter's earnings. From a single trade perspective this morning, I want to look at a simple volatility arbitrage a bit unconnected to the broader equity market.

For those who follow my weekly (or most weekly) volatility reports from, I have been commenting on the iShares Silver Trust ETF (SLV). From the Aqumin Landscape below in Bloomberg you see the SLV leading the active ETF's in 10-day implied volatility outpacing the 30-day volatility (green building in the corner). Building height is one-week total return, so SLV enjoyed a little pop after the implosion from the great silver heights.

Click to see the Aqumin View here:

Aqumin Landscape

The weekly volatility is about 12 points over the June volatility, and with the market slipperiness, I think this sets up for a decent short-term time spread using the Weeklys. We buy June to protect against more market upheaval and sell the Weekly against it to take advantage of decay and the implied volatility spread.

Trades: Buy to open 2 SLV June 33 calls for $2.40 (49% volatility) and sell to open 2 SLV Weekly (May 27) 33 calls @ $1.64 (62% Volatility), with SLV trading $34.18 on an -8 delta.

This trade is Risk Level 1, and given the Weeklys, we should be closing on or near the 27th. Looking for a about $0.25 on this one.

TheStreet Recommends

Andrew is the Executive Vice President of Business Development for Aqumin, where he participated in the design team to apply AlphaVision to the financial markets. For 15 years he was a member of the Pacific Exchange and the Chicago Board Options Exchange, where he actively made markets and traded in both equity and index options. At the same time Andrew started and ran the Designated Primary Market Marker post for Group One, Ltd. on the floor of the CBOE where it became one of the highest grossing posts for the company in 1992 and 1993. While in Chicago and San Francisco, Andrew was instrumental in creating and managing a training program that allowed Group One, Ltd. to dramatically increase its trader count over an eight year period. He left Group One, Ltd. to co-found Henry Capital Management in 2001.

Special Invite to the Floor of the NYSE: Join Skip Raschke, Jill Malandrino and OptionsProfits for exclusive access to the NYSE trading floor. Skip and Scott Redler of T3Live will provide informative presentations on trading and the markets in the Exchange's main boardroom. Following the session, we will head to the trading floor for a mock trading session and cocktail reception. This is an amazing opportunity that you will not want to miss!

OptionsProfits For actionable options trade ideas from a team of experts, visit TheStreet's OptionsProfits now.

Readers Also Like:

>>VIX: A Relative Indicator

Readers Also Like:

>>AKAM: Bottom Fishing

Readers Also Like:

>>Is Yandex the Next High-Flying Internet IPO?