SteadyOptions is an options trading forum where you can find solutions from top options traders. Join Us!

We’ve all been there… researching options strategies and unable to find the answers we’re looking for. SteadyOptions has your solution.

There’s Volatility To Be Found….. In Turkey


Since the correction in US markets from February to April, things have really quietened down since. Volatility is back to a 12 handle, stocks are rallying and all seems well with the world. The falling volatility is great for long term investors, but as options traders, we love high volatility and it’s becoming increasingly hard to find once again.

One ETF that caught my eye this week for having very high implied volatility is the Turkish ETF – TUR.

 

After bouncing 3% on Wednesday and then dropping over 5% on Thursday, this ETF has just hit a fresh 12 month high in implied volatility. So there is volatility to be found in this market after all.

image.png

 

I tend to be more of a technical trader. I’m aware that there’s some political turmoil going on in Turkey and it’s certainly a risky place to invest. The Turkish Lira has been in freefall since late February and has fallen 28% since then. Ouchy!

 

According to Market Watch:

 

“On Wednesday, the Central Bank of the Republic Turkey raised its late liquidity window lending rate by 300 basis points on Wednesday, in a surprise move that put a halt to the lira selloff — at least for now. The lending rate now sits at 16.5%, compared with 13.5% before.

 

The central bank has been operating in a peculiar environment given that Turkey’s inflation has been hitting double digits and its currency keeps sliding to historic lows. Moreover, the government of President Recep Tayyip Erdogan has been critical of the central bank, calling for lower interest rates.”

 

On the technical side of the equation, we’ve got an ETF that is getting pummelled, dropping from near $47 in late January to just above $31 now. RSI has been hovering around 30 for the last few weeks and there was also a death cross back in mid-April.

 

So, we have political issues and a badly broken chart, but I do like the look of that high vol.

 

With that said, let’s look at a couple of trade ideas:

 

BULLISH TRADE IDEAS

 

Poor Man’s Covered Call – This is one of my favorite strategies and one that I wrote about recently here. This trade is buying the 80 delta January 2019 call and selling the 36 delta August calls. Risking only $645 for a potential profit of nearly $350 is not a bad risk reward ratio. Particular as the breakeven on the downside is just over 5% below the current price.

 

image.png

 

Cash Secured Put – This trade is shorter term to try and take advantage of the accelerated time decay. Being cash secured a trader would need to have $3100 set aside in case of assignment, so the return potential in percentage terms is not nearly as good. But, the trader could always roll out to the next month to avoid taking assignment.

 

image.png

  

NEUTRAL TRADE IDEA

 

Short Straddle – With high volatility the premiums are quite juicy, so traders how prefer a neutral stance can generate some good income if they think the stock will stay flat and volatility will drop. Earlier in the week I shared the results of a delta neutral option strategy using a short straddle with a delta hedge. The delta hedge ended up costing me money but it did means less price risk. Looking at the June options again in this example to take advantage of the higher rate of time decay. This trade starts delta neutral, so it would be up to each individual trader whether or not to delta hedge.

 

image.png 

 

BEARISH TRADE IDEA

 

Bear Call Spread– Traders thinking that the woes will continue for this ETF could trade a bear call spread. Using the July 33-34 spread gives traders the chance for a 53% return on capital with a 6% margin for error on the upside.

 

image.png

 

Whatever your opinion, there is always a way to express it via the options market and these are just a couple of examples. Either way it’s sure to be an interesting couple of weeks for this ETF!

 

Trade safe!

Gavin McMaster has a Masters in Applied Finance and Investment. He specializes in income trading using options, is very conservative in his style and believes patience in waiting for the best setups is the key to successful trading. He likes to focus on short volatility strategies. Gavin has written 5 books on options trading, 3 of which were bestsellers. He launched Options Trading IQ in 2010 to teach people how to trade options and eliminate all the Bullsh*t that’s out there. You can follow Gavin on Twitter. The original article can be found here.

 

What Is SteadyOptions?

Full Trading Plan

Complete Portfolio Approach

Real-time trade sharing: entry, exit, and adjustments

Diversified Options Strategies

Exclusive Community Forum

Steady And Consistent Gains

High Quality Education

Risk Management, Portfolio Size

Performance based on real fills

Subscribe to SteadyOptions now and experience the full power of options trading!
Subscribe

Non-directional Options Strategies

10-15 trade Ideas Per Month

Targets 5-7% Monthly Net Return

Visit our Education Center

Recent Articles

Articles

  • SPX Options vs. SPY Options: Which Should I Trade?

    Trading options on the S&P 500 is a popular way to make money on the index. There are several ways traders use this index, but two of the most popular are to trade options on SPX or SPY. One key difference between the two is that SPX options are based on the index, while SPY options are based on an exchange-traded fund (ETF) that tracks the index.

    By Mark Wolfinger,

    • 0 comments
    • 429 views
  • Yes, We Are Playing Not to Lose!

    There are many trading quotes from different traders/investors, but this one is one of my favorites: “In trading/investing it's not about how much you make, but how much you don't lose" - Bernard Baruch. At SteadyOptions, this has been one of our major goals in the last 12 years.

    By Kim,

    • 0 comments
    • 872 views
  • The Impact of Implied Volatility (IV) on Popular Options Trades

    You’ll often read that a given option trade is either vega positive (meaning that IV rising will help it and IV falling will hurt it) or vega negative (meaning IV falling will help and IV rising will hurt).   However, in fact many popular options spreads can be either vega positive or vega negative depending where where the stock price is relative to the spread strikes.  

    By Yowster,

    • 0 comments
    • 775 views
  • Please Follow Me Inside The Insiders

    The greatest joy in investing in options is when you are right on direction. It’s really hard to beat any return that is based on a correct options bet on the direction of a stock, which is why we spend much of our time poring over charts, historical analysis, Elliot waves, RSI and what not.

    By TrustyJules,

    • 0 comments
    • 465 views
  • Trading Earnings With Ratio Spread

    A 1x2 ratio spread with call options is created by selling one lower-strike call and buying two higher-strike calls. This strategy can be established for either a net credit or for a net debit, depending on the time to expiration, the percentage distance between the strike prices and the level of volatility.

    By TrustyJules,

    • 0 comments
    • 1,472 views
  • SteadyOptions 2023 - Year In Review

    2023 marks our 12th year as a public trading service. We closed 192 winners out of 282 trades (68.1% winning ratio). Our model portfolio produced 112.2% compounded gain on the whole account based on 10% allocation per trade. We had only one losing month and one essentially breakeven in 2023. 

    By Kim,

    • 0 comments
    • 5,886 views
  • Call And Put Backspreads Options Strategies

    A backspread is very bullish or very bearish strategy used to trade direction; ie a trader is betting that a stock will move quickly in one direction. Call Backspreads are used for trading up moves; put backspreads for down moves.

    By Chris Young,

    • 0 comments
    • 9,484 views
  • Long Put Option Strategy

    A long put option strategy is the purchase of a put option in the expectation of the underlying stock falling. It is Delta negative, Vega positive and Theta negative strategy. A long put is a single-leg, risk-defined, bearish options strategy. Buying a put option is a levered alternative to selling shares of stock short.

    By Chris Young,

    • 0 comments
    • 11,130 views
  • Long Call Option Strategy

    A long call option strategy is the purchase of a call option in the expectation of the underlying stock rising. It is Delta positive, Vega positive and Theta negative strategy. A long call is a single-leg, risk-defined, bullish options strategy. Buying a call option is a levered alternative to buying shares of stock.

    By Chris Young,

    • 0 comments
    • 11,514 views
  • What Is Delta Hedging?

    Delta hedging is an investing strategy that combines the purchase or sale of an option as well as an offsetting transaction in the underlying asset to reduce the risk of a directional move in the price of the option. When a position is delta-neutral, it will not rise or fall in value when the value of the underlying asset stays within certain bounds. 

    By Kim,

    • 0 comments
    • 9,655 views

  Report Article

We want to hear from you!


There are no comments to display.



Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account. It's easy and free!


Register a new account

Sign in

Already have an account? Sign in here.


Sign In Now

Options Trading Blogs