Daily Options Report

We have no jobs and we don't need any more cars. But we need some steel!

X was one of the first options I traded on the AMEX. It was 20 years ago, and at the time they owned both US Steel and Marathon Oil and Carl Icahn was in his Greenmail Prime and involved. He cajoled them into a proxy vote about splitting the company in two. USX (as they were called then) won the vote, Icahn eventually sold his stock, then they split into two anyway. Hey, who says there's no pride in authorship.

Anyway, why am I mentioning this? Not sure really. Oh yeah, that stock chart. All they did back then was sell us ATM calls in obscene size. You had to short stock against it, which gave you a big "smile". What that means is when you got a graph of your position, it looked like a smile, i.e. you earned money if it moved either way. Our positions were so big, my smile would have spontaneously combusted me in glee if we got a move like X has seen the last couple month's. Of course when that's going to happen, no one inundates you with calls, and/or you sell stock way too soon.

But hey, that's all in the past.

Going forward, it's a rare spot I do like the long volatility trade. Unless options pricing is out of whack, I'd rather net own options in spot like this that's NOT at a volatility bottom than one that looks cheaper to the naked eye. When you have a well-defined range or a very slow chug higher, volatility should be at/near lows. When you're flying and putting lots of air between the stock and any important MA, it's just not stable. I was long calls on the January 55 line vs. short stock and on Friday sold the balance of my stock against them, and then a little more and bought April 65 calls on a ratio.