PurelyTechnical

The following is an update on the two options picks used as illustrations in the volatility options trading strategies webinar, after Wednesday's session.

OXY - Long AUG 75.00 Straddle

The stock gained 3.5% today and that's great because it has now moved away from the strike, which of course is what we want it to do. Price is less than 2 points away from the upper target, as of the close, today. There will be a bit of hurdle that will need to be overcome at the open tomorrow. That hurdle is in the form of the falling upper triangle line, of course, but if that line can be taken out, it should be smooth sailing to the upper Bollinger Band. Our upper target is actually a touch below the upper Bollinger Band. If the stock is showing strength early tomorrow, then by all means a temporary raising of the target to the level of the upper BBand may not be a bad idea, but don't get too complacent. No point letting a profitable trade turn into a potential loser, especially when expiration is nigh.

If instead the stock turns lower, then considering closing the position and cutting losses tomorrow would be a good idea. Holding into the.last day could prove disastrous (or work out really well, but it'll be a gamble).

NOV - Long AUG 70.00 Straddle

The underlying made a decent move today (up 5.5%). The only issue was that that meant that it crossed to the other side of the straddle strike and, as such, it wasn't a move into profitability. It's trading close to breakeven as of today's close though and if we can get a little follow-through tomorrow, there should be profits for the taking.

Given that there are only two more days to expiration, it might be best to bring in the targets a little bit. The 20dMA is hovering around 75, so we'll place the upper target at that level. That will call for just over a 3% climb in the stock tomorrow. Rather than get too fancy, we'd look to close off the entire straddle once that price is reached. If it isn't reached by mid-afternoon, we'd look to close off the trade, rather than hold it into the last day. We'll provide further updates, if necessary, during the session tomorrow.