IV Charts on Think or Swim vs LiveVol

So since the free version of LiveVol is no longer, I have been using the TOS platform to get a visual even though I don't like it compared to what I'm used to at LiveVol. But today I pull up IV on TOS for (RMBS) and I know by eyeballing it that it's not correct because I've been following my APR position daily and taking a look at MAY periodically as well. So I pull up the option chain to see what that says versus the IV chart and I confirm that it's wrong. Then I use LiveVol and that chart looks correct to me from what I've been seeing the last few weeks, and also matches the option chain information. Here is my question, why are they different? Does anybody know what the IV is measuring on TOS? Can I check it, change it, etc.? I don't want to pay for LiveVol but if I can't rely on TOS then I have to look elsewhere. IV on TOS is showing 84, that is not correct, how do I find out where they got this from?

New Trade: (RMBS) Short APR 17/26 Strangle

This is my first attempt at doing a video for my trades instead of a long write up with screen shots. Please let me know what you think. I already realized one mistake. My chart has is labeled as selling FEB call/puts but those were MAR expiration option. Thank you. Jason

E-mail: JasonAndrewHaas@aol.com



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(RMBS) Update on 18/25 short strangle

I wanted to update this trade in case anybody was following. Here is the link to the initial trade. I actually intended on updating last night 3/9 but got busy and pushed it off. So the screen shot of the chart below is yesterday's close on 3/9, which was the reason for the update because as you can see we closed right on support. However, today we broke support and I don't see a really well defined next support zone. With six trading days left I might be looking to close this leg out for a scratch trade and just let the 25 strike calls expire worthless and make the profit on the trade there. I sold the puts for .28 and the mark today is just below that. Each night I analyze my positions and ask myself if I would still put this trade on today, because if not, you should close the trade. Today's close is the first time I would say I wouldn't be interested in selling short the 18 strike puts. At the time of initiation I liked the idea. But because we've now broken a long-term support zone and the markets in general are in a much different environment then on 2/18 when I put the trade on, I'm thinking pulling this off the table for a break even on the puts but capturing 100% of the short calls is the best move. If anybody else is trading this let me know what you're thinking here.

E-mail: JasonAndrewHaas@aol.com



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(RMBS) Doubling Down on my short 25 strike calls

The stock is down $2 since I sold naked calls last Friday and I was just able to double down on my short call position for one penny less than my original entry. I got .30 on 2/18 and got .29 today. The reason this is possible is the three day sell off put fear in to put buyers and they drove implied volatility up from 49% to 65%. Since put/call parity means IV is distributed almost evenly, even though its the put buyers who are driving up IV, the calls benefit from an increase in price as well. I will gladly take this gift. Here is a link to the original trade last Friday 2/18/11. http://bit.ly/gSjqLH And here is a link to Put/Call parity in case this is a concept you would like more information on. http://bit.ly/dPO2s3

I also deleted my technical analysis drawings today and started from scratch. I like to do this from time to time to make sure I'm operating under a just set of assumptions. I found something interesting. In the updated chart you'll notice I added a new set of lines in purple that the original chart did not have. This is exactly why I like to update charts from scratch every now and then. To me there is an obvious short-term trend in gold within an even longer trending channel in purple. Today the stock reacted perfectly to both as the first possible support line that did not hold on yesterday's selling, is now acting as support. My point is that at the moment this stock is trading very strongly on technicals and I'm going to try and trade around this theme. This combined with the dramatically increased IV led me to feel comfortable to double down on my short calls. And of course if RMBS gets a buy out bid in the next few weeks then I'm an idiot, that is the known risk I'm taking.

Implied Volatility chart as of 2/18/11

Implied Volatility chart as of 2/24/11

Original Chart from trade on 2/18/11

Updated Chart as of 2/24/11

Intra-day Chart where previous support acted as resistance three times.

New Trade: Selling (RMBS) MAR 25 Naked Calls

Trade Update 2/22/11: I sold 18 strike puts today for .28, which now leaves me short an 18/25 strangle at .58. The original call sale and trade idea as well as updated charts are below.

The short FEB 19 puts expired worthless today. IN THE MONEY TRADES: New Trade: RMBS Short FEB 19 Puts And earlier today I decided to short the MAR 25 calls for .30 and here is why:

• IV is elevated again in the low 50's (favors selling premium rather than buying)
• HV has been flat at under 20% since October. Which means the IV bid has been wrong the last four months and speculators haven't been getting paid.
• We failed at resistance this morning at roughly $22.00
• There is a second possible resistance line above near $23.50
• Third possible resistance line at 52-week high of $25.50. Keep in mind that was an intra-day high and the largest closing high the last 12 months is $25.03, which is under our break-even point of $25.30. 
• Getting to $25 from here in four weeks looks like a stretch. In fact, the largest gain between options cycles in the last 12 months is just 7.19%. That means we can double the largest move seen in the last year and still have these calls expire worthless. If you want to throw in the largest percentage move intra-month, that's only 11.1%. Getting to $25 from here is a 15% move (25-21.70)/(21.70), so I really think you're getting paid more than a fair price to sell premium here.
• Earnings aren't until April so shouldn't be any upside surprises for March expiration. Stocks don't crash to the upside, a takeover rumor is my worst known fear here.

But let's be honest here, literally anything can happen and this is a trade that initially carries unlimited risk. The credit from a spread sale just wasn't attractive to me so I went with naked calls instead. If we take a run at $25 in a short quick manner then I would expect IV to increase even further, so I could roll out to another month and higher strike if I'm worried. If we continue to fail at resistance and pull back I will possibly either take the trade down early for a small profit in exchange for zero future risk, or limit and define my risk by purchasing the 26 strike calls and rolling in to a 25/26 call spread. I will also consider selling 19 strike puts again on a pullback which would mean I roll in to a 19/25 short strangle. If anyone has any questions or comments feel free to contact me.

2/22/11 Trade entry on put sale. Filled at 20.81 for .28

Updated Chart after selling puts. Break-even points are now essentially at 52-week Hi/Low levels. There are three possible resistance lines above current price, and three possible support lines below.

New Trade: RMBS Short FEB 19 Puts

On Tuesday 1/25/11 near the close of trading I sold short (10) FEB 19 Puts for .40. Cost average/risk is $18.60. That's over 2% return (.40/18.60) for less than a month, and I have 9% downside protection (1.86/20.46) to my break even point. Unfortunately this wasn't on my radar a few days ago. I could have entered at essentially the same spot near $20.46 but with 3 more days theta and a higher IV. I'm still comfortable with my entry point, but being around at the right time has advantages. This is a name I've played in the past and feel comfortably taking a long position should it be put to me at $19. Earnings are tomorrow after the bell so there is risk associated with that. However, IV is pretty high at the moment near 50. I don't care if earnings are terrible and the stock plunges as I'm willing to own. The worse case scenario is the stock does plunge, IV collapses, and there aren't any attractive covered call scenarios available for MAR expiration. That is the risk I'm accepting.

5-day chart showing entry point

1-year chart showing channel range, break even point, and possible support level near $17.50

IV at the higher end of the range for last six months