Option Block 625: Dealing With Profound Market Malaise

Trading Block: VIX at 960! The VIX is back to flirting with its lowest levels ever. Keep an eye on APPL. The World Wide Developer Conference begins this week. The year-to-date performance of Apple, Amazon, Netflix and FB is +34% right now.

Odd Block: Calls trade in Cenovus Energy Inc. (CVE), puts and calls trade in Dynavax Technologies Corp. (DVAX) and calls trade in MSCI Hong Kong Index (EWH) , update from 4/3/17.

Mail Block: Options Question of the Week

Weird Fact: #1 $TSLA position= 26,760 Jan 2019 50 P. Fact 2: 10k OI added in last 2 months (200 today). Why buy these puts?

• Extreme Catastrophe Hedge
• Newsletter Recommendation
• Model S Extended Warranty
• Only an idiot buys these

Listener questions and comments: What do you want to know?

• Comment from Fed Zeppelin - Shorts are learning there's a better option than getting squeezed via equity…
• Comment from Option Drone‏ - Short CDS or an OTC put in the name.
• Question from Adam Linlan - Whats up OB? Thinking about getting a model S. It is not a small purchase (about 85k) so I am a little concerned about the future of Tesla motors. Will it be around to service my pricey vehicle in 3-5 years. So I thought I should purchase some insurance. The longest listed puts are Jan 19. I do not want to pay through the nose so I am thinking about picking up the Jan 100 puts for about $4. By my math if TSLA goes bankrupt I will be sitting on a cool 96k, more than the cost of my car. If it does not happen then I will probably roll about six months out so it will cost me a little more but all in all I do not foresee spending more than $1000 during the life of the car. Am I crazy for thinking about doing this?
• Question from Parallelism - What site are you using paper on? I would like to learn options using paper.
• Question from GiddyFranciscan - Sell in May and go away. What option strategy benefits from the profound market malaise that occurs over the summer?

Around the Block/This Week in the Market:

• Jun 5: Productivity and Costs, Factory Orders
• Jun 6: JOLTS
• Jun 8: Jobless Claims