Market comments 20220513

Finally a bit of steam off the markets but I certainly wouldn't call it the bottom yet.

At the end of the day the VIX (volatility index) is still very high, which means the tension/scare in the market is still very much present.

Although I like to go into the weekend by closing as many of my positions as possible, for now, I keep them open hoping that we will see a large decline in the IVR (Volatility Rank) in the coming days.

So what's my trade for today?

#XOP (#EnergyIndex). I can no longer hold my temptation back from jumping onto this one, despite my fear about the development of the Russian war. That could create a massive energy crises.

I selected the June $110 / 160 strangle (sell $110 put and sell $160 call with June 17 expiration). It pays $3.15 but the bp (buying power or capital) requirement is only $1337.

The stats

Trade Type: Short Strangle

Strike: $110 / 160

Expiry: 17 Jun

Delta: -1.3

IV Rank: 45.1

Premium: $3.15

Cap Req: $1337

Annualised Prof at Expiry: 246%

Let me know what you think.