THE WEEK AHEAD: PBR, USO, GE, T, ORCL, EWZWith various things Brazilian in implosion mode, it's no surprise that PBR and EWZ have high implied volatility here.
PBR:
Bullish Assumption Setups: The July 20th 30 delta 9 put is paying .43/contract, resulting in an 8.57 break even, which isn't very compelling, but might appeal to some smaller account holders who are willing to hold the short put until near worthless and or roll for duration/further cost basis reduction should the worst not be over (check out the weekly). The natural alternative is a synthetic covered call with the short put at the 70 delta 11 strike, which pays 1.55, and gives you a 9.55 break even. I would work the synthetic as a "money, take, run" affair and look to take profit at 50% max or sooner.
Neutral Assumption Setups: The July 20th 10 short straddle pays 1.56 at the mid, with break evens at 8.44 and 11.56. Generally, I look to take profit on these at 25% (here, .39), but would naturally be prepared for a bumpy ride and to make adjustments as things unfold.
USO: I generally don't like this instrument a ton as a petro play due to its size, with my preferred go-to's being XOP, XLE, and (when in a pinch), OIH. However, if you're willing to go a little larger than you usually would with contracts, it can be productive. The July 20th 13 short straddle pays .93/contract and is skewed quite short delta wise (-20.93). To neutralize some of that, I could see doing a July 27th "double straddle" with one straddle at the 13 and one at the 13.5 (you need to move to the weeklies to get the half strikes). That would pay 2.01 per contract, give you break evens at 12.25 and 14.25, and reduce the directionality to -9.67 delta. Taking profit on the whole shebang at 25% max (.50) wouldn't be horrible.
GE and T: Both have earnings around the July monthly; I'd hold off putting on plays, opting instead to play for vol contraction around earnings ... .
ORCL: Announces in 9 days, so sit on your hands and play the announcement.
EWZ: With underlyings under $50, I've been short straddling or iron flying. The July 20th 34 short straddle pays 3.09, with break evens at 30.91 and 37.09. Naturally, that isn't for everyone, since short straddles and iron flies generally skew out delta-wise fairly immediately, so they're not "nervous nellie" trades or trades for the "delta anal"; for those kids, the July 20th 31/37 short strangle camped out around the 20 delta strikes might make more sense; it's paying .98.
