Several Plays With Potential Volatility

Now we wait for the jobs number. Expectations are clearly high, but I think they are too high. However, I find the opportunity in the long bond rather than short equities. Long bonds have been sold down hard and if I am looking at an opportunity for an aggressive play into tomorrow, I would use iShares Barclays 20-Year-Plus Treasury ETF (TLT). I'm a buyer of the March 8 $116-$117-$117.50 skip-strike-call butterfly for $0.26 to $0.29. I wouldn't pay more than $0.33 because I want the risk-reward at a two-to-one clip, so at least $0.66 profit potential for the $0.33 or less risk.

Pandora (P) Source: StockCharts.com View Chart » View in New Window »

A few earnings plays should bring volatility and maybe a potential trade. Pandora (P) is still trying to figure out how to be profitable. Regardless of its plans, Pandora needs a strong partner or a takeout. This is a highly competitive area of business and I just don't see Pandora turning the corner yet. The chart is set up with a wide wedge formation, which often acts as a prelude to a big move. Options are pricing in about a $2 move or 16.6%, which is quite possible given the 22% short interest. There is a lot of call action in the stock today, but I believe it more driven by shorts simply hedging positions into earnings. I've taken a small March $12-$10 put spread position at an average cost of $0.835....83 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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