Peter Lusk

Peter Lusk

Peter B. Lusk is an instructor at the Options Institute, the educational arm of the Chicago Board Options Exchange. He teaches option courses for public and institutional traders and has contributed educational type articles to various financial publications. Peter has spoken to thousands of investors across North America the past few years including over 200 webinars for the CBOE and member firms on trading options. He can also be seen each week on CBOE-TV with his show, Strategy of the Week. In addition to his responsibilities at the Options Institute, Peter serves as an Instructor for the Options Industry Council – an organization representing the options industry in the U.S. Prior to working at the Options Institute, Peter was a highly successful market maker for many years on the floor of the CBOE trading equity options. He was also involved in options training for new market makers at Lakota Trading in Chicago. As a professional trader, Peter enjoys sharing his knowledge of proven option strategies and risk management at the Options Institute.

No Comments

Who Am I? – Quiz Review

OK class, it’s time to go over the options quiz that you took last week. We had good participation, and I sent CBOE hats to winners in California, Colorado, New Jersey, Illinois and the United Kingdom. 1)    I work 7 days a week. I’m like a sculptor chipping away at time premium every day. When [...]

No Comments

‘Twas the Night Before Expiration – A Holiday Tale

‘Twas the night before expiration, when all through the floor Nothing was trading, not even a Condor My trades were placed electronically with care In hopes that a market maker would soon be there Gutsy traders all snuggled in their big brass beds While visions of arbitrage played out in their heads Eileen in her [...]

No Comments

#Twitter and Other Internet IPO’s

IPO’s can generate as much excitement as a Hollywood movie premier but can sometimes disappoint too.  Not so with Twitter (TWTR).  So far it has proved to be much more than a bad Will Ferrell movie. But over time every stock has a story to tell and Twitter will too. Do you remember some of [...]

No Comments

Who’s Hungry for Potbelly?

Chicago based sandwich maker Potbelly (PBPB) went public last Friday at $14 and is now trading $31 confirming investors hunger for restaurant chains.  (Noodles (NDLS) has more than doubled since its $18 IPO last June.)   Potbelly started out as an antique store on Lincoln Avenue in Chicago that sold sandwiches to help make ends [...]

No Comments

Protecting a Diversified Portfolio

So what are you worried about?  If you’re a Cub fan you’re worried all the time!  That I can’t help you with because you should be worried.  But how about your $300,000 stock portfolio?  It’s been a nice run but now you’re thinking all good things got to come to an end.  For example, let’s [...]

No Comments

AMZN Volatility Post Earnings

OK AMZN traders, hopefully you were on the right side of volatility. Yesterday, both calls and puts were on the expensive side in advance of the earnings release. Do you remember the February weekly ATM 270 straddle was trading about $25 bucks? Well today it closed at about $6.55 Volatility got CRUSHED!!! Amazon Volatility Index [...]

No Comments

Amazon Earnings and Implied Volatility

As traders anxiously await Amazon (AMZN) earnings announcement after the close today implied volatility has made both call and puts rather expensive. Uncertainty of earnings along with supply and demand will do that to option prices. Amazon volatility index VXAZN here at CBOE is 48.75 up 4.11  The February weekly 270 straddle is trading around [...]

No Comments

How Bad do You Want It?

The New Year has a way of bombarding us with so many swell ideas on self-improvement.  Like the mindless magazine in the checkout line at the grocery store boasting rippled abs in just 10 days. A shopper confidently beams while placing the magazine in the cart alongside the greasy chips, synthetic cheese dip and high [...]

No Comments

The Tale of Two Traders

Traders tell their tales of risk and reward all the time. Of course some only tell you about the reward. It kind of reminds me of that Danny O’Keefe song where he sings “You forget about the losses, you exaggerate the wins.” I’ve got friends just like that.  In October, two friends of mine placed [...]

No Comments

Where Are They Now?

Do you remember the guy in high school who never had a job but he did have that shiny new Camaro daddy bought him? And that kid drove around in that car with that cheerleader while I was biking to my part time job. Where are they now? Who cares.  Do you remember some of [...]

No Comments

SPY: What Happened to My Dividend?

The S&P 500 ETF (SPY) recently went Ex-Dividend and a major firm neglected to exercise a sizable amount of In-The-Money calls to capture that dividend for its customers.  The SPY pit traders here at CBOE tell me that it is normal to see about 8% of the call volume go unexercised.  With this painful oversight [...]

No Comments

Option Trading Terminology

A market maker who stood next to me in the pit for 10 years here at CBOE used to always say option trading is the closest thing to professional sports. With the NFL football season now underway I thought it would be a good time to review option terminology to see if his assessment is [...]

No Comments

The Week Ahead

Facebook (FB) – FB ($19.15) becomes eligible for inclusion in the Nasdaq-100 Index on Saturday but it probably won’t happen until December when NASDAQ reviews its list of 100 components and makes whatever adjustments it deems appropriate. Could an inclusion give FB a much needed boost? Federal Reserve Chairman Ben Bernanke will be speaking in [...]

No Comments

Facebook (FB) the Sequel

The Sequel to the first Facebook movie starring Justin Timberlake is writing itself now. And oh what an engaging script it is! The social network giant, with almost 1 billion users has lost almost half its stock value since its IPO in May. Many shares were sold last week just as we anticipated with the [...]

No Comments

Facebook Lock Up

The first expiring IPO Lock-Up on Facebook (FB) arrives August 15th when trading restrictions are cancelled for company insiders and employees holding large amounts of stock. Many of these shareholders will sell to cash in or diversify on the stock that was awarded to them. Between August 15th and May 17th 2013 over 2 billion [...]

No Comments

How Many Stocks Do You Follow?

In my trading pit I traded options on all 16 appointed stocks. On any given day only about 5 of those stocks were really active. Casually watching all 16 stocks for 6½ hours a day, 252 days a year, I couldn’t help but absorb their behavior patterns.  Back when Cirrus Logic (CRUS) was a $70 [...]

No Comments

Has Facebook Hit Bottom Yet?

Is Facebook (FB) sick?  Has FB hit bottom yet? Questions still remain. My brief interview with 10 Facebook users revealed disenchantment across the board. Some have begun to prefer using Twitter which boasts 340 million tweets a day while others said they enjoyed Facebook more when they were in college. Each person of my small [...]

No Comments

Next Week’s Calendar

May 28th – Memorial Day May 29th – FB options begin trading at CBOE (Refer to Marty Kearney’s blog posted earlier today for more    Information). Consumer Confidence Report 9am CST May 31st – Option’s Institute Plus Join us here at CBOE or on-line for 2 day beginner option education seminar. www.cboe.com/oiplus June 1st – [...]

No Comments

Two Upcoming Dates to Remember

May 23rd – European Summit The European debt crisis has continued to be an on and off again pain for global markets for a few years now. Leaders of European nations will formally meet to discuss economic growth and job creation. June 1st – Monthly Jobs Report This has always been the most important date [...]

No Comments

Market Re-Cap

Stocks closed lower today with lingering concerns over Europe. Major retailers revealed disappointing sales results for April. Roughly seven stocks fell for every three that gained on the NYSE where 3.9 billion shares changed hands. DJIA 13,207 Down 62 Nasdaq 3,024 Down 36 S & P 500 1,392 Down 11 CBOE Volatility Index (VIX) 17.56 [...]

No Comments

CBOE Then and Now

Today I had the pleasure of taking a friend of mine on the trading floor. I used to trade in the pits at CBOE so I shared firsthand knowledge of what it was like way back when and what it’s like now.  One thing you can be certain of in life is that things are [...]

No Comments

Apple iPad Suppliers to Watch

There are a few companies that make up the core of Apple’s (AAPL) iPad touchscreen computer and they might be worth watching along with AAPL as we approach earnings season in April: Texas Instruments (TXN) is up .14 cents today trading $32.79  TXN is a chip supplier for the iPad touchscreen. (Implied Volatility 27%) Broadcom [...]

No Comments

Facebook IPO

Yesterday I met a very nice fellow in the waiting room of a doctor’s office. We immediately hit it off sharing the pleasure that it was our wives having outpatient surgery and not us. Our conversation turned to Facebook and its much anticipated IPO. The big question we both had of course was how much [...]

No Comments

Is Apple a Bargain?

I know I’m not alone on this.  Apple (AAPL) stock looks cheap to many investors.  Here’s why:   First quarter revenue was more than twice that of Microsoft. First quarter income exceeded Google’s. Earnings expectations this year continue to be robust. Potential dividend later this year. So through options, is there a possible trade to [...]

No Comments

How High Can Apple Go?

It appears nothing is standing in the way of Apple (AAPL) stock. It is up $118 since the death of Steve Jobs in October and is currently trading $496.25  So far today it’s ignoring the moderate sell-off. Investor expectations for the stock remain strong with the release of iPad 3 next month. Currently, AAPL does [...]

No Comments

Now Showing…Netflix Earnings Today

My earnings forecast on Netflix (NFLX) plays out different endings like an unfinished screenplay.  As I plan my trade here are just a few things I need to consider: Is it a takeover target? Can they beat earnings expectations of $.025 per share? Will their overseas expansion be profitable? Will streaming movies replace the DVD? [...]

No Comments

“What’s Your Logic”?

Cirrus Logic (CRUS) is a stock I used to trade in the pits here at CBOE. It’s an audio chip maker and the majority of its business is with Apple (AAPL). CRUS pre-announced better than expected 4Q profits with the official earnings announcement on January 26th. CRUS has mostly traded in the mid-teens this past [...]

No Comments

2011 Coming to a Close

As we look back on 2011 we saw the VIX having a range between 15 and 48.  Major news events and uncertainty made for some volatile times. I can remember so many of my trades and the major events that affected them. Which events of 2011 had the most impact on your option positions? Japan [...]

No Comments

“What’s the Best Strategy?”

Well I just returned home from beautiful Houston, TX where I was speaking of the glory of options to a bunch of curious investor’s. I spoke for 75 minutes and the core of my presentation was about an option strategy, The Collar. A portfolio protection strategy that this audience could appreciate. The questions they asked [...]

No Comments

Chinese CEOs Make a Visit to the CBOE Trading Floor

CBOE was honored today to have some very special guests from the Southern Province of China. They were CEOs of diverse corporation’s and they came to see our trading floor as part of their visit to Chicago. I was lucky to have Brenna Hardman of Trading Block, who is conversational in Chinese, and her intern [...]

No Comments

“What Happens to All of Those Options?”

Well its expiration eve and curious minds always want to know how many options are closed, exercised or expire worthless. The Options Clearing Corporation (OCC) has the statistics for 2010. Closed: 71.6% Exercised: 7.9% Expire Worthless: 20.5% Hopefully, this satisfies the curious mind.

No Comments

My Friend Was so Much Older Then

What a humbling business this is. I remember this market maker friend of mine who had a roaring start in the trading pits here at the CBOE. He made sure to tell you how his trading style was so successful it was just like printing money. He would conveniently leave the back pages of his [...]

No Comments

Option Trading Terminology

My market maker friend DVH used to always say option trading is the closest thing to professional sports. With the NFL football season kicking off tonight I thought it would be a good time to review option terminology to see if his assessment is really true. Hang time – Waiting for the market to open. [...]

No Comments

August is Over!

August is supposed to be lazy days with reflection of another summer gone by in the rear view mirror. Not for the markets. It started with the government scrambling to avoid default on its debt. Worries escalated over European countries defaulting on their debt too.  If that wasn’t enough, economic indicators began pointing toward another [...]

No Comments

Are You a Contrarian?

Con·trar·i·an – A person who takes an opposing view. One who rejects the majority opinion as in economic matters. What an emotional business this is. The uneasy market sell-off continues big time today with option implied volatility soaring higher. And the radio and TV experts have no problem pumping fear into the average investor’s head. [...]

No Comments

Will Google Earnings Continue a Downward Trend?

Well if you’re trading Google earnings on the eve of expiration this is your big day to dream about the outcome of your trade tomorrow. Google stock has been hit the last couple of earnings periods. Here are a few fun facts to chew on: The day before Google earnings back in April, options were [...]

No Comments

Is it Time to Buckle Up?

Well I just got back from beautiful San Francisco and the only thing I left behind this time were a bunch of passionate option traders that I had the privilege to speak to on Wednesday night. So because of jet lag and the re-occurring day dream that all my trades are good ones, my usual [...]

No Comments

Maybe You Were Just Early to the Party

The latest rage for investors appears to be for trendy internet service companies like LinkedIn (LNKD) and Pandora (P). Both LinkedIn and Pandora saw their stock prices climb on that first day of trading. LinkedIn got as high as $122.70 on that initial day and traded as low as $86.67 on the first day of [...]

No Comments

A Father’s Day Gift Idea!

As a proud father of four expensive kids I’m really looking forward to my big day on Sunday. It will be all about listening to the Sox game on the radio with my feet up as I watch my perennials grow and soaking up all of the attention surrounding me that I so much deserve. [...]

No Comments

What Happened to the Price of My Option?

Sometimes new traders jump into the water without knowing the temperature can change rather quickly. Grab a towel, dry off and I’ll explain. I get this question all the time: “I bought a call option, the stock went higher and my call barely increased in value! Can you explain that to me?” And I say sure [...]

No Comments

What Do You Make of Next Week’s Apple Conference?

Apple CEOSteveJobs is planning on delivering the keynote speech at next weeks Apple conference. Does he have anything really crisp and shiny to showcase? iCloud perhaps? Or will it be more like the comments of a boring Fed meeting? For all of you speculative traders out there are you seeing opportunity using options? Well this [...]

No Comments

Why Are Weekly Options the Latest Rage?

Weekly options are listed on Thursday’s and they expire the following Friday offering traders new strategic opportunities. For instance, a Covered Call Strategy may allow the investor to take advantage of short term time decay. Instead of selling a 30 day call against a stock you already own as a means of generating income, how [...]

No Comments

Nobody Ever Went Broke Closing Out a Winning Trade

Well I just got back to Chicago after doing option seminars in Calgary, Edmonton and Morristown, New Jersey. One topic which came up in all three towns was when to close out a winning trade. Well what a nice problem to have. With option expiration tomorrow I thought the timing was good to tell everyone that I [...]

No Comments

VIX Trick

When checking out VIX Index option quotes for the first time, there is often confusion among traders regarding the proper underlying. The correct underlying pricing vehicle is the corresponding VIX Future. Note the market prices below: VIX Index @ 16.88 VIX July 20 Put @ 2.60 It appears the VIX July 20 Put is mispriced [...]

No Comments

Have You Ever Considered a Protective Put?

The things that cause stress in life are the things you have no control over. Think about it. Traffic jams. Maybe a cancelled flight. So now you’ve been part of this two year bull market with a nice run in your stock. But now you’re stressing about a potential bump in the road which may [...]

No Comments

Do You Swing for the Fences With Your Trades?

The home run in baseball is considered by many to be the most exciting play of the American pastime. But the really successful teams are the ones that execute the little things in the game by moving the runners along with bunting and base hits. Successful option traders understand this small ball mentality very well [...]

No Comments

In the Bag of an iPad

“In the Bag of an iPad” – By Peter Lusk Apple and its products seem to get all of the attention these days but there are a couple of chip stocks that may peak your interest and I’m not talking about Frito Lay (PEP) Cirrus Logic (CRUS) provides the chips used for the iPad’s headphone [...]

No Comments

Crisis and the Markets

Trading can be a very emotional business. Sometimes greed and fear take over. The current events in Japan have investors worried about the impact it will have on their portfolio’s and retirement accounts. Looking back at other catastrophic events it has been proven that it might just be best for investors to hold on tight. [...]

No Comments

Still Addicted to Oil

George Bush in his 2006 State of the Union address said: “Keeping America competitive requires affordable energy. And here we have a serious problem; America is addicted to oil, which is often imported from unstable parts of the world.” Well here in 2011 the gas pump still beckons us like a junkie’s needle and in [...]

No Comments

Are You a Superstitious Trader?

All of my friends on the trading floor here at the CBOE are very superstitious traders. To keep good fortunes coming their way they do all sorts of very sane rituals. I know this trader who sits in the exact same seat on the train ride in. (Get up lady!) He reads each section of [...]

No Comments

Pete’s Blog

As Mick would say, please allow me to introduce myself! I’m Peter Lusk with the Options Institute, the educational arm of the CBOE. I’m excited to share my thoughts on current events that are affecting the markets as well as the things you should be paying attention to when placing your option trades. So I’m [...]