TradeKing Midday Market Call Recap - SPX, DD
Recap for Tuesday, April7th by Brandon Wilson
Did you miss Tuesday’sTradeKing Midday Market Call? Here’s a quick recap. Don’t miss another session,register here today!
Analysis of S&P 500from QuickTakesPro’s Michael Kahn:
S&P 500 (SPX) – Atthe time of this broadcast, SPX was around 2088.71, up 8.09 today. Michaelmentions that he believes Monday after the long Easter weekend was more of asave than a breakout. When examining his chart, Michael mentions that the“long-term trend line is still well below.” The coiling in RSI tells us thatthe market has been going back and forth, while short-term trend lines continueshowing a choppy market, but “overall the bias is still to the upside.”
SPX is just above its 50day moving average of 2074.42 and above the 200 day moving average of 2014.53.
The Chart of the Day isDuPont (DD) -
At the time of thisbroadcast, DuPont was at 72.08, up .08 on the day. DD, part of the chemicalsector, has been doing well until March, when it appears an earnings sell-offstruck. Currently, the security sits right above the 200 moving day average of70.44, which may signal support. Looking a little closer at the short-termvolume, Michael mentions DD has horizontal support, 200 day MA support, as wellas trend line support. Although the stock has been “out of favor for about amonth and a half,” the stock has “a bullish engulfing line - a pending changefor the better,” Michael states.
It is below its 50 daymoving average of 75.34.
Analysis of DDVolatility Chart and Dividends from TradeKing’s Brian Overby -
DuPont’s 30-day ImpliedVolatility (IV) is at 21.04% and the 30-day Historical is sitting at 21.18%.Both have increased lately and are approaching the 52 week highs, probably inanticipation of earnings expected to be announced on April 21st.
The stock paid a 47 centdividend in February which would put the next anticipated ex-dividend in themiddle of may. Brian reminds us that the decent sized dividend (2.61% yield)could potentially deflate call prices and inflate put prices relatively.
Technical tools used:
- Moving Averages
- Trend lines
Brian Overby’s papertrade strategies based on Michael’s analysis -
Michael’s outlook iscautiously bullish, but waiting for a breakout to confirm. Since earnings isexpected within 30 days, Brian discusses a Short Put Spread with expirations avoiding earnings. Brian also takes a look at along-term Long Call using the next expected dividend to cheapen the call costs.
Brian’s Paper Trade - Short Put Spread
- Sell 1 April 17 2015DD 71.50 Put
- Buy 1 April 17 2015 DD69.50 Put
- 10 Days to expirationfor the April 17th
- Net Bid 0.43, Mid0.46, Ask 0.49 for the strategy
- Net credit is 0.46 ifwe get it at the Mid, may not be possible.
- Maximum potentialloss: $1.54
- Maximum potentialgain: $0.46
Total commission toenter this trade is $6.25.
Brian’s Paper Trade - Long Call
- Buy 1 May 15 2015 DD70 Call
- 38 Days to expiration
- Bid 3.00, Ask 3.15 forthe option
- Debit is 3.15 if wepay the Ask
- Maximum potentialloss: $3.15
- Maximum potential gain is unlimited if the stock goes to infinity (not likely to happen).
Total commission toenter this trade is $5.60
**NOTE: option prices are given as a per contract amount. Multiply loss andgain figures by 100 shares and by the number of contracts traded to determinethe amount of the full potential loss or full potential gain. No additionalcalculations are needed to determine commission costs.
TradeKing Options Toolsused:
- Detailed DD Quote- TradeKing Short Put Spread- TradeKing Long Call- TradeKing Volatility Charts- TradeKing Options Pricing Calculator- TradeKing Probability Calculator- TradeKing P&L Calculator
Get solid marketanalysis and potential trading ideas. Take 15 minutes of your lunch with ourteam, as they analyze the market during this live online session. As an addedbonus, a stock chart will be covered in detail each session accompanied by apotential option trade. This might be the most valuable thing you do all week!Every Tuesday midday from 12:00 - 12:15pm ET.
Don’t miss the nextTradeKing Midday Market Call. Register here!
Regards,
Brandon Wilson
TradeKing Group, Inc.
Options involve risksand are not suitable for all investors. Prior to buying or selling options, aninvestor must receive a copy of Characteristics and Risks of StandardizedOptions, sent to you in previous communication. Additional copies may beobtained by calling TRADEKING at 877-495-KING or by visiting www.TradeKing.com/ODD.
Multiple leg optionsstrategies involve additional risks, and may result in complex tax treatments.Please consult a tax advisor.
At the time ofpublication and in the preceding month, TradeKing and/or Michael Kahn did nothave ownership greater than 1% in any stocks mentioned; did not have any otheractual, material conflict of interest known at the time of publication; havenot received compensation from a public offering nor from investment bankingservices related to any companies mentioned within the past 12 months, norexpect to receive any in the next 3 months; nor engaged in market making in thesecurities mentioned.
System response andaccess times may vary due to market conditions, system performance, and otherfactors.
Any strategies discussedand examples using actual securities and price data are strictly forillustrative and educational purposes only and are not to be construed as anendorsement, recommendation, or solicitation to buy or sell securities. Pastperformance is not a guarantee of future results. Consider the following whenmaking an investment decision: your financial situation, your risk profile andtransaction costs.
Market timing is acomplex investment strategy which involves risk and may incur additionalcommission costs.
While implied volatilityrepresents the consensus of the marketplace as to the future level of stockprice volatility, there is no guarantee that this forecast will be correct.
TradeKing charges $4.95for online equity and option trades, add 65 cents per option contract.TradeKing charges an additional $0.35 per contract on certain index productswhere the exchange charges fees. See our FAQ for details. TradeKing adds $0.01per share on the entire order for stocks priced less than $2.00. See our Commissions + Fees page for commissions on broker-assisted trades, low-priced stocks,option spreads, and other securities.
The projections or otherinformation generated by TradeKing's tools regarding the likelihood of variousinvestment outcomes are hypothetical in nature, do not reflect actualinvestment results and are not guarantees of future results. The calculationsdo not take into consideration all costs, such as commissions and margininterest which may impact the results shown. It is the user's soleresponsibility to select the criteria to enter in the TradeKing's tools, or tochoose among the predefined screens, and to evaluate the merits and risksassociated with the use of the tools before making any investment decisions.TradeKing is not responsible for any losses that occur from such investmentdecisions.
TradeKing Webinars andAll-Star Blogs are provided for educational and informational purposes only.
All investments involve risk, losses may exceed the principal invested, and thepast performance of a security, industry, sector, market, or financial productdoes not guarantee future results or returns. TradeKing provides self-directedinvestors with discount brokerage services, and does not make recommendationsor offer investment, financial, legal or tax advice. You alone are responsiblefor evaluating the merits and risks associated with the use of TradeKing'ssystems, services or products.
TradeKing selects anddefines as All-Stars certain independent market commentators who are recognizedindustry personalities and experienced traders and who provide timely marketcommentary via the TradeKing All-StarBlog and/or TradeKing Webinars. Each All-Star commentator's bio, relatedqualifications and disclosure as to their relationship with TradeKing can befound on the All-Star Roster. The selection of All-Star commentators issolely based on the quality and style of the content provided. TradeKing doesnot measure, endorse, or monitor the performance or correctness of anystatement or recommendation made by independent All-Stars commentators.Supporting documentation for any claims made by TradeKing All-Stars will besupplied upon request by the author of the post, who is solely responsible forthe views expressed. Contact TradeKing All-Stars by sending an email message toTKallstars@tradeking.com.
? 2015 TradeKing Group,Inc. All rights reserved.