TradeKing Midday Market Call Recap - $SPX & $VZ
Featuring @BrianOverby & @MNKahn
Quick Takes Pro Market Technician Michael Kahn Analyzes the S&P 500:
SPX was trading at 2,057.52 at the time of analysis, up 13.80 on the day. SPX continues to surprise investors as the rally we’ve been watching since early February ran into some trouble within the last two weeks. For those on the bearish side, Michael points out that SPX hasn’t set a higher high since the 4th quarter of 2015, however, he also points out that there are bullish signs as well. While the rally has faltered some, a bullish flag pattern appears to be emerging in the chart. The pattern is a bit congested, but if a breakout from the flag pattern occurs, it could be a bullish sign.
Michael Kahn’s Chart of the Day: Verizon Communications Inc. (VZ):
Verizon Communications Inc. was trading around the $53.025 level during the time of analysis, just above its 50-day moving average of $52.58. Verizon has had a good year so far with the beginning of the year seeing a strong reversal followed by a very sharp rally. However VZ has since gapped down twice with a downside breakaway gap occurring last week with large volume on that move. VZ is now sitting on its 50-day moving average but, Michael warns it’s more of a speed bump than a support. Looking at the indicators, before the breakdown there were many bearish signals as well like bearish divergence was present in RSI and a lack of movement in on-bounce volume. As far as Michael can tell, he believes the party for VZ is over. He now anticipates that Verizon may continue to trade between $45 and $54.25.
TradeKing “Options Guy” Brian Overby Analyzes Verizon Communications Inc.’s Volatility & Dividends:
Verizon.’s 30-day Implied Volatility (IV) has seen a small spike, but overall VZ’s volatility is rather low.
Verizon Communications Inc.pays quarterly dividends and its next earnings announcement is anticipated to be on 04/21/16.
Brian Overby Shares VZ Paper-Trading Strategies:
Brian’s first paper trade was a Back Spread with Puts, a speculative trade that’s looking for more volatility than what the marketplace is implying from the pending earnings announcement. His second paper trade is a Long Put Spread with the purchased put in-the-money.
Brian’s First Paper Trade - Back Spread with Puts
- Buy 2 Apr 22nd 2016 VZ 52 Put- Sell 1 Apr 22nd 2016 VZ 53.50 Put
- 10 days to expiration
- Net Bid 0.18, Mid 0.22, Ask 0.25 for the strategy
- Net credit is 0.22 if we get it at the mid-price, though note this is not always possible
- Maximum potential loss: 1.28
- Maximum potential gain: 0.22
- Total commission to enter this trade at TradeKing is $6.90
Brian’s Second Paper Trade - Long Put Spread
- Buy 1 Apr 29th 2016 VZ 53 Put- Sell 1 Apr 29th 2016 VZ 51 Put
- 17 days to expiration
- Net Bid 0.83, Mid 0.89, Ask 0.94 for the strategy
- Net debit is 0.89 if we get it at the mid-price, though note this is not always possible
- Maximum potential loss: 0.89
- Maximum potential gain: 1.11
- Total commission to enter this trade at TradeKing is $6.25
Important notes: Option prices are given as a per-contract amount. Multiply loss and gain figures by 100 shares and by the number of contracts traded to determine the amount of the full potential loss or full potential gain. No additional calculations are needed to determine commission costs.
TradeKing Options Tools used:
- TradeKing Options Pricing Calculator
- TradeKing Probability Calculator
Options involve risks and are not suitable for all investors. Prior to buying or selling options, an investor must receive a copy of Characteristics and Risks of Standardized Options, sent to you in previous communication. Additional copies may be obtained by calling TRADEKING at 877-495-KING or by visiting www.TradeKing.com/ODD.
Multiple leg options strategies involve additional risks, and may result in complex tax treatments. Please consult a tax advisor.
At the time of publication and in the preceding month, TradeKing and/or Michael Kahn did not have ownership greater than 1% in any stocks mentioned; did not have any other actual, material conflict of interest known at the time of publication; have not received compensation from a public offering nor from investment banking services related to any companies mentioned within the past 12 months, nor expect to receive any in the next 3 months; nor engaged in market making in the securities mentioned.
System response and access times may vary due to market conditions, system performance, and other factors.
Any strategies discussed and examples using actual securities and price data are strictly for illustrative and educational purposes only and are not to be construed as an endorsement, recommendation, or solicitation to buy or sell securities. Past performance is not a guarantee of future results. Consider the following when making an investment decision: your financial situation, your risk profile and transaction costs.
Market timing is a complex investment strategy which involves risk and may incur additional commission costs.
While implied volatility represents the consensus of the marketplace as to the future level of stock price volatility, there is no guarantee that this forecast will be correct.
TradeKing charges $4.95 for online equity and option trades, add 65 cents per option contract. TradeKing charges an additional $0.35 per contract on certain index products where the exchange charges fees. See our FAQ for details. TradeKing adds $0.01 per 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 other information generated by TradeKing's tools regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results and are not guarantees of future results. The calculations do not take into consideration all costs, such as commissions and margin interest which may impact the results shown. It is the user's sole responsibility to select the criteria to enter in the TradeKing's tools, or to choose among the predefined screens, and to evaluate the merits and risks associated with the use of the tools before making any investment decisions. TradeKing is not responsible for any losses that occur from such investment decisions.
TradeKing Webinars and All-Star Blog are provided for educational and informational purposes only.
All investments involve risk, losses may exceed the principal invested, and the past performance of a security, industry, sector, market, or financial product does not guarantee future results or returns. TradeKing provides self-directed investors with discount brokerage services, and does not make recommendations or offer investment, financial, legal or tax advice. You alone are responsible for evaluating the merits and risks associated with the use of TradeKing's systems, services or products.
TradeKing selects and defines as All-Stars certain independent market commentators who are recognized industry personalities and experienced traders and who provide timely market commentary via the TradeKing All-Star Blog and/or TradeKing Webinars. Each All-Star commentator's bio, related qualifications and disclosure as to their relationship with TradeKing can be found on the All-Star Roster. The selection of All-Star commentators is solely based on the quality and style of the content provided. TradeKing does not measure, endorse, or monitor the performance or correctness of any statement or recommendation made by independent All-Stars commentators. Supporting documentation for any claims made by TradeKing All-Stars will be supplied upon request by the author of the post, who is solely responsible for the views expressed. Contact TradeKing All-Stars by sending an email message to TKallstars@tradeking.com.
? 2016 TradeKing Group, Inc. All rights reserved.