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Options Trading

TradeKing Midday Market Call Recap: SPX, VIX, ADI

Recap for Tuesday, Aug 28 by Kevin Corrigan

Did you miss Tuesday’s TradeKing Midday Market Call? Here’s a quick recap. Don’t miss another session, register here today!

Analysis on SPX:

S&P 500 (SPX) – at the time of this broadcast, SPX was around 1,411 up about .80 from Monday’s close. No real change from Michael Kahn’s analysis from last week. However, last Tuesday SPX was unable to close above 1420. Since then the market has been in a tight trading range.

Discussion from TradeKing Options Analyst Brian Overby:

VIX – at the time of this broadcast, VIX was about 16.12 down about .23  from yesterday. Still not much going on here. Like the market itself, it has been very quiet. Looks like it will continue to be quiet until after Labor Day.

Quick Take Pro Chart of the Day is Analog Devices - (ADI)

Discussion from TradeKing Analyst Nicole Wachs:  At the time of this broadcast, ADI was 39.50, down.10 from yesterday. It hit a resistance level of 40.90 back on August 16 and 17, then gapped down after earnings news. It’s been in a narrow range since then around its current level. It could continue down to 39, or lower to 38 and below.

Technical tools used:

Support / resistance
- Trendlines
- Moving Averages

Brian Overby’s potential strategy based on Michael’s chart – ADI – Long Put

ADI - Analog Devices is another stock that doesn’t seem to have a lot going on in terms of volatility. The historical and implied volatility is very close to its yearly low. Both the Implied and Historical are around 19-20%. Next earnings announcement looks to be in November. Our trade will be completed before this announcement comes into play.

ADI – Possible Conservative Strategy - Long In-The-Money Put

- Buy 1 ADI Sep 40 (market was Bid 1.10, Ask 1.15)
- 25 days until expiration
- Total net debit is 1.15 if we take the Ask.

- Maximum potential loss is the debit paid of 1.15

- Maximum potential gain is $38.85 if ADI goes to zero (highly unlikely)

- Total commission to enter this trade is $5.60

ADI – Possible Speculative Strategy - Long Out-Of-The-Money Put

- Buy 1 ADI Jan 39 Put (market was Bid 0.60, Ask 0.70)
- 25 days until expiration
- Total net debit is 0.70 if we take the Ask.

- Maximum potential loss is the debit paid of 0.70

- Maximum potential gain is $38.30 if ADI goes to zero (which, of course, is unlikely)

- Total commission to enter this trade is $5.60

**NOTE: 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:

- Detailed Quote / Earnings Calendar
TradeKing Long Put
TradeKing Volatility Charts

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Kevin Corrigan
VP Content and Social Media

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.

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

System response and access times may vary due to market conditions, system performance, and other factors.

Multiple leg options strategies involve  additional risks and multiple commissions, and may result in complex tax treatments. Please consult a tax advisor.

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.
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