TradeKing Midday Market Call Recap: SPX, VIX, F
Published December 04, 2012
Recap for Tuesday, December 4th by Kevin Corrigan
Did you miss Tuesday’s TradeKing Midday Market Call? Here’s a quick recap. Don’t miss another session, register here
Analysis of S&P 500 and Nasdaq Composite from QuickTakesPro’s Michael Kahn:
S&P 500 (SPX
) – At the time of this broadcast, SPX was around 1407 down about 2.33 from Monday’s close. We’ve had a rally in the past couple weeks, but it still looks to be in a declining trend. It is still below the trendline from last October. Right now it seems to be between support of about 1405 and resistance of about 1423. The bright red trend-line on the chart is the close on the day of the election and we can see the market was not happy the next. This line is a strong resistance point for the market. It is also between its 50 and 200 day moving averages of 1419.53 and 1385.32, respectively.
The Dow, Nasdaq and the Russell also appear to have similar patterns on the downside recently.
Analysis of Volatility Index from TradeKing’s Brian Overby:
S&P 500 Volatility (VIX
) - is around 16.96, up about .32. It is between the 100 day and 200 day moving averages of about 16.24 and 17.54, respectively. This and the VVIX (VIX of the VIX) have bounced up recently. VVIX is around 85.18, but still well below its 100 day moving average of 91.07.
Interesting piece of activity happened recently. Someone bought 50,000 contracts of the December 5 call. Looks like someone is trying to buy a lottery ticket anticipating higher volatility based on the fiscal cliff situation.
Stock for the day is Ford (F):
Discussion from QuickTakesPro’s
Michael Kahn - At the time of this broadcast, F was $11.26 down about .15 on the day. It is still above its 50 day, 200 day moving averages and its trendline, all about $10.60. It came out with some good earnings yesterday. It jumped up, but had a reversal to the downside yesterday and looks like it continued through today. This can be a bad sign in the near term, possibly suggesting it was overbought recently. As the trendline moves forward, the support could move to be around $10.75.
Technical tools used:
- Moving Averages
Brian Overby’s Short Term Strategy based on Michael’s Analysis – Long Put
The Implied Volatility is right around its year low, around 15%. The Historical is also close to 15%. Since Michael thinks there could be a short term bearish move, we are going to look at a Long Put.
Possible Trade - Long Put
- Buy 1 Dec F 12 Put
- 18 days to expiration
- Net Bid .80, Ask .82
- Total debit is .82 if we can get filled at the Ask.
- Maximum potential loss is $.82
- Maximum potential gain is $11.18, if Ford goes to zero. (Not going to happen)
- Total commission to enter this trade is $5.60
Possible Additional Longer Term Trade - Buy Long Put
- Buy Jan F 12 Put
- 46 days to expiration
- Net Bid 1.33, Ask 1.35
- Total debit is 1.35 if we can get filled at the Ask.
- Maximum potential loss is $1.35
- Maximum potential gain is $10.65, if Ford goes to zero. (Not going to happen)
- 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
- TradeKing Long Put
- TradeKing Volatility Charts
Get solid market analysis and potential trading ideas. Take 15 minutes of your lunch with our team, as they analyze the market during this live online session. As an added bonus, a stock chart will be covered in detail each session accompanied by a potential 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 next TradeKing Midday Market Call. Register here: www.tradeking.com/events
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 www.TradeKing.com/ODD
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.
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 pre-defined 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 Blogs 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.