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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 1429.65 up about 11.10 from Monday’s close. It has jumped above resistance of about 1424 and is above its 50 and 200 day moving averages of 1416.56 and 1386.73, respectively.
Despite low volume and an absence of certain sectors one might expect to lead, the SPX still appears to be in a rally trend.
S&P 500 Volatility (VIX) - is around 15.59, down about .46. The story hasn’t changed much in the VIX in recent months. It is below the 100 day and 200 day moving averages of about 16.19 and 17.50, respectively. The December contract is around 16, all of the outer month contracts (Jan and Feb) have fallen around 30 to 40 cents today. It may be a sign that the market is not as concerned about the Fiscal Cliff as the media seems to be.
This and the VVIX (VIX of the VIX) is near it’s yearly lows. VVIX is around 78.98, still well below its 100 day moving average of 90.49.
Discussion from QuickTakesPro’s Michael Kahn - At the time of this broadcast, SLB was $72.48 up about .48 on the day. It is above its 50 day, 200 day moving averages and just broke above its short term downwards trendline (just below 72). Next level of resistance could be around 77.60 and the next possible level above that appears to be just above 80.
- Moving Averages
Brian Overby’s short term strategy based on Michael’s Analysis – Long Call Spread
Schlumberger is planning to announce earnings on the morning of Expiration Friday for the January options, which is January 18th. Because the next level of resistance is about 77.60 and 39 days to expiration/earnings, we will take a look Long Call Spread in January.
Possible Trade - Long Call Spread
- Buy 1 Jan SLB 72.50 Call
- Sell 1 Jan SLB 77.50 Call
- 39 days to expiration
- Net Bid 1.74, Ask 1.78, Mid 1.76
- Total debit is 1.78 if we can get filled at the Ask.
- Maximum potential loss is $1.78
- Maximum potential gain is $3.22
- Total commission to enter this trade is $5.60
Possible Additional Short Term Trade - Long Call
- Buy 1 Dec SLB 72.50 Call
- 11 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 Unlimited if the stock goes to infinity. (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 Call Spread
- TradeKing Long Call
- TradeKing Volatility Charts
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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.
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