Recap for Tuesday, August 19th 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 of S&P 500 from QuickTakesPro’s Michael Kahn -

S&P 500 (SPX) – At the time of this broadcast, SPX was around 1,979.26 up 7.52 today. The upward trendline going back to November 2012 is still intact. It had a recent bounce off this trendline, which is a sign of strength. It can no longer be considered in a correction according to the chart. It is now above support levels, and from a technical analysis perspective, there is no clear indicator before the old highs. Summating the chart, Michael warned, “You gotta go with the flow at this point, but there could be some resistance coming up ahead.” 

It is back above its 50 day moving average of 1958.05 and its 200 day moving average of 1869.58.


The Chart of the Day is Occidental Petroleum. (OXY) - At the time of this broadcast, OXY was at 101.82 up 1.22 today. It’s been in a giant rising channel going back to November 2012. It broke down and recovered at around the 99 level, even as the oil sector has been struggling. It is above its 50 and 200 day moving averages of 101.03 and 96.38, respectively.
It could return to recent highs near 105 if it continues in this rising channel, according to Michael.



Analysis of OXY Volatility Chart and Dividends from TradeKing’s Brian Overby
Both the 30-day implied and historical volatility levels have dropped near year lows after its recent earnings announcement. The 30 day historical is about 17.5%, while the 30 day implied is near 15%.  
It does have a significant dividend (73 cents/share) and is due to go ex-dividend on September 8th. This will affect option contract prices that expire after that date. 


Technical Tools Used:

Moving Averages

- Trendlines

Brian Overby’s paper trade strategies based on Michael’s analysis - 

Michael's analysis is bullish. Brian discusses two strategies, a shorter term Long Call Spread that is more aggressive (the expiration is before the ex-dividend date) and a more conservative Short Put Spread that expires after. 

 

Brian’s Paper Trade - Long Call Spread 

 - Buy 1 Sep 5 2014 OXY 100 Call

- Sell 1 Sep 5 2014 OXY 104 Call

- 17 Days to expiration

- Net Bid 1.94, Mid 2.00, Ask 2.07 for the Spread 

- Net Debit is $2.00, if we execute at the Mid (might not be possible).

- Maximum potential loss: $2.00

- Maximum potential gain is $2.00


Total commission to enter this trade is $6.25



Brian’s Paper Trade - Short Put Spread 

 

- Sell 1 Sep 26 2014 OXY 101 Put

- Buy 1 Sep 26 2014 OXY 99  Put

- 38 Days to expiration

- Net Bid 0.67, Mid 0.76, Ask 0.84 for the spread

- Net Credit is $0.76, if we execute at the Mid (might not be possible).

- Maximum potential loss: $1.24 

- Maximum potential gain is $0.76


Total commission to enter this trade is $6.25

 

**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 Short Put Spread

- TradeKing Volatility Charts

- TradeKing Options Pricing Calculator
- TradeKing P&L Calculator

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Regards,Kevin Corrigan, PMPVP Content and Social Mediawww.tradeking.com
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