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TradeKing Midday Market Call Recap - SPX, PCLN

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Recap for Tuesday, April 14th byBrandon Wilson

 

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Analysis of S&P 500 from QuickTakesPro’s MichaelKahn:

 

S&P 500 (SPX) – At the timeof this broadcast, SPX was around 2092.74, up 0.32 today. Michael states thatthe last 5 months of the S&P have been relatively flat. When examining the50 day and 200 day moving averages, he notes that they are both trending up andmay signal a bull market.

 

SPX sits just above its 50 daymoving average of 2081.31 and above the 200 day moving average of 2018.03.

 

 

 

The Chart of the Day is Priceline(PCLN):

 

Priceline was just above 1,193,down 6.52 at the time of broadcast. PCLN has struggled over the last 12 monthswith a quick bounce back during Q1 of this year. Michael mentions that he’dlike to see PCLN get over the 1200 mark, and “the next breakout may be a greatbuy signal” because of the security’s recent stability and upward trend. AddedMichael, “it’s not a classic short-term technical chart set-up,” but has provento breakout at multiple time frames during its history.

 

Taking a look at the moving dayaverages, the 50 day moving average of 1160.11 is trending to surpass the 200day moving average of 1161.71.

 

 

 

Analysis of PCLN Volatility Chartand Dividends from TradeKing’s BrianOverby:

 

PCLN’s 30-day Implied Volatility(IV) is at 28.95% and the 30-day Historical is sitting at 18.52%. Inanticipation of its expected earnings announcement on May 7th, HV has droppedwhile IV has spiked.

 

PCLN does not pay a dividend atthis time.

 

 

Technical tools used:
- Moving Averages

- Trendlines

 

Brian Overby’s paper tradestrategies based on Michael’s analysis:

 

Michael’s outlook is bullish, andwaiting for a 1200 breakout to confirm. Earnings is expected within 30 days,Brian discusses two LongCall Butterfly Spread strategies with different strike prices. Weekly expirations maybe reducing some of the liquidity in the underlying. Brian reminds us that thebid/ask spreads are nearly 3 points on some of the strikes, near 10% wide in general.He also emphasised that with this much slippage it is important to work theorder for a fill between the net bid and ask price (if possible) for athree-legged strategy. The option contracts chosen for the paper trades expirebefore the anticipated earnings announcement before the open on May 7th.

 

Brian’s Paper Trade - LongCall Butterfly Spread

 

- Buy 1 May 1st  2015 PCLN1200 Call

- Sell 2 May 1st  2015 PCLN1220 Call

- Buy 1 May 1st  2015 PCLN1240 Call

 

- 17 Days to expiration

 

- Net Bid 1.60cr, Mid 2.40, Ask6.40 for the strategy

 

- Net debit is 2.40 if we get itat the Mid, may not be possible

 

- Maximum potential loss: $2.40

- Maximum potential gain: $17.60

 

Total commission to enter thistrade is $7.55

 

 

Brian’s Paper Trade - LongCall Butterfly Spread

 

- Buy 1 May 1st  2015 PCLN1200 Call

- Sell 2 May 1st  2015 PCLN1250 Call

- Buy 1 May 1st  2015 PCLN1300 Call

 

- 17 Days to expiration

 

- Net Bid 6.7, Mid 10.15, Ask13.60 for the strategy

 

- Net Debit is 10.15 if we get itat the Mid, may not be possible

 

- Maximum potential loss: $10.15

- Maximum potential gain: $39.85

 

Total commission to enter thistrade is $7.55

 

 

**NOTE: option prices are givenas a per contract amount. Multiply loss and gain figures by 100 shares and bythe number of contracts traded to determine the amount of the full potentialloss or full potential gain. No additional calculations are needed to determinecommission costs.

 

TradeKing Options Tools used:

- DetailedPCLN Quote

- LongCall Butterfly Spread

- TradeKing Volatility Charts

- TradeKing Options Pricing Calculator

- TradeKing Probability Calculator

- TradeKing P&L Calculator

 

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Best,

Brandon Wilson

TradeKing Group, Inc.

www.tradeking.com

 

 

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