TradeKing Midday Market Call Recap - $SPX & $VLO

Markets TradeKing

Featuring @BrianOverby  &  @MNKahn

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Quick Takes Pro Market Technician Michael Kahn Analyzes the S&P 500:

SPX was trading at 2,088.85 at the time of analysis, down 0.99 on the day. The rally in SPX has continued with Michael pointing to a consolidation that occurred in March followed by additional bullish momentum. That momentum is now slowing with SPX approaching a huge area of resistance where we’ve historically seen a lot of peaks, congestion, and areas where supply has overwhelmed demand. We’re also seeing a slowing of indicators, specifically with RSI slowing down. Should SPX continue on a bullish run, it will be very difficult to get through this resistance.  

Michael Kahn’s Chart of the Day: Valero Energy Corporation (VLO):

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Valero Energy Corporation was trading around the $61.55 level during the time of analysis, below its 50-day moving average of $63.19. VLO is currently seeing what Michael describes as a short-term breakout. With it still under both the 50-day moving average and the 200-day, Michael indicates it may not be great for the big picture, but he has plenty of reason to remain bullish. The pullback we recently saw reversed when it hit the trendline with a bullish reversal bar being present last week and On Balance Volume (OBV) has been trending upward, regardless of the static in the price movements. Michael believes this should help push the stock higher. He expects it’s on the verge of making a move higher with a long term bullish outlook as the short term trend appears to have broken to the upside. Michael expects next level of resistance will be present around $65.

TradeKing “Options Guy” Brian Overby Analyzes Valero Energy Corporation’s Volatility & Dividends:

Valero Energy Corporation’s 30-day Implied Volatility (IV) is approaching its 6-month low, even with earnings approaching early next month.

Valero Energy last paid a dividend on February 5th or 60 cents or dividend yield of

3.89% its next earnings announcement is anticipated to be before the open of the market on 05/03/16.

Brian Overby Shares VLO Paper-Trading Strategies:

Brian’s first paper trade was a Long Calendar Call Spread. He is using out-of-the-money calls to put a little bit of a bullish spin on a normally neutral strategy.  His second paper trade is a Long Call Spread using a further out expiration.

Brian’s First Paper Trade - Long Calendar Call Spread


- Sell 1 Apr 29th 2016 VLO 63 Call

- Buy 1 May 6th 2016 VLO 63 Call

- April 29th has 3 days and May 6th has 10 days to expiration

- Net Bid 0.57, Mid 0.62, Ask 0.66 for the strategy

- Net Debit is 0.62 if we get it at the mid-price, though note this is not always possible.

- Maximum potential loss: 0.62

- Maximum potential gain is limited to the premium received for the back-month call minus the cost to buy back the front-month call, minus the net debit paid to establish the position. NOTE: You can’t precisely calculate your risk at initiation of this strategy, because it depends on how the back-month call performs at the first expiration date.

- Total commission to enter this trade at TradeKing is $6.25

Brian’s Second Paper Trade - Long Call Spread


- Buy 1 May 20th 2016 VLO 60 Call
- Sell 1 May 20th 2016 VLO 63 Call

- 24 days to expiration

- Net Bid 1.55, Mid 1.67, Ask 1.79 for the strategy

- Net debit is 1.67 if we get it at the mid-price, though note this is not always possible

- Maximum potential loss: 1.67

- Maximum potential gain: 1.33

- Total commission to enter this trade at TradeKing is $6.25

Important notes: 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 VLO Quote

- Long Calendar Call Spread

- Long Call Spread

- TradeKing Volatility Charts

- TradeKing Options Pricing Calculator

- TradeKing Probability Calculator

- TradeKing P&L Calculator

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