TradeKing Midday Market Call Recap - $SPX & $AMZN

Featuring @BrianOverby  &  @MNKahn

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

SPX was trading at 1,891.99, down 3.33 on the day. In the last few weeks Michael had drawn a potential head-and-shoulders pattern with a rising neckline that he’s now altered to a flat neckline. Friday saw SPX dipping below that neckline level but ended up closing above it’s support. Michael believes that move wasn’t a reversal signal and SPX should continue to see bullish momentum this week. He also believes that with SPX currently at a support, if a this bullish bounce doesn’t occur this week and it closes below the support line drawn in the chart it may be a sign that an even bigger down-turn is on the horizon.

Michael Kahn’s Chart of the Day:, Inc. (AMZN):, Inc. was trading around the 570.18 level during the time of analysis, below its 50-day moving average of 654.46. Michael began his analysis by painting a picture of where AMZN has come from: there was a clear break-out about a year ago and it’s been on a mostly bullish tear since. However, Michael doesn’t believe it’s going to continue. He pointed to a short-term breakout failure where AMZN closed above resistance for 2 days then took a tumble down at the beginning of the year. That downside breakaway gap below it’s 50-day average was bad news, according to Michael, and may be a reflection of a changing investor-attitude. Previously investors may have viewed AMZN as a stock that was on sale while they now may view it as a stock that’s reversed course. However, if it’s going to bounce, this is where he thinks it could happen.

TradeKing “Options Guy” Brian Overby Analyzes Netflix Inc.’s Volatility & Dividends:, Inc.’s 30-day Implied Volatility (IV) is currently very high, as is the overall market. Amazon’s implied volatility also moves quite a bit around earnings and this quarter is no different., Inc. does not pay dividends, but it’s next earnings announcement is slated for 01/28/2016.

Brian Overby Shares AMZN Paper-Trading Strategies:

Brian’s paper trades today are 2 short-term Short Put Spreads, a bullish to neutral strategy. Both trades will expire before the next earnings announcement.

Brian’s First Paper Trade - Short Put Spread

- Buy 1 Jan 22nd 2016 AMZN 525 Put

- Sell 1 Jan 22nd 2016 AMZN 530 Put

- 3 days to expiration

- Net Bid 0.10, Mid 0.40, Ask 0.70 for the strategy

- Net credit is 0.40 if we get it at the mid-price, though note this is not always possible

- Maximum potential loss: $4.60

- Maximum potential gain: $0.40

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

Brian’s Second Paper Trade - Short Put Spread

- Buy 1 Jan 22nd 2016 AMZN 547.50 Put

- Sell 1 Jan 22nd 2016 AMZN 550 Put

- 3 days to expiration

- Net Bid 0.15, Mid 0.60, Ask 1.05 for the strategy

- Net credit is 0.60 if we get it at the mid-price, though note this is not always possible

- Maximum potential loss: $1.90

- Maximum potential gain: $0.60

- 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 AMZN Quote

- Short Put Spread

- TradeKing Volatility Charts

- TradeKing Options Pricing Calculator

- TradeKing Probability Calculator

- TradeKing P&L Calculator

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