TradeKing Midday Market Call Recap - SPX, BBY

Recap for Tuesday, March 10th 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 2050.47, down 28.96 today. It has gotten really “sour” over the last week, with large sells offs after recent highs. According to Michael: there is more room to go down, but it’s not clear how oversold the market is after the recent sharp pull back. The long-term trend is still up.

SPX is just below its 50 day moving average of 2061.47, but remains above the 200 day MA of 2001.33.

The Chart of the Day is Best Buy, Inc. (BBY) -

At the time of this broadcast, BBY was at 39.49, down 0.34 today. The increasing on balance volume is what initially attracted Michael to take a closer look at BBY. It’s recently been outperforming the market after recovering strongly from a sharp drop. There’s an important caveat that as BBY tests a possible breakout just below the 40.00 line, it did recently fail a test of the resistance-- cracking through but still closing under. It’s in a place to watch, not be too excited about just yet. If a breakthrough does happen, Michael sees 46.75 as a next possible area for resistance.

It is above both its 50 day and 200 day moving averages of 37.72 and 33.68, respectively.

Analysis of BBY Volatility Chart and Dividends from TradeKing’s Brian Overby -

The 30-day Implied Volatility (IV) is around 27%, while the 30-day Historical is near 24%. The volatility chart is close to ideal for option buyers. It would be preferable for historical to be slightly above implied instead of vice versa, but both volatility levels are near the very bottom of the yearly range.

Technical tools used:

- Moving Averages

- Trendlines

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

Michael’s outlook is tentatively bullish, hoping for a breakout past 40 to reaffirm his outlook. With no immediate earnings announcement, the only factor on options prices should be the upcoming dividend for BBY. It’s a relatively large one at .23, and this will be inflating put prices and deflating call prices, including on the paper trades Brian reviews today. The stock will go ex-dividend on March 20th, and the dividend is already priced into the options prices. Brian discusses two Long Calls, at or near the money, but going out to the April monthly expiration with March 20th being so near, and better open interest and volume in monthly expirations compared to the weeklies.

Brian’s Paper Trade - Long Call (if the breakout happens)

- Buy 1 April 17 2015 BBY 40 Call

- 38 Days to expiration

- Bid 1.08, Ask 1.12 for the call

- Debit is 1.12 if we pay the Ask

- Maximum potential loss: $1.12

- Maximum potential gain is technically unlimited if the stock goes to infinity.

Total commission to enter this trade is $5.60

Brian’s Paper Trade - Long Call (if the breakout happens)

- Buy 1 April 17 2015 BBY 41 Call

- 38 Days to expiration

- Bid 0.69, Ask 0.73 for the call

- Debit is 0.73 if we pay the Ask

- Maximum potential loss: $0.73

- Maximum potential gain is technically unlimited if the stock goes to infinity.

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

- TradeKing Volatility Charts

- TradeKing Options Pricing Calculator

- TradeKing Probability Calculator

- TradeKing P&L Calculator

Get solid market analysis and potential trading ideas. Take 15 minutes of your lunch with our team, as they analyze the market during this live online session. As an added bonus, a stock chart will be covered in detail each session accompanied by a potential option trade. This might be the most valuable thing you do all week! Every Tuesday midday from 12:00 - 12:15pm ET.

Don’t miss the next TradeKing Midday Market Call. Register here:


Kevin Corrigan, PMP

VP Content and Social Media

Options involve risks and are not suitable for all investors. Prior to buying or selling options, an investor must receive a copy of Characteristics and Risks of Standardized Options, sent to you in previous communication. Additional copies may be obtained by calling TRADEKING at 877-495-KING or by visiting

Multiple leg options strategies involve additional risks and multiple commissions, and may result in complex tax treatments. Please consult a tax advisor.

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.

System response and access times may vary due to market conditions, system performance, and other factors.

Any strategies discussed and examples using actual securities and price data are strictly for illustrative and educational purposes only and are not to be construed as an endorsement, recommendation, or solicitation to buy or sell securities. Past performance is not a guarantee of future results. Consider the following when making an investment decision: your financial situation, your risk profile and transaction costs.

Market timing is a complex investment strategy which involves risk and may incur additional commission costs.

While implied volatility represents the consensus of the marketplace as to the future level of stock price volatility, there is no guarantee that this forecast will be correct.

TradeKing charges $4.95 for online equity and option trades, add 65 cents per option contract. TradeKing charges an additional $0.35 per contract on certain index products where the exchange charges fees. See our FAQ for details. TradeKing adds $0.01 per share on the entire order for stocks priced less than $2.00. See our Commissions + Fees page for commissions on broker-assisted trades, low-priced stocks, option spreads, and other securities.

The projections or other information generated by TradeKing's tools regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results and are not guarantees of future results. The calculations do not take into consideration all costs, such as commissions and margin interest which may impact the results shown. It is the user's sole responsibility to select the criteria to enter in the TradeKing's tools, or to choose among the predefined screens, and to evaluate the merits and risks associated with the use of the tools before making any investment decisions. TradeKing is not responsible for any losses that occur from such investment decisions.

TradeKing Webinars and All-Star Blogs are provided for educational and informational purposes only.

All investments involve risk, losses may exceed the principal invested, and the past performance of a security, industry, sector, market, or financial product does not guarantee future results or returns. TradeKing provides self-directed investors with discount brokerage services, and does not make recommendations or offer investment, financial, legal or tax advice. You alone are responsible for evaluating the merits and risks associated with the use of TradeKing's systems, services or products.

TradeKing selects and defines as All-Stars certain independent market commentators who are recognized industry personalities and experienced traders and who provide timely market commentary via the TradeKing All-Star Blog and/or TradeKing Webinars. Each All-Star commentator's bio, related qualifications and disclosure as to their relationship with TradeKing can be found on the All-Star Roster. The selection of All-Star commentators is solely based on the quality and style of the content provided. TradeKing does not measure, endorse, or monitor the performance or correctness of any statement or recommendation made by independent All-Stars commentators. Supporting documentation for any claims made by TradeKing All-Stars will be supplied upon request by the author of the post, who is solely responsible for the views expressed. Contact TradeKing All-Stars by sending an email message to

(c) 2015 TradeKing Group, Inc. All rights reserved.