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Options Trading

TradeKing Midday Market Call Recap - $SPX & $BMRN

Options TradingTradeKing

Featuring @BrianOverby &  @MNKahn

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

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SPX was trading at2080.29 during the broadcast, between its converging 50-day (2095.60) and200-day moving averages (2074.77). Michael began his analysis outlining the2015 trading range highlighting levels between 2050 and 2130. He examined theshort-term swings: yesterday’s gains backed by a Fed official that stated thewant for more inflation, while China’s currency devaluation pushes today’sstruggle.

Michael Kahn’s Chart ofthe Day: BioMarin Pharmaceutical (BMRN):

BioMarin Pharmaceuticalwas trading at 136.99 during the time of broadcast, just above its 50-day(136.77) and 200-day (112.62) moving averages. Michael believes biotechs haveshown cracks and the sector has been weak recently. He examined the stock’son-balance volume (OBV) which showed a steady decrease during BMRN’s recentspike. This indicator hints that even though the stock price is increasing, thedemand is slowing waning. Michael is looking for a bearish confirmation at aclosing level of below 132.

TradeKing “Options Guy”Brian Overby Analyzes BioMarin Pharmaceutical Volatility & Dividends:

BMRN’s 30-day ImpliedVolatility (IV) sat near 40% and its 30-day Historical Volatility was around32% during the time of analysis, both about average for the company.

BioMarin Pharmaceuticaldoes not currently pay a dividend. The company reported Q2 earnings last weekon August 3, 2015 and is expected to report Q3 in October.

Brian Overby Shares BMRNPaper-Trading Strategies:

Brian’s first papertrade was a Short Call Spread to sell premium, going out to the Septembermonthly expiration and closing it out within the next 20 days. His second tradewas a more speculative Long Put Spread looking for more of a short term bearish move,he would prefer to see a close below Michael's support line (around 132) beforeplacing the paper trade.

Brian’s First PaperTrade - Short Call Spread

- Buy 1 September 18th2015 BMRN 155.00 Call

- Sell 1 September 18th2015 BMRN 150.00 Call

- 38 days to expiration

- Net Bid 0.00 even, Mid0.70 (credit),  Ask 1.40 (credit) for the strategy

- Net credit is 0.70 ifwe get it at the mid-price, though note this is not always possible

- Maximum potentialloss: $4.30

- Maximum potentialgain: $0.70

- Total commission toenter this trade at TradeKing is $6.25

Brian’s Second PaperTrade - Long Put Spread

- Buy 1 August 21st 2015BMRN 130.00 Put

- Sell 1 August 21st2015 BMRN 125.00 Put

- 10 days to expiration

- Net Bid 0.70, Mid1.18, Ask 1.65, for this strategy

- Net Debit is 1.18 ifwe get it at the mid-price, though note this is not always possible

- Maximum potentialloss: $1.18

- Maximum potentialgain: $3.82

- Total commission toenter 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 contractstraded to determine the amount of the full potential loss or full potentialgain. No additional calculations are needed to determine commission costs.

TradeKing Options Tools used:

- Detailed BMRN Quote

- Short Call Spread

- Long Put Spread

- TradeKing VolatilityCharts

- TradeKing OptionsPricing Calculator

- TradeKing ProbabilityCalculator

- TradeKing P&LCalculator

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