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Options Trading

TradeKing Midday Market Call Recap - $SPX & $CHRW

Options TradingTradeKing

Featuring @BrianOverby  &  @MNKahn

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

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SPX was trading at 2,032.58, down 0.55 on the day. As MIchael indicated last week, we’ve seen some bullish momentum over the last few weeks, but his belief was that it was a short-term move. That trend appears to be continuing into this week. While SPX is currently above its 50-day moving average (the first time since the plunge), it’s still below both its 200-day moving average as well as the old bull market trend line, which can be negative indicators for the long-term. It’s currently approaching resistance where the bottom of the old trading range existed, but Michael doesn’t believe it will be met with fanfare.

Michael Kahn’s Chart of the Day: C. H. Robinson Worldwide, Inc. (CHRW):

C. H. Robinson Worldwide, Inc. was trading around the 72.17 level during the time of analysis, above its 50-day moving average of 68.96. Overall, Michael thinks the transportation sector is perking up, and CHRW is no exception. Right now the stock is hovering just above its former resistance level, but Michael was hesitant to call this a true breakout. He currently believes that the consolidation phase is occurring as we’re seeing  sideway movement on the stock price with falling volume. He’s hoping for the stock to break out soon to the upside, with the golden cross assisting in that forecast. We’ll have to see if this bullish formation continues and officially breaks through resistance for good.

TradeKing “Options Guy” Brian Overby Analyzes C. H. Robinson Worldwide, Inc.’s Volatility & Dividends:

C. H. Robinson Worldwide Inc.’s 30-day Implied Volatility (IV) has increased, which is

typical of a stock approaching earnings, as CHRW is.

C. H. Robinson Worldwide Inc. pays dividends quarterly, with a most recent ex-dividend date of 09/02/15 and a 2.11% dividend yield.

Brian Overby Shares CHRW Paper-Trading Strategies:

Brian’s first paper trade is a Long Call Spread, a bullish strategy. He believes the lower 30-day historical volatility (17.5%) and the higher 30-day implied volatility (27.5%) presents an opportunity as this is a rather wide discrepancy despite the earnings announcement that’s coming soon. His second paper trade is a Short Put Spread. This strategy is also considered to be a bullish strategy that he thinks would be a great if the stock completes a successful breakout.

Brian’s First Paper Trade - Long Call Spread

- Sell 1 Nov 20th 2015 CHRW 75 Call

- Buy 1 Nov 20th 2015 CHRW 70 Call

- 31 days to expiration

- Net Bid 2.30, Mid 2.65, Ask 3.00 for the strategy

- Net debit is 2.65 if we get it at the mid-price, though note this is not always possible

- Maximum potential loss: $2.65

- Maximum potential gain: $2.35

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

Brian’s Second Paper Trade - Short Put Spread

- Sell 1 Dec 18th 2015 CHRW 67.50 Put

- Buy 1 Dec 18th 2015 CHRW 65 Put

- 59 days to expiration

- Net Bid 0.35, Mid 0.58, Ask 0.80 for the strategy

- Net credit is 0.58 if we get it at the mid-price, though note this is not always possible

- Maximum potential loss: $1.92

- Maximum potential gain: $0.58

- 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 CHRW Quote

- Long Call Spread

- Short Put Spread

- TradeKing Volatility Charts

- TradeKing Options Pricing Calculator

- TradeKing Probability Calculator

- TradeKing P&L Calculator

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