Quick Takes Pro Market Technician Michael Kahn Analyzes the S&P 500:
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SPX was trading at 2,083, down 1.42 on the day. Michael still has the major trendline on the chart as he doesn’t believe that line has been recaptured and is now acting as resistance following SPX breaking through the downside. The current activity in the chart looks like a “mess” to Michael. He points out that the chart is showing both bullish and bearish trends with a negative technical being present after it reached resistance and a positive technical appearing after SPX bounced off the September high support. He believes there’s no clear indication for what’s to come next.
Michael Kahn’s Chart of the Day: General Electric, Co. (GE):
General Electric, Co. was trading around the 30.49 level during the time of analysis, above its 50-day moving average of 28.18. Michael wrote a piece for Barron’s 2 weeks ago indicating that defense stocks were breaking out, and GE was no exception with a large breakout in October that continued into November. However, Michael believes a short-term correction is on the way. Currently volume is high with very little price movement, the RSI and the MACD are dropping, and Michael believes these are indications of waning momentum and a yet to come correction.
TradeKing “Options Guy” Brian Overby Analyzes General Electric Co.’s Volatility & Dividends:
General Electric Co.’s 30-day Implied Volatility (IV) is near the bottom of its 52-week range.
General Electric Co. pays quarterly dividends with their last ex-dividend date being 9/17/2015 with a 3.01% dividend yield. Their next earnings announcement is anticipated to be on 01/22/2016.
Brian Overby Shares GE Paper-Trading Strategies:
Brian’s paper trades for the day are Long Puts, a bearish strategy. He’ll be exploring 2 different scenarios. One trade will be more speculative with Brian purchasing an at-the-money short-term put while the second trade will be more conservative with an in-the-money put option being purchased that expires much further out in time.
Brian’s First Paper Trade - Long Put #1
- Buy 1 December 11th 2015 GE 30.5 Put
- 17 days to expiration
- Bid 0.38, Mid 0.41, Ask .43 for the contract
- Debit is 0.43 at the ask
- Maximum potential loss: $0.43
- Maximum potential gain: $30.07
- Total commission to enter this trade at TradeKing is $5.60
Brian’s First Paper Trade - Long Put #2
- Buy 1 January 15th 2015 GE 32 Put
- 52 days to expiration
- Bid 1.75, Mid 1.78, Ask 1.81 for the contract
- Debit is 1.81 at the ask
- Maximum potential loss: $1.81
- Maximum potential gain: $30.19
- Total commission to enter this trade at TradeKing is $5.60
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:
- Long Put
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