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Options Trading

TradeKing Midday Market Call Recap - $SPX & $HAL

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 2,107.87, up 5.24 on the day. The rally continues with SPX edging closer and closer to the top of the previous trading range. As Michael was expecting, we saw a small pause at the first resistance level followed by a break-through of the 200-day average. While Michael believes SPX has generally had a great start to the week, he’s quick to point out that if SPX powers through the next serious resistance level at the top of the old trading range without pause, SPX may be prone to failure as it could be an indication that people are simply piling on and making the market go too far too fast creating an overbought situation.

Michael Kahn’s Chart of the Day: Halliburton Company (HAL):

Halliburton Company was trading around the 39.90 level during the time of analysis, above its 50-day moving average of 37.76. The oil services sector has taken a bit of a beating over the last couple years, but is now trading above its lowest resistance level after hitting and rebounding from 2 double-bottoms a few months ago. As a result, Michael thinks the long term breakdown in the energy sector may be overdone. HAL seems to be following a similar pattern. Michael points out that we saw a fall in the stock price, followed by a breakout, with the stock moving into a sideways coiling pattern. Michael believes this is an indication of a reversal pattern instead of a continuation pattern and expects the breakout that we saw today to continue.

TradeKing “Options Guy” Brian Overby Analyzes Halliburton Company’s Volatility & Dividends:

Halliburton Company’s 30-day Implied Volatility (IV) has dropped following their earnings announcement last quarter and is now in the lower end of the 52 week range.

Halliburton Company pays dividends quarterly, with the last ex-dividend date of 08/31/15 with a 1.88% dividend yield.

Brian Overby Shares HAL Paper-Trading Strategies:

Both of Brian’s paper trades today are Long Calls, a bullish strategy. He believes that when the market’s simple, simple trades are best and HAL is no exception, especially with volatility being so low.

Brian’s First Paper Trade - Long Call #1

- Buy 1 Dec 18th 2015 HAL 41 Call

- 45 days to expiration

- Bid 1.11, Ask 1.16 for the option

- Debit is 1.16 if we get it at the ask price.

- Maximum potential loss: $1.16

- Maximum potential gain: Unlimited in theory

- Total commission to enter this trade at TradeKing is $5.60

Brian’s Second Paper Trade - Long Call #2

- Buy 1 Nov 20th 2015 HAL 38.50 Call

- 17 days to expiration

- Bid 1.83, Ask 1.86 for the strategy

- Debit is 1.86 if we get it at the ask price.

- Maximum potential loss: $1.86

- Maximum potential gain: Unlimited in theory

- 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:

- Detailed HAL Quote

- Long Call

- Long Call Spread

- TradeKing Volatility Charts

- TradeKing Options Pricing Calculator

- TradeKing Probability Calculator

- TradeKing P&L Calculator

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