This article is part of the series

Options Trading

TradeKing Midday Market Call Recap - $SPX & $NFLX

Options TradingTradeKing

Featuring @BrianOverby  &  @MNKahn

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

Continue Reading Below

SPX was tradingat 1,945.53 up 28.31 on the day. Michael thinks the end of the bull market isofficial. As its 50-day moving average (2054.29) continues to drop below its200-day (2072.40) moving average, the validity of a moving average “deathcross” has strengthened and this is seems to be happening in a lot of the majorindexes. So we have a major trend line that was broken and a few support levelsthat were broken. The market is now starting to form a wedge pattern that isleaning to the bear side.

MichaelKahn’s Chart of the Day: Netflix (NFLX):

Netflix wastrading around the 96 level during the time of analysis, below its 50-daymoving average of 109.08. Michael pointed out a bearish head and shoulderspattern that formed recently and the steady decline in on balance volume (OBV).The stock is overcooked after their good earnings announcement recently.Michael thinks the first area of support is around 79 and if it can breakthrough that it may go down as low as 71-72 range.

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

NFLX’s 30-dayImplied Volatility (IV) and 30-day Historical Volatility have spiked in thelast two weeks, similar to the market as a whole. The big spike up above the70% IV number was even higher than the 30-day IV was before its last earningsreport.

Netflix doesnot pay a dividend currently and the next earnings announcement should beannounced in mid-October.

Brian OverbyShares NFLX Paper-Trading Strategies:

Brian’s firstpaper trade was a Short Call Spread which is a neutral to bearish forecast. He is hoping to sell some volatility based on Michael’s analysis, withthe goal of closing out the position before expiration. His second paper tradeis a Long Put Spread, which is a little more speculativebecause he used a shorter term expiration and the strategy is looking for thestock to reach Michael’s Netflix in the low 70s with a.

Brian’sFirst Paper Trade - Short Call Spread

- Buy 1September 18th 2015 NFLX 104 Call

- Sell 1September 18th 2015 NFLX 102 Call

- 10 days toexpiration

- Net Bid .058,Mid 0.64, Ask 0.69 for the strategy

- Net credit is0.64 if we get it at the mid-price, though note this is not always possible

- Maximumpotential loss: $1.36

- Maximumpotential gain: $0.64

- Totalcommission to enter this trade at TradeKing is $6.25

Brian’sSecond Paper Trade - Long Butterfly with Puts

- Buy 1 October9th 2015 NFLX 75 Put

- Sell 2October 9th 2015 NFLX 85 Put

- Buy 1 October9th 2015 NFLX 95 Put

- 31 days toexpiration

- Net Bid .84,Mid 1.57, Ask 2.30 for this strategy

- Net Debit is1.57 if we get it at the mid-price, though note this is not always possible

- Maximumpotential loss: $1.57

- Maximumpotential gain: $8.43

- Totalcommission to enter this trade at TradeKing is $7.55

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.

TradeKingOptions Tools used:

- Detailed NFLX Quote

- Short Call Spread

- Long Put Spread

- TradeKingVolatility Charts

- TradeKingOptions Pricing Calculator

- TradeKingProbability Calculator

- TradeKingP&L Calculator

Options involverisks and are not suitable for all investors. Prior to buying or sellingoptions, an investor must receive a copy of Characteristics and Risks ofStandardized Options, sent to you in previous communication. Additional copiesmay be obtained by calling TRADEKING at 877-495-KING or by visiting www.TradeKing.com/ODD.

Multiple legoptions strategies involve additional risks, and may result in complex taxtreatments. Please consult a tax advisor.

At the time ofpublication and in the preceding month, TradeKing and/or Michael Kahn did nothave ownership greater than 1% in any stocks mentioned; did not have any otheractual, material conflict of interest known at the time of publication; havenot received compensation from a public offering nor from investment bankingservices related to any companies mentioned within the past 12 months, norexpect to receive any in the next 3 months; nor engaged in market making in thesecurities mentioned.

System responseand access times may vary due to market conditions, system performance, andother factors.

Any strategiesdiscussed and examples using actual securities and price data are strictly forillustrative and educational purposes only and are not to be construed as anendorsement, recommendation, or solicitation to buy or sell securities. Past performanceis not a guarantee of future results. Consider the following when making aninvestment decision: your financial situation, your risk profile andtransaction costs.

Market timingis a complex investment strategy which involves risk and may incur additionalcommission costs.

While impliedvolatility represents the consensus of the marketplace as to the future levelof stock price volatility, there is no guarantee that this forecast will becorrect.

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

The projectionsor other information generated by TradeKing's tools regarding the likelihood ofvarious investment outcomes are hypothetical in nature, do not reflect actualinvestment results and are not guarantees of future results. The calculationsdo not take into consideration all costs, such as commissions and margininterest which may impact the results shown. It is the user's soleresponsibility to select the criteria to enter in the TradeKing's tools, or tochoose among the predefined screens, and to evaluate the merits and risksassociated with the use of the tools before making any investment decisions.TradeKing is not responsible for any losses that occur from such investmentdecisions.

TradeKingWebinars and All-Star Blog NFLX are provided for educational and informationalpurposes only.

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

TradeKingselects and defines as All-Stars certain independent market commentators whoare recognized industry personalities and experienced traders and who providetimely market commentary via the TradeKing All-Star Blog and/or TradeKing Webinars.Each All-Star commentator's bio, related qualifications and disclosure as totheir relationship with TradeKing can be found on the All-Star Roster. The selection of All-Star commentatorsis solely based on the quality and style of the content provided. TradeKingdoes not measure, endorse, or monitor the performance or correctness of anystatement or recommendation made by independent All-Stars commentators.Supporting documentation for any claims made by TradeKing All-Stars will besupplied upon request by the author of the post, who is solely responsible forthe views expressed. Contact TradeKing All-Stars by sending an email message toTKallstars@tradeking.com.

? 2015 TradeKing Group, Inc. All rights reserved.

FINRA

SIPC