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Options Trading

TradeKing Midday Market Call Recap - $SPX & $NOK

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 1,880.90, up 7.00 on the day. The SPX wasn’t able to recover from it’s failed break-out attempt, continued to ebb, and is now sitting at a support. Michael pointed out that there are many indexes hanging around their lows that were set in the middle of August  -  in particular the S&P 400 Mid Cap (MID) - which is indicative of an index that recently had a sharp decline and just hasn’t been able to bounce off that support provided by the low from August. That is not a good sign overall for the market.

Michael Kahn’s Chart of the Day: Nokia Corp. (NOK):

Nokia Corp. was trading around the 6.58 level during the time of analysis, right at its 50-day moving average of 6.55. Michael believes this stock is setting itself up for a rally, against the trend of the market. With a bullish flag pattern appearing in the chart and a possible merger on the horizon, he believes this is a good candidate to buck the bear trend, with a potential resistance around 7.40.

TradeKing “Options Guy” Brian Overby Analyzes Nokia Corp.’s Volatility & Dividends:

NOK’s 30-day Implied Volatility (IV) has been climbing recently, with their upcoming earnings announcement next month.  The Q3 earnings is anticipated to be announced October 29, 2015.

Nokia Corp. pays dividends annually, with an ex-dividend date of May 5, 2015. It’s expected to pay a healthy dividend of around $0.16 per share, or a 2.37% yield.

Brian Overby Shares NOK Paper-Trading Strategies:

Brian’s first paper trade is to purchase Long Stock, a bullish strategy. Brian believes with a stock price this low why not just trade the stock, avoiding options altogether. The stock has a tighter bid ask spread than most of the options in the chain. His second paper trade is a Long Call. This is also a bullish strategy. The goal is to purchase a call that contains the earnings to take advantage of an increase in volatility as we approach the earnings date.

Brian’s First Paper Trade - Long Stock

- Buy 100 shares NOK

- Bid 6.57, Ask 6.58

- Debit is 6.58 if we get it at the ask price

- Maximum potential loss: $658.00

- Maximum potential gain: Unlimited in theory

- Total commission to enter this trade at TradeKing is $4.95

Brian’s Second Paper Trade - Long Call

- Buy 1 Oct 30th 2015 NOK 6 Call

- 31 days to expiration

- Bid 0.65, Ask 0.80 for the call

- Debit is 0.80 if we get it at the ask-price.

- Maximum potential loss: $0.80

- 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 NOK Quote

- Long Stock

- Long Call

- TradeKing Volatility Charts

- TradeKing Options Pricing Calculator

- TradeKing Probability Calculator

- TradeKing P&L Calculator

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