TradeKing Midday Market Call Recap – SPX, BBBY – Fox Business

Recap for Tuesday, December 16th by Kevin Corrigan

Did you miss Tuesday’s TradeKing Midday Market Call? Here’s a quick recap. Don’t miss another session, register here today!

Analysis of S&P 500 from QuickTakesPro’s Michael Kahn:

S&P 500 (SPX) – At the time of this broadcast, SPX was around 2008.02 up 18.39 today. The red line from the previous high in September is the key level at about 2020 that was acting as support. It broke below that and has remained below the past two days. It could have a reversal today, but it usually doesn’t mean anything unless there is follow through tomorrow.

It is well above its 50 and 200 day moving averages of 2002.11 and 1947.63, respectively.


The Chart of the Day is Bed, Bath and Beyond Inc. (BBBY) –

At the time of this broadcast, BBBY was at 73.52, up 0.38 today. It appears to have broken out of a “bull flag” pattern yesterday. It has been outperforming the Relative Performance of the SPX. If it continues heading up, we can look at the last “gap down” at the beginning of the year. If the stock fills the gap, the next level of resistance could be around 78.

It is above both its 50 and 200 day moving averages of 69.13 and 64.86, respectively.

Analysis of BBBY Volatility Chart and Dividends from TradeKing’s Brian Overby – 
The 30-day implied volatility (IV) has been jumping up recently to about 32.5%, most likely because BBBY is expected to announce earnings on January 8th, which is within the next 30 days. The 30-day historical volatility is currently fairly low, about 15%.

BBBY does not currently pay a dividend.

Technical tools used:

 Moving Averages
– Trendlines

Brian Overby’s paper trade strategies based on Michael’s analysis –
Michael’s analysis was bullish. Brian discusses two paper strategies, one with an expiration that that avoids the earnings announcement and one that contains it. One short term Long Call before earnings on January 2, and one longer term Short Put Spread that expires after the announcement on January 30th. Although the expiration is after the announcement, it is imperative to consider closing the position before the event date.

Brian’s Paper Trade – Long Call (shorter term) – Buy 1 Jan 2 2015 BBBY 72.50 Call
– 17 Days to expiration  – Bid 1.83, Ask 2.04 for the Call
– Debit is $2.04
– Maximum potential loss: $2.04- Maximum potential gain is unlimited if the stock goes to infinity (not likely to happen).
Total commission to enter this trade is $5.60

Brian’s Paper Trade – Short Put Spread (longer term) – Buy 1 Jan 30 2014 BBBY 67.00 Put- Sell 1 Jan 30 2014 BBBY 69.00 Put
– 45 Days to expiration – Net Bid 0.13, Mid 0.44, Ask 0.75 for the strategy
– Net Credit is $0.44 if we get at the Mid (might not be possible)
– Maximum potential loss: $1.56    – Maximum potential gain is $0.44
Total commission to enter this trade is $6.25

 **NOTE: 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 Quote

TradeKing Short Put Spread

TradeKing Long Call

TradeKing Volatility Charts

TradeKing Options Pricing Calculator

TradeKing Probability Calculator

TradeKing P&L Calculator

Get solid market analysis and potential trading ideas. Take 15 minutes of your lunch with our team, as they analyze the market during this live online session. As an added bonus, a stock chart will be covered in detail each session accompanied by a potential option trade. This might be the most valuable thing you do all week! Every Tuesday midday from 12:00 – 12:15pm ET.

Don’t miss the next TradeKing Midday Market Call. Register here: www.tradeking.com/events

Regards,
Kevin Corrigan, PMP
VP Content and Social Media
www.tradeking.com

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

Multiple leg options strategies involve additional risks and multiple commissions, and may result in complex tax treatments. Please consult a tax advisor.

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

System response and access times may vary due to market conditions, system performance, and other factors.

Any strategies discussed and examples using actual securities and price data are strictly for illustrative and educational purposes only and are not to be construed as an endorsement, recommendation, or solicitation to buy or sell securities. Past performance is not a guarantee of future results. Consider the following when making an investment decision: your financial situation, your risk profile and transaction costs.

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While implied volatility represents the consensus of the marketplace as to the future level of stock price volatility, there is no guarantee that this forecast will be correct.

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