10/31/2013

Soybean futures options              Month January of 2014 (53)         ZSF4

Risk: Defined

Buy Jan 1420 call/Sell Jan 1520 call for 4.00 or better the risk is $200 (the contract multiplier is 50)

Maximum profit before commissions is $4,800.

January IV 19%

Open Interest is deep in the January options

On this trade I rolled down the 1420 call and selling it and buying the 1380 call for an additional risk of 3.625 or $181.25 when the futures backed down to the 1263 area. In rolling down you better re-position the trade based on the technical analysis being the same. The risk is increased slightly, but it is a better position and the reward is increased by $1,000 in rolling down.

Trade is now 1380/1520.


Jan.  Monthly (57)

January options still gives the trader 53 days for short covering in the markets which could conceivably happen with soybeans down approximately 35% from their early September HI’s and rallying roughly 38% back from the august LO’s of 1162.5. Above 1310 look for the a run to 1355 area and above there the 1405 area looks to offer the next resistance level with little above that up through the 1450- 1475 area which is around the mid-range where they had been trading from late November of 2011 through late June of this year before plummeting down to the 1150’s.The other technical factor that I see is the initial gap from 185 level hasn't been filled and correlates to the upper resistance areas at the mid to upper 1400’s

*Disclaimer: This is not a recommendation. All trading entails risk. Anyone employing any strategies and having limited knowledge of options trading should consult with a FINRA licensed professional.

SPX    Standard & Poor’s 500 Index

The markets are looking a bit stagnant and we could see the market overall sell off moderately into the later part of the week with both PPI and CPI as well as Retail Sales coming up tomorrow and Wed as well as the always welcomed “Jobless Claims” due out Thurs morn The low volatility always offers a cheap play with a great return in case of any hic ups along the way.

IV Nov Weekly’s  12%

Look to buy the  1750/1730 Nov Weekly Put Vertical  for 2.25 or better with SPX at or below 1770

Risk $225 Reward $1,775

10/29/2013 Tues

SPX    Standard & Poor’s 500 Index

The markets are looking a bit stagnant and we could see the market overall sell off moderately into the later part of the week with both PPI and CPI as well as Retail Sales coming up tomorrow and Wed beyond that are Thursday's always welcomed “Jobless Claims” due out Thurs morn The low volatility always offers a cheap play with a great return in case of any hic ups along the way.

IV Nov Weekly’s  12%

Look to buy the  1750/1730 Nov Weekly Put Vertical  for 2.25 or better with SPX at or below 1770

Risk $225 Reward $1,775

Open Int. (est.)       strike                     Nov 13 Weekly (3)

1700                                   13,500

1705                                     5,500

1710                                     4,200

1715                                     2,650

1720                                   10,800

1725                                   20,500

1730                                      8,850

1735                                      5,000

1740                                   10,500

1745                                      5,800

1750                                    12,500

1755                                      2,850

1760                                      4,750

1765                                      5,350

1770                                      5,125

1775                                      3,750

*Disclaimer: This is not a recommendation. All trading entails risk. Anyone employing any strategies and having limited knowledge of options trading should consult with a FINRA licensed professional.

10/28/2013 MON

Ford Motor Company                         NYSE:     F

Ford is trading near the top of resistance around the 18.25 area. The stock looks strong but might back off going in to year end with sales already slowing due to the economy there are some cheap plays on the spreads and out right inexpensive protection on the near term put side. The stock has support coming in at the 17.00/ 16.50 levels initially and major support at the 10.25 area.

Avg Volume  36,550,000

IV                Dec Monthly 27. 50%              Jan Monthly 27.75%

Support  17.00/16.50**   15.45*

Resist    18.05*    19.00*     19.95***

Look at selling the Dec 18 calls and buying the Dec 17 puts for even and buy the Nov Weekly or Monthly calls for protection should the stock break through resistance.

Open Int. (est.)   strike   Dec 13 Monthly (53) Jan Monthly (81)

15                 27,500                                          194,700

16                 30,825                                            75,700

17                 20,400                                            97,400

18                 33,500                                            49,150

19                 53,000                                            53,800

EARNINGS ESTIMATES

                                                  Current Qtr                 Next Qtr                    Current Yr

                                                      12/2013                       3/2013                         12/2013

Average Estimate	0.34	0.46	1.62
Number of Estimates	15	9	18
Low Estimate	0.27	0.40	1.39
High Estimate	0.44	0.50	1.73
Year Ago EPS	0.31	0.41	1.41
EPS Growth	9.46%	12.20%	14.70%

*Disclaimer: This is not a recommendation. All trading entails risk. Anyone employing any strategies and having limited knowledge of options trading should consult with a FINRA licensed professional.

10/25/2013 FRI

Abbott Labs      NYSE:      ABT    $37.21

The stock looks like it is near a top after rallying back form the 32.75 area. With the controversy over Obamacare and the looming debate over the debt as well as the continuation of QE by the Fed this is another prime target poised for a sell off.

Avg Volume 9,200,000

Support     34.25*  33.00**   31.47**     30.1/ 29.50***

Resistance   37.61* 38.77**

Weekly Stochastics still showing sell after rally

IV Feb 19.61

Buy 35/30/25 +1/-2/+1 Feb Put Butterfly for .55 or better

Risk $55 Reward $445 per spread

Open Int. (est.)                strike        FEB 14 Monthly (119)

25                             4

26                         115

27                           32

28                         135

29                           65

30                         330

31                         270

32                         415

33                         455

34                         640

35                      3,700

EARNINGS ESTIMATES

                                                               Current Qtr                                   Next Qtr                               Current Year 
                                                                (12/2014)                                     (03/2014)                                (12/2013)

Average Estimate	0.58	0.49	2.01
Number of Estimates	13	9	18
Low Estimate	0.57	0.45	1.99
High Estimate	0.61	0.52	2.03
Year Ago EPS	1.52	0.42	5.07
EPS Growth	-61.59%	16.14%	-60.27%

       The risk is minimal if I’m wrong and the reward is great for a stock that has had a run up from a low in 2009 of 19.75.

*Disclaimer: This is not a recommendation. All trading entails risk. Anyone employing any strategies and having limited knowledge of options trading should consult with a FINRA licensed professional.

10/24/2013 Thurs

Corn Futures          ZC

IV  Mar options  23%    ZCH4

      Corn futures appear to have consolidated between the 435 and 450 range over the past couple weeks. I would look to get long the Mar options on any weakness from here. Minor retracement of 23% comes in around the 528 level and 590 is the 38% retrace from the move down from 849 hi back on 8/10/2012 to the 432 area a move which represents a 50% price decline.

      Look at the 490/540 call spread in Mar which is currently trading for around 6.75. If you can pick the spread up for 6.50 or better the risk is minimal at $325 with a potential reward of $2,175. Margin on the spread is only $425. That positions the buyer for a rally back to the 500 area and a further move to where the futures gapped down to at the 550 level back in late June. Even if the futures were to rally to the 505 levels and fail the spread would probably trade up to the 15 to 25 point range depending on both time and volatility at that particular point.

*Disclaimer: This is not a recommendation. All trading entails risk. Anyone employing any strategies and having limited knowledge of options trading should consult with a FINRA licensed professional.

10/23/2013 Wed

Wheat Futures    Mar futures closed yesterday 709.75    ZWH4

* front month is still Dec Futures which are at a 10 point differential

IV                    JAN 21.80%        Mar 22.75%

      The grains have been hit hard over the past year and a half. Wheat sold off from a high of 945, bottoming at around 621. It has been strong over the last several weeks rallying through the 700 handle. To me it looks like short covering could push the futures up through the 800 handle which is just over the 50% retracement from the move down from 945.

      Look at buying the Jan call contracts on any weakness. The best play to me is in the Jan or Mar options. In Jan look at the 750/790 call vertical +1/-1 for 7 points or better, which is a risk of $300 with a potential gain of $1,700 it is currently trading around 7.50.

      The other choice would be the Mar 750/790/830 call Butterfly +1/-2/+1 for 3.50 or better but at the current price it’s trading for of 3.50 which is a risk of $175. The risk reward is attractive $175/ $1,825. The difference in the 2 spreads is time and how fast the move occurs. The Butterfly’s have a tendency not to pay off further out from expiration  they are but one can still take some excellent profits none the less should the move up continue.

      With the forecasts pointing to a harshly cold winter here it’s a good percentage play in either case. If the cost of the Jan spread is too pricey, look at the 750/790/830 +1/-2/+1 Butterfly same strikes as in the Mar spread. The Jan Butterfly is trading around 4.00.

10/22/2013 Tues

Netflix Inc.                          NASDAQ: NFLX

    With much of the controversy behind them and the new business plan apparently working well for the company, the stock looks poised for a short cover rally, especially going in to year end. Subscribers are up and so are revenues, which now top $1 billion. The company seems to be gearing up to position itself as yet another "channel" on your cable TV box, with the added benefit of their entire streaming content.

      I would wait and see where the stock and IV settle in tomorrow. With that said look at selling the front month Nov calls and buying the Dec call on a diagonal selling the Nov 420 call and buying the Dec 425 call provided the vol differential is still 15% or more in your favor. If not, look at a call vertical in Dec around the 425 strike. Short covering coupled with portfolio managers and hedge funds could see the stock soar.

    Notice the volume on the Dec 450 calls was around 3,000 traded on Monday and the Nov 350, 400, 450 and 490 calls all traded heavy volume as well, which suggest more upside to come.

Even the Dec 450/470 long vertical seems attractive at around the 1.50 range great risk reward in a market where many stocks have substantial gains and having trouble supporting their prices as we saw with both ISRG and IBM.

Avg Volume 3,257,000

IV       Nov Monthly’s 72%      Dec Monthly’s 56.60%     Jan Monthly’s 53.30%

EARNINGS ESTIMATES

	Current Qtr  (09/2013)	Next Qtr  (12/2013)	Current Year  (12/2013)	Next Year  (12/2014)
Average Estimate	0.48	0.47	1.56	3.35
Number of Estimates	19	19	16	21
Low Estimate	0.39	0.20	1.29	1.70
High Estimate	0.61	0.88	2.24	NA
Year Ago EPS	0.13	0.13	0.29	1.56
EPS Growth	272.87%	261.94%	436.42%	115.47%

*Disclaimer: This is not a recommendation. All trading entails risk. Anyone employing any strategies and having limited knowledge of options trading should consult with a FINRA licensed professional.