12/06/2013 FRI

Kellogg Company         NYSE: K

Kellogg’s has been in a down trend since it topped at 67.98 on 7/22/2013. The stock rallied back off the lo of 58.01 on 10/2/2013 hitting the 61.8% retracement, after which it has continued to show weakness. It looks like could be a nice play with trend support from the monthly chart coming in around 52 level with a couple Fibonacci retracements around 55.7 and 57 right where the stock broke out from at the beginning of the year. Watch for the stock to trade below 60.50 after which it could regain downside momentum again.

Avg. Volume    1,865,215

52 Wk High   67.98               52 Wk Low  54.53 

Resist   61.85*   62.88/63.05**    65.82***

Support   60.3/ 60.4*    60.05*   57/55.7**

PE Ratio Current Year Est. 3.76

IV    Jan 15.75%    Mar 16.61%

Look at buying the Jan 60 puts simply due to the lo implied volatility of 15.75% they offer inexpensive entry on a stock that is in a down trend coupled with a 42 day time frame. The Jan 60 puts closed at .925, though .85 or better is a good price based on risk v. time scenario.

The other play simply due to the upcoming holiday as well as the ever popular window dressing would be a Diagonal Calendar spread buying the Mar 62.5 put and selling the Dec 60 puts and then rolling the short Dec out to Jan depending where the stock is at that point in time.

Open Int. (est.)   strike   Dec Monthly (14)   Jan Monthly (42)   Mar 14 Monthly (105)

52.5                                      12                        242                          19

55                                       147                        549                        324

57.5                                    584                      2006                        304

60                                      1160                     5078                       1853

62.5                                   2883                     2684                       1753

*To view the full articles on trading please go to https://tradersexclusive.com

*Also for trading ideas and commentaries and responses from industry professional go to https://mtmtradercommunity.com

*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 FNRA licensed professional.

12/06/2013 FRI

Kellogg Company         NYSE: K

Kellogg’s has been in a down trend since it topped at 67.98 on 7/22/2013. The stock rallied back off the lo of 58.01 on 10/2/2013hitting the 61.8% retracement, after which it has continued to show weakness. It looks like could be a nice play with trend support from the monthly chart coming in around 52 level with a couple Fibonacci retracements around 55.7 and 57 right where the stock broke out from at the beginning of the year. Watch for the stock to trade below 60.50 after which it could regain downside momentum again.

Avg. Volume    1,865,215

52 Wk High   67.98               52 Wk Low  54.53 

Resist   61.85*   62.88/63.05**    65.82***

Support   60.3/ 60.4*    60.05*   57/55.7**

PE Ratio Current Year Est. 3.76

IV    Jan 15.75%    Mar 16.61%

Look at buying the Jan 60 puts simply due to the lo implied volatility of 15.75% they offer inexpensive entry on a stock that is in a down trend coupled with a 42 day time frame. The Jan 60 puts closed at .925, though .85 or better is a good price based on risk v. time scenario.

The other play simply due to the upcoming holiday as well as the ever popular window dressing would be a Diagonal Calendar spread buying the Mar 62.5 put and selling the Dec 60 puts and then rolling the short Dec out to Jan depending where the stock is at that point in time.

Open Int. (est.)   strike   Dec Monthly (14)   Jan Monthly (42)   Mar 14 Monthly (105)

52.5                                      12                        242                          19

55                                       147                        549                        324

57.5                                    584                      2006                        304

60                                      1160                     5078                       1853

62.5                                   2883                     2684                       1753

*To view the full articles on trading please go to https://tradersexclusive.com

*Also for trading ideas and commentaries and responses from industry professional go to https://mtmtradercommunity.com

*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 FNRA licensed professional.

12/05/2013 THURS

Earnings Volatility: Friend or Foe?

      When a company has an earning conference scheduled, many times there is speculation not only in regards to the accuracy of the projected Earnings Per Share (EPS), but to several other factors as well. These include, but are not limited to sales and revenue streams, products in the pipe line, cash on hand, management changes, possible future stock or bond offerings, etc. The uncertainty may cause volatility in the shares themselves, but the diamond in the rough is actually the temporary parabolic increase in the exchange listed options on the underlying shares. Traders tend to stay on the side lines going into the days leading up to the earnings conferences. Call buyers swap out shares of stock for call options so they may participate in a rise should the shares move higher and limit the potential should the shares trade lower, forcing the call options to trade, in many cases, a drastically expanded volatility. Additionally, put buyers force the options higher as they try and protect their positions.

      From a traders perspective the opportunity to capitalize on the potential volatility allows them to capitalize with limited risk via Verticals, Butterfly’s, and Diagonal Spreads. A Long Vertical Spread is simply a long call at a lower strike and a short call at a higher strike or a long put at a higher strike and a short put at a lower strike, normally in the front two months where premium is most sensitive and susceptible to Theta (time decay), especially if the earning are in the last week prior to expiration. The Long Butterfly is similar but it is achieved by buying a long vertical and selling a short vertical with a common short strike. The Long Diagonal is achieved by selling a front month option and buying a back month option of the same type, put or call, on different strikes. The trick is to devise a way to use options to benefit from a potentially large swing either up or down to your advantage. 

To view the full article please go to https://tradersexclusive.com

Also for trading ideas and commentaries and responses from industry professional go to https://mtmtradercommunity.com

*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 FNRA licensed professional.

12/4/2013 WED    

International Business Machines                 NYSE: IBM   Close 176.08

Avg. Volume  4,921,991

52 Wk Lo       172.57

52 Wk Hi        215.90

Support    175.60*   172.60**   167.25/169.70***    159.6/153.85****

Resistance     178.25/178.95*   179.71**   182.30/182.65***

PE Ratio 10.51

IV Dec Monthly 19.03%   Jan 19.02%

IBM has been in a downtrend since late March when it made new his at 215.90

The 170/155/140 put Butterfly in January is trading on the mid for around 1.45 which is an approximately a 9 to 1 risk reward scenario with the risk at $145 and potential reward of $1,355 should the shares drop to the mid to upper150 area.

The Dec 175/165 put vertical is also attractive which is trading around 1.85 on the mid point.

The Jan Butterfly spread offers more time as well as allows you to sell out of the long vertical portion of the fly should the move come earlier than anticipated which would leave you short the 155/140 put vertical which is why I prefer to be positioned in the butterfly though with the Dec put vertical you have a chance to roll into a butterfly or put condor should the opportunity present itself.

Open Int. (est.)   strike   Dec Monthly (16)          JAN 14 Monthly (44)

140              152                                      2,047

145              268                                      1,380

150              294                                      3,161

155            1,572                                     2,193

160            8,219                                     4,000

165            7,498                                     6,787

170            9,716                                     8,169

175            8,835                                     8,633

For a better understanding of Butterfly spreads you can see a full 3 part article published on https://tradersexclusive.com

Also for trading ideas and commentaries and responses from industry professional go to https://mtmtradercommunity.com

*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 FNRA licensed professional.

12/3/2013 VIX

VIX CBOE Market Volatility Index                                      CBOE: VIX 

Previous day        13.78 lo     14.32 hi    14.31 close

      “The ticker symbol for the Chicago Board Options Exchange (CBOE) Volatility Index, which shows the market's expectation of 30-day volatility. It is constructed using the implied volatilities of a wide range of S&P 500 index options. This volatility is meant to be forward looking and is calculated from both calls and puts. The VIX is a widely used measure of market risk and is often referred to as the "investor fear gauge."”

     The current level created a low risk scenario with the markets starting to get nervous as they move into the newly untested heights they are presently at the mid-range over the past year is in the 17.05 range with the spikes reaching into the 18.50 – 19.00 levels and going all the way to 2.45 and 21.91 only twice this year. With 5 peaks already this year, all coming about 2 months a part except for these past two which were about a month apart.

      “VIX values greater than 30 are generally associated with a large amount of volatility as a result of investor fear or uncertainty, while values below 20 generally correspond to less stressful, even complacent, times in the markets.”

VIX - CBOE Volatility Index. Retrieved from http://www.investopedia.com

Long the 13/18/23 Call Butterfly for .65 which was purchased back on 11/25/2013. It closed yesterday at 1.00. Even with a .35 profit which represents roughly a 53% profit on capital risked I believe the market is poised for a much needed pull back I will consider exiting the trade if the VIX get up to the 17 level.

Open Int. (est.)   strike             DEC 13 Monthly (14)

12                                       142,600

13                                       420,490

14                                       523,265

15                                       450,614

16                                       243,390

17                                       224,797

18                                       165,282

19                                         88,525

20                                       124,248

21                                         70,114

22                                       124,442

23                                         71,351

*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 FNRA licensed professional.

12/2/2013

Soybean Futures

ZSF4 Soybean futures looking good trading just above trend resistance after rallying back from the 1318 level. Looking for the 1357- 1360 area as the next target after that it looks like they could make a run at the 1400 level staying long the Jan 1350 call …fingers crossed and eyes closed

*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 FNRA licensed professional.