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Nick Chiu
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Senior Options Trading Strategist at Optionity, MBA. Our trading approach starts with the fundamentals, then through short-term technical analysis, to finally leverage options trading (with the combination of long and short positions) to achieve favorable risk and reward ratio trading plays. Our... More
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Optionity
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Optionity - specialized in Options Trading
  • Optionity Daily Report 04/25/2013 0 comments
    Apr 25, 2013 7:43 PM | about stocks: SPY, AXP, CHL, CSCO, F, GE, INTC, KO, MDLZ, MMM, MSFT, ORCL, PEP, PFE, QCOM, SYY, TEVA, TSM, UTX, VOD, WM

    Date: April 25, 2013

    Daily Market Statistics

    Source: Barrons

    S&P 500 5-Day Daily Chart

    (click to enlarge)

    Source: Google Finance

    Economic Calendar

    (click to enlarge)Source: Briefing

    Options Market Recap

    The market sentiment was neutral with Fear & Greed Index at 54, which had increased from the previous day closing of 48. As reported by CBOE, the total put/call ratio was 0.97 for the day. The index put/call ratio was 1.13, and the equity put/call ratio was 0.61. The CBOE volatility index (VIX) put/call ratio was 0.70. The stocks with unusual call activities had been identified through our daily options scanning process, with the scanning criteria where the daily call option volume ratio was above 2.00 (2x of the average call option volume) with a call option volume above 20,000. Unusual option activities can be an indicator or precursor of a major movement for the underlying stock.

    (click to enlarge)Source: Schaeffer's Research

    Stocks with Unusual Volume

    Below is the top 10 list obtained from AVAFIN.com for options alert with the following screening criteria:

    1. Unusual Volume
    2. 300% spike in volume
    3. In all sectors and all industries

    (click to enlarge)Source: AVAFIN.COM

    Market Volatility and Analysis

    (click to enlarge)

    For Option Equity Put/Call Ratio, the MACD (12, 26, 9) continues to be bullish. RSI (14) has increased and is indicating a slightly bearish lean. RSI (14) closed at 47.59 (previous closing of 46.45). MACD different is converging. The market is expected to decline if both MACD and RSI are bullish. Watch out for "Sell in May and Go Away" effect.(click to enlarge)

    SPDR S&P 500 ETF Trust (NYSEARCA:SPY)

    SPY opened higher and closed higher at $158.61 (+0.45%). The volume was 32.49M. On weekly basis, the MACD (12, 2, 9) is showing a bullish trend and the MACD Histogram increased in the last trading day and closed at 0.297. SPY is currently trading above its 200-day MA of $121.09 and its 50-day MA of $142.60. RSI (14) increased and closed at 68.76. The next resistance is $161.10 (R2).

    Optionity Core-20 Options Portfolio (Credit Put Strategy)

    Stock criteria:

    1. Large Cap with low beta
    2. Fair/Under-valued
    3. Consistent, strong earnings
    4. Dividend distribution
    5. High liquidity, large volume
    6. Good/strong economic moat

    This options portfolio consists of 20 core stocks. The portfolio will employee mainly the credit put strategy with the primary objective of generating consistent cash flow. The portfolio focuses on 1) sufficient sector diversification 2) risk/reward ratio control 3) margin of safety by leveraging options.

    Daily portfolio performance will be updated at Seeking Alpha Instablog and Optionity.com.

    Transaction details will be updated whenever new position is opened or the existing position is closed/expired/adjusted.

    Core-20 Stocks Update

    (click to enlarge)

    Source: Seeking Alpha

    Existing Position(s):

    For the complete list, please visit Optionity.com

    *New position opened/closed

    Closed Position(s):

    Core 20 Positions:

    GLW credit short put spread $11/$12 Mar. 15, 2013 ($0.23 credit, established on February 7, 2013) => Closed short put $12 at $0.07 on February 20, 2013. $0.16 profit (20.78% Return on Margin, 13 days, including non-trading days). $11 put position was sold for $0.04 on February 26, 2013, adding $0.04 to the total profit.

    ORCL credit short put spread $29/$31 May 17, 2013 ($0.32 credit, established on March 21, 2013) => Closed position on April 11, 2013. $0.23 profit (13.69% Return on Margin, 21 days, including non-trading days).

    CHL credit short put spread $50/$52.5 April 19, 2013 ($0.55 credit, established on March 6, 2013) => Closed position on April 16, 2013. $0.15 profit (7.69% Return on Margin, 40 days, including non-trading days).

    CHL credit short put spread $50/$52.5 April 19, 2013 ($0.75 credit, established on March 19, 2013) => Closed position on April 16, 2013. $0.35 profit (20% Return on Margin, 27 days, including non-trading days).

    CHL credit short put spread $50/$52.5 April 19, 2013 ($0.30 credit, established on February 25, 2013) => Closed short put $52.5 put at $0.05 on April 19, 2013. $0.25 profit (11.36% return on margin, 55 days, including non-trading days)

    TEVA credit short put spread $35/$37.5 April 20, 2013 ($0.19 credit, established on March 7, 2013) => Closed short put $37.5 at $0.02 on April 19, 2013. $0.17 profit (7.36% return on margin, 42 days, including non-trading days)

    AKAM credit short put spread $30/$32 May 17, 2013 ($0.38 credit, established on February 13, 2013) => Closed AKAM short put $32 at $0.03 on April 25, 2013. $0.35 profit (21.60% return on margin, 72 days, including non-trading days)

    Other Options Positions:

    N/A

    All rights reserved © Optionity 2013

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