Tuesday, August 31, 2010

FOMC

Dan doesn't see real big reaction during the FOMC minutes announcement. Dan feels the Fed will hold back on any further quantitative easing unless economy starts to show negative growth. Short term he cites better than expected consumer confidence numbers, which have helped hold the market together. As for the market, however, S&P 500 tested 1040 three times in the past week and if this level is breeched, Dan expects more downside for the market and VIX could escalate back into the 30’s.


Dan on Business News Network

Market View

Dan discussed the disappointment in the market after the relief rally last Friday which continued into Sunday night, only to fade on Monday. The VIX firmed up as the S&P 500 approached that critical support level of 1040. He sees scaled back trading as market participants wait to see if there are any changes in the economic climate as multiple new items hit the tape this week. Dan also feels the recent M&A activity is an effort to pad the bottom line, with little top line growth prospects. However, these types of mergers do little to alleviate the current job situation in the US.


Dan on Bloomberg

Thursday, August 26, 2010

Relief Rally

The market remains in a downtrend, but Dan doesn't want to short here from a trading stand point. He sees to much bearish sentiment in the market at this time. The market held a key technical level of 1040 in the S&P 500, so there is potential for a relief rally to work off the oversold conditions. The VIX didn’t pop like he would expect on the recent down move, which is another hint that market participants are leaning short.

Dan on Bloomberg

Wednesday, August 25, 2010

Chart Talk

Dan talks about the downtrend of market following a series of lower highs and lower lows. The S&P 500 breaks below the low of "flash crash" -- 1065 level and next support level is 1045 and 1020. Semiconductor HOLDRs (SMH) is especially bearish, even breaking the July low. However, based on the activity in the VIX, Dan feels the market's down move will be less volatile then previous tests of these levels.

Dan on First Business

Monday, August 23, 2010

Bets on Quality Names

Brian Stutland, contributor to CNBC's Options Action shown on Fridays, talks about his market view of sideway to slight upside in the coming month. Brian recommends to buy the Sep 100/104 call spread for $2.25.
DIA Option Play

Friday, August 20, 2010

Merger Madness

Brian Stutland, contributor to CNBC's Options Action shown on Fridays, talks about his play on the next possible take over target: US steel. Specifically, Brian recommends to buy the Sep 45/55 call spread for $3.25.

X Option Play

Thursday, August 12, 2010

S&P 500 50 day moving average

With S&P 500 drop 2.74% one day after Fed meeting, Dan points out the critical level of 50 day moving average-1088, if market breaks this level, it will likely drift down to
1045-1050 level.



Dan Deming on First Business

Unusual Uncertainty, or Usual Uncertainty

Dan discusses the current down move in the market and where he sees the market heading from here. Dan suggests to wait and observe the market over the next couple of days while it digest the news from the Fed. coupled with economic reports from the US and asia. Based on the relationship between the VIX cash and August VIX future, Dan didn't see "unusual uncertainty" at this time.

Dan on Bloomberg

Tuesday, August 10, 2010

CDX vs VIX and TLT Option Play

Brian Stutland, contributor to CNBC's Options Action shown on Fridays, talks about the strong correlation between CDX (insurance premium on corporate bond) vs VIX on "Fast Money Final Call", he thinks the better borrowing and lending conditions coming forwards as implied by the correlation.
CDX vs VIX

Brian also suggests a TLT collar play ahead of the Fed meeting. With TLT around 100, Brian recommends to sell the Aug 102 call for 0.30 and buy the Aug 98 put for 0.35 to protect the bond portfolio.
TLT Play

Friday, August 6, 2010

Dan Deming talks about the jobs numbers

As the job numbers come out today, Dan Deming talked on First Business News about what kind of affect those numbers will have on the market. Dan feels the numbers will be in line and the marekt will maintain its levels. He mentioned that we are sitting on critical trend lines and we need to see the S&P trade above 1135 to confirm up move otherwise we could fall down to 1100 or below. The short term momentum still feels high and Dan wouldn't be suprised if the job number comes out better than expected.

Unemployment Numbers

A Coca-Cola Call Option

After a strong push with their World Cup marketing scheme and essentially doubling their growth in Africa and Asia, Coke looks poised for a nice run. The fundamentals and dividend yield are both strong and Brian has a simple trade to gain more leverage to the upside. His play is the Sept.55 call, you pay $1.80 so your break even point is $56.80, above that you start to participate as if you are long stock. Below 55 you have no more risk other than the $1.80 you paid for the trade. Brian feels Coke is at an inflection point where it may move significantly higher, possibly 10% or more in the next year.

Coca-Cola Trade

Wednesday, August 4, 2010

Mutual Funds vs. ETF's

Yesterday on the Fast Money Final Call, Brian explained the advantages of using ETF's as opposed to mutual funds. As an option trader, he loves ETF's because instead of owning mutual funds, he can trade ETF's for less fees. Also, with ETF's, he gets paired options to use against ETF's to over-write his long bias and generate income. Even though ETF's fell during the flash crash, you can still use options to mitigate your risk. Brian suggests buying a downside put for downside protection or selling an upside call to collect a little extra premium. The example Brian used was EWZ, a Brazillian ETF. He suggests selling the Dec.76 call at $3.70 and taking in some premium there. You will break even on the upside at $79.70 and you are willing to be called away above $76.00. With this trade, you add a little extra income to your portfolio and you still have the Brazillian exposure.

Trading ETF's

Monday, August 2, 2010

Options Action

Check out some of the clips from Brian and the guys last Friday on Options Action.

The Final Call

Total Recall

In the Money Now

Interesting stats that might make you bullish on stocks

Corporate yields over Treasuries on corporate debt have shrunk as much as 0.38 % points on average to 2.9 percentage points from the high this year in June. Investors drove U.S. Corporate bond yields now sit on average at 4.98% last week, the lowest since March 2004, from this year’s high of 5.75% on Jan. 4, according to Bank of America Merrill Lynch index data.

Debt sales totaled $90.1 billion last month, the busiest July on record, Bloomberg data show.

The Commerce Department data also showed business investment climbed at the fastest rate since 1997 as corporate profits rose, according to Bloomberg.

Earnings will rise 35 percent this year, the most since 1988, forecasts show. Following the 2001 recession, income growth never exceeded 20 percent.

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