MomentumOptionsTrading.com Midday Update for 7/17/2014
Small-Caps Slip Below 1,140
Futures were weak throughout the night following fresh US sanctions on Russia by President you know who. While the market was choppy, things got worse following reports of a Malaysian airplane crash over the border of Ukraine. There is speculation the plan was shot down but many questions remain on the breaking news.
The neighborhood fight just got a little more serious between Obama and Putin and the rhetoric and tragedy has weighed on the market.
Earnings have been in focus for much of the week and two of the biggest powerhouses on Wall Street will confess their numbers after today’s close.
Google (GOOG, $577.33, down $9.33) will have a huge impact on the Tech sector and is expected to bring home $12.73 a share. The company has their fingers in a lot of pies but their bread-and-butter is ad sales.
Meanwhile, International Business Machines (IBM, $194.68, up $2.32) is expected to earn $4.29 a share on revenue of $24.13 billion. Shares had a 28 point impact on the Dow following yesterday’s 2% pop and every dollar move on Friday should add 7-8 points to the Dow, good or bad.
The IBM August 200 calls IBM140816C00200000, $2.25, up $0.95) are up over 70% today after surging over 100% on Wednesday’s $4 advance. These call options could continue to do well if the company surprises Wall Street with an earnings beat. However, I would be reluctant to chase them at current levels following yesterday’s double and today’s nice pop
The IBM August 185 puts (IBM140816P00185000, $1.65, down $0.35) might make a good strangle option trade but with both premiums the trade would cost nearly $4, or $4,000, for 10 contracts of both the call and put options.
It is tempting to “sell” these options then buy them back but this is known as a naked short and the risk/reward just isn’t there.
Instead, an index trade on the Dow or the PowerShares QQQ might be the better play as both of these stocks will specifically help or hinder Friday’s action.
Heading into the second half of trading, the Dow is down 54 points to 17,083 while the S&P 500 is losing 10 points to 1,971. The Nasdaq is lower by 32 points to 4,393. The Russell 2000 is declining 10 points to 1,141 but has kissed 1,139.92. The VIX is getting attention today as it has zoomed 15% to 12.60, up 1.60.
Subscribers, check the Members Area for the latest updates and stay locked-and-loaded into the close as I could have a New Trade. I am still doing some research and chart work and if I can find the right options I hope to take action today.