I just want to make everyone aware of a new CBOE regulation that will affect Options Traders.
The fee became operative March 1, 2009.
The Options Regulatory Fee or ORF Fee is a charge implemented by the Chicago Board Options Exchange (CBOE) to fund its regulatory and surveillance duties. This fee will apply regardless of the market place of execution. Visit the CBOE website at http://www.cboe.org/publish/RegCir/RG09-030.pdf.
If you have additional questions or concerns about this, please contact your broker for more information.
We saw a short term spike in the VIX yesterday to $32 off the most recent low of $26. I would be most concerned about this spike in volatility if we break above the $35 level. This break above this level would represent a spike above the most recent resistance levels that have been holding for many weeks. The S&P 500 is reaching a major key support level of 880. This is a substantial support level that could be tested several times before realizing its strength or weakness. If we hold this major support level then the S&P 500 could attempt a strong rally back to the 950-960 range. If this 880 level does not hold then there could be substantial downside into the high 700 range. Be extremely cautious in trading to the long side around the 880 level.
If you would like to receive more information on Financial Education for your organization please contact me at dsullivan@wizetrade.com or go to www.WizetradeForGroups.com. Wizetrade for groups can educate employees or members of your organization about the stock market, retirement investments, 401K asset allocation, and many other trading markets such as options, forex, and commodities. Should your group be interested in learning how to trade the financial markets in 30 days, go to www.Wizetradeforgroups.com and sign up for your free 30 day trial.
Diane Sullivan
Wizetrade TV Expert
Director of New Business Development
800.304.8881 x22435
dsullivan@wizetrade.com
SPY- The market that’s been in a channel for a while that’s broken down over the last couple of days. The 65 or 130 minute light give a great view of the true movement of the stock between it’s high’s and low’s. With the strength in the angle we broke through $93 on the low yesterday and we’re making new lower high’s and lower low’s. This could move us into a bearish movement or a new lower channel.
The VIX has breaken out on the Short Term wedge formation that it’s formed over the previous few weeks. Making continued decreasing high’s and increasing low’s, there was a breakout finally on June 8, 2009. The breakout doesn’t necessarily mean there will be a bearish trend now in the bearish breakout direction, but we are at least consistently closing the price at new lower lows.
With the VIX having moved so big over the last year and a half, one has to wonder, is the VIX low now? It used to be that the VIX at 28 (where it is as I write this) was outrageously high in price and one should be looking actively for the exit door to their positions. And now?
Well, I think it's all relative and there's no clear answer to that question. It is still my opinion that this market is high on false hopes. But that's not to say that we're going to fall back or that we won't move up another 2000 in the DOW before pulling back again. I'm just being super-cautious with everything that I'm looking at and keeping all of my stops actively managed.
Happy Trading!!
Angie C.
Consider the advantage of leverage that an options trader has over a stock trader. If you were looking at purchasing 500 shares of stock XYZ at $150.00, you may want to consider a LEAPS options on the investment for a smaller percentage of portfolio invested. Typically the premium of the option is approximately 10% to 20% of the price of the underlying stock. Considering this example:
Stock:
500 Shares
Total Investment: $75,000
Options
5 contract
Total Investment: $11,250 (Assuming a 15% ratio)
There are many differences between an investment in common stock and an investment in options. An option has a limited life which is the expiration date. But you only lose what you pay for the option in long calls and long puts. Consider LEAPS when looking at longer term investments.
Wizetrade For Groups can provide educational training on the financial markets to any business, organization or group. As an employee we can help increase employee morale by knowing they are more secure about their financial future. Go to www.WizetradeForGroups.com or call me at 800.304.8881 ext. 22435. Ask questions or request additional information at dsullivan@wizetrade.com.
The anticipated GM bankruptcy was filed today and it will be the end of an era but not the end of the car company. GM will have access to taxpayer money while the government attempts to run the company. We can temporarily move past this news headline, but unfortunately we do not have a line drawn in the sand as to the money it's going to cost for this bailout. This is an unfortunate circumstance for many. With you trading we must always be aware of the next headline, and most importantly is the data coming in the week ahead. The jobs market is what it's all about right now. Many of us have our eyes on the Labor Department report on Friday but we must not forget about the ADP report on Wednesday. Optimism has been on the horizon and if we see a positive ADP number on Wednesday we could continue this rally throughout the week to that significant S&P 950 level. Watch this 950 level which we are close to reaching in this morning trading session. Breaking through this resistance from December 2008 could see a significant move higher, if not we could see a possible retracement back to the 880 levels. Have a great week of trading.
Wizetrade For Groups can provide educational training on the financial markets to any business, organization or group. As an employee we can help increase employee morale by knowing they are more secure about their financial future. Go to www.WizetradeForGroups.com or call me at 800.304.8881 ext. 22435. Ask questions or request additional information at dsullivan@wizetrade.com.
