Options/Futures

Teradata Draws Upside Trades

twocents@thestreet.com (OptionMonster) — Wed, 22 May 2013 08:55 GMT

By David Russell, reporter at OptionMonster

NEW YORK -- Cloud-computing stocks have been active recently, and Tuesday the bulls turned to data-warehousing company Teradata.

OptionMonster's tracking systems detected an early volume spike in the June 60 calls, with large blocks crossing for 80 cents and 85 cents. Those contracts lock in the price where the stock can be purchased, which can result in some nice leverage in the event of a rally. ...

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Trends in VIX Settlement

twocents@thestreet.com (Mark Sebastian ) — Mon, 20 May 2013 12:20 GMT

CBOE Volatility Index (VIX) options and futures expire this week on Wednesday. This is a once a month opportunity for traders to get a clean look at how VIX options and futures function. During this five-day period the VIX really shows how the different months interact with each other, what happens to a contract when it moves from 'out month' to front-month future and the process by which a future moves from trading at a premium to settling into cash. If you are unfamiliar with VIX derivatives, this is the week to watch the VIX options and futures move. Lets start with the contract that is settling. May is currently trading at a $0.70 premium to cash, assuming there is some weekend adjustment, that number will open up around $0.30 today and widdle down to $0.10-$0.15 tomorrow. Traders often lament there is no way to 'trade the cash VIX.' Over this two-day period VIX futures and options get as close as one can get in the list market to trading like the cash VIX. When VIX settles on Wednesday pay attention to where the VIX is trading on the open, and where the VIX actually settles. Also, notice the number of weird far OTM options that trade $0.05 on the open as well. Depending on how many of these OTM options trade the VIX will either settle near the cash, well below or well above cash. It's a convoluted settle, but interesting to watch. Next up, watch the out month become the front-month future. Over the next five days, the June future will truly begin "slipping off the slope." As traders move into shorting it in anticipation of the Future converging with cash VIX. The first week of a futures life as the front month can have some of the strongest decay. Playing June on Monday or Tuesday as a short regardless of any May play is known to be a favorite of prop traders. June is going to have a bit of a blood bath this week. The rest of the curve will also shift with June and a new month will be added. The curve will manage to hold its current shape even as May rolls off. This means that actually ALL of the months will see some increase in decay this week, not just June, however it's the most significant in June. If we see June take its expected dive that is also bad news for iPath S&P 500 VIX ST Futures ETN (VXX). The ETN, which we know has problems, typically performs at its worst during these weeks. It is when its most concentrated in the front month future and also when the front month future dives. This is not good forVXX. There is less of an affect on some of the other ETNs, however, my guess is they will also see similar issues to VXX. It's also buy-write Monday in options world. This is when many funds and individual investors move to execute buy-write strategies in June options. This can have a negative impact on SPX options, so look for VIX cash to see some pressure early Monday from this effect We would see it if VIX is up far less than its normal .60%-.70% that we normally get on a Monday. The week after expiration is a great time to learn about premium flows and how things become oversold (or over bought) take some time this morning to really watch how the VIX moves. Continue to watch the rest of the week paying special attention to cash, May and June's relationship. OptionsProfits can be followed on Twitter at twitter.com/OptionsProfits Mark can be followed on Twitter at twitter.com/OptionPit

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Kinder Morgan Bulls Look for a Breakout

twocents@thestreet.com (OptionMonster) — Mon, 20 May 2013 08:54 GMT

By David Russell, reporter at OptionMonster

NEW YORK -- Energy pipelines have been a favorite of the bulls, and now they're looking for Kinder Morgan to break out. ...

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Bulls Take the Wheel in Con-Way

twocents@thestreet.com (OptionMonster) — Fri, 17 May 2013 08:49 GMT

By David Russell, reporter at OptionMonster ...

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EMC Draws Stubborn Buyers

twocents@thestreet.com (OptionMonster) — Thu, 16 May 2013 08:52 GMT

By Pete Najarian, co-founder of OptionMonster

NEW YORK -- Call buyers stubbornly returned to EMC Wednesday, even though the cloud-computing stock has lagged the rest of the market. Option traders looked for upside in the June contracts, snapping up almost 16,000 of the 24 calls, with the largest block priced for 25 cents, according to OptionMonster's tracking systems. The volume was almost triple the strike's open interest before the session began, indicating fresh activity. Those calls lock in the price where the stock can be bought no matter how far it might rise. They can provide some nice leveraged gains from even a small pop in the share price over the next month. EMC fought back from earlier losses after the calls hit and closed the session up 0.09% to $23.02, but it is still down about 10% in the last two months. Management also appears at the JP Morgan Technology, Media and Telecom conference Thursday, so those buyers are apparently hoping for some positive comments. ...

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Bulls Beam In on Dish Network

twocents@thestreet.com (OptionMonster) — Wed, 15 May 2013 08:44 GMT

By Pete Najarian, co-founder of OptionMonster

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Energy Bulls Discover Dresser Rand

twocents@thestreet.com (OptionMonster) — Tue, 14 May 2013 08:48 GMT

By David Russell, reporter at OptionMonster ...

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Frontline Bulls Hope to Steam Higher

twocents@thestreet.com (OptionMonster) — Mon, 13 May 2013 08:51 GMT

By David Russell, reporter at OptionMonster

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Bears Want to Bury ConAgra

twocents@thestreet.com (OptionMonster) — Fri, 10 May 2013 08:51 GMT

By David Russell, reporter at OptionMonster ...

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Click to research the Food & Beverage industry.

Keep Your Options Close, Your Hedge Closer

twocents@thestreet.com (Bret Kenwell) — Thu, 09 May 2013 19:26 GMT

NEW YORK (TheStreet) -- When the market was drifting higher, finally punching through all-time highs, it seemed like everyone and their brother was calling for the almighty crash.

The "triple top" was in play for a while. But what investors didn't seem to understand was that the previous two tops where from epic market collapses in 2002 and 2008. Granted, there are certainly many macro concerns to worry about now, but nothing like what we went through a few years ago.

With the S&P 500 up 15% so far this year and the inevitable pullback coming, where do you stash your cash? Contrary to belief, cash is not king. Not in this environment anyway. If you haven't been in stocks, you haven't been making money. >>Also see: Microsoft's Turnaround Recipe: Copy Google and Salesforce >> But where do you go from here? If not cash, then where? Obviously U.S. equities have become the best alternative for many investors, hence the large increase in liquidity and huge yearly gains. When you look at bonds, I believe that's not the place to be. Treasuries can't even keep pace with inflation....

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Coal Rally Draws Buyers to Peabody

twocents@thestreet.com (OptionMonster) — Thu, 09 May 2013 08:52 GMT

By David Russell, reporter at OptionMonster

NEW YORK -- Coal miners dominated Wednesday's market gains, and bulls clambered for exposure to Peabody Energy. OptionMonster's market scanners detected huge volume in the St. Louis-based company, with more than 36,000 contracts changing hands. That was almost quadruple its daily average. The first big trade that caught our attention entailed the purchase of 2,500 January 25 calls for $1.32 and the sale of an equal number of January 19 puts for $1.92. Owning calls locks in the price where shares can be sold, while selling puts can make money if the stock climbs or holds its ground. Combining the two strategies is strongly bullish, letting the investor collect a credit of 64 cents and carrying the potential of infinite profits if the stock rallies. But he or she also faces losses to the downside. Peabody shares rose 2.1% to $20.90 Wednesday. The stock is up 10% in the last two weeks as improving sentiment toward global growth lifts economically sensitive material stocks. Later in the session, an even larger Peabody trade occurred in the form of a call spread. More than 9,000 June 21 calls were bought, mostly for $1.05, while a similar number of June 23 calls were sold for 35 cents. The trader stands to receive $2 if the stock closes at or above $23 on expiration, a profit of 186%. ...

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How To Level the Playing Field Against the Machines

twocents@thestreet.com (Skip Raschke) — Wed, 08 May 2013 12:36 GMT

As time and price marches on the third anniversary of the Flash Crash went by, ah, in a flash! Supposedly nobody who is empowered to have done the forensic accounting of that fiasco is remotely aware of what caused that infamous stock market debacle. Thus, I have no choice but to live with the fact that while the High Frequency Traders have kept a very low profile during this entire bull cycle, their power to destroy stock market value has not been neutered by those who hold the power to do so. Muse on the analogical way that the High Frequency Traders are the modern Sword of Damocles (http://en.wikipedia.org/wiki/Damocles) for the stock market. Any time the powers that be want to literally take the HFTs toy away and restore order and confidence to the market, all that needs to be done is to reinstall the uptick rule. Why this has not been done, with all the evidence pointing to the efficacy of the uptick rule is possibly worthy of a mystery novel. The stock market peaked in July of 2007. The uptick rule was eliminated in July of 2007. Muse on the timing of the uptick rule's elimination and why it was eliminated, just as the stock market was about to roll over into a major bear market circa July 2007. When I was a floor trader, we in the pit never sensed any retail shorting of our stocks. because the retail trader does not sell short into strength. With an uptick rule in place, only during periods of stock price strength, can a trader be confident of executing a short sale. Professional options traders did the vast majority of short selling; buying inexpensive calls to hedge the shorted stock. That situation did set up because plenty of times as a stock rises in price the retail trader/investor sells calls to hedge the gains the stock just made. Pros buy those calls from the retail hedger and short the stock using the greeks (think: delta neutral trading) to mathematically create their new position. Muse on how that dynamic radically changed thanks to the elimination of the uptick rule! Trying to short a stock that is rapidly declining is almost impossible to do. I know that is a fact because many times I tried to do such, failing in the attempts. When the market is in a serious selling mode only short sellers covering short stock positions do the majority of the buying volume as they lock in gains. However, today, there is no uptick rule to hamper short selling as everyone can play the shorting game like they were playing whack-a-mole. Muse on the genius of the first S.E.C. and how they knew after doing their forensic accounting that short selling did a tremendous amount of stock market damage during the Crash of 1929. Not only has the elimination of the uptick rule empowered the HFT world, it has ironically encouraged the retail trader to sell short. Permabears in the financial and general media have enabled the business of short selling as hyperbolic headlines of doom and gloom sell far more advertisements than do anything positive about the economy or the value of stocks. Muse on how the retail trader who shorted stocks some 3,000 Dow points and one year ago has been taken for quite a nasty ride, due in part to the fact that no uptick rule was in place to make them think twice before taking those awful positions. OptionsProfits can be followed on Twitter at twitter.com/OptionsProfits

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Cramer: Tackling the Rotation Dilemma

twocents@thestreet.com (Jim Cramer) — Tue, 07 May 2013 15:07 GMT

Editor's Note: This article was originally published on Real Money at 6:53 a.m. EDT on May 7. To see Jim Cramer's latest commentary as it's published, sign up for a free trial of Real Money.

NEW YORK (Real Money) -- One minute you can't own enough drug stocks. The next minute you can't own any drug stocks. Same with the foods. But where to go?

Do you go to the worst, knowing they can only get better? Or do you go to the good, knowing that they are good? ...

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Fast Profits in Bank of America

twocents@thestreet.com (OptionMonster) — Tue, 07 May 2013 08:50 GMT

By David Russell, reporter at OptionMonster

NEW YORK -- Two words sum up the trading in Bank of America on Monday: fast money.

The financial behemoth opened higher, and the option action hit almost immediately as traders took positions in the short-term weekly calls that expire this Friday. OptionMonster's tracking systems show that activity was initially focused on the 12.50 calls, which were bought early for 10 cents to 12 cents. Those contracts lock in the price where the stock can be purchased no matter how high it might rise. Because they are relatively inexpensive, the options can generate significant leverage if the stock moves. And move it did. ...

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Must-See Charts: The Gold/Silver Ratio

twocents@thestreet.com (Matt Zeman) — Mon, 06 May 2013 18:01 GMT

NEW YORK (TheStreet) -- The gold/silver ratio is something I watch closely. This ratio has been on the move in recent weeks, and in my opinion could have further upside to go.

Now, many people reading this article have likely seen what the precious metals markets have been through in recent weeks. There are many potential reasons for the huge selloff we saw in gold and silver. These reasons range from simple large hedge fund liquidation to investors wanting to chase stocks to the usual conspiracy theories.

I am not here to speculate on what caused the drop, because for my purposes it doesn't make any difference. What I am here to try and do is find solid trade opportunities based on price action, not what I "think" the market might do. As I have discussed previously, I think the price action in gold and silver following the plunge has been constructive; however, there is a lot of work left for the bulls. I think many people have been disenchanted by the recent selloff and perhaps are turning their backs to some potentially good trade opportunities. Looking at the precious metals, I think the gold/silver ratio could provide such an opportunity. ...

Bulls Pile Into Tibco at Lows

twocents@thestreet.com (OptionMonster) — Mon, 06 May 2013 08:50 GMT

By David Russell, reporter at OptionMonster

NEW YORK -- Tibco Software has been falling for the last year, but the bulls showed up at the end of last week. OptionMonster's tracking programs detected heavy call volume in the provider of business software on Friday. The trades began in the June 18s, which initially fetched $2 but then saw large blocks price for $2.15 and $2.20. Minutes later, the June 19s also lit up with buyers paying $1.50 and $1.55 for more than 3,000 of those contracts. There was barely any open interest at either strike when the session began, so this was new money being put to work. Calls lock the price where shares can be purchased. They have a tight correlation to the stock price at a fraction of the cost, which can result in significant leverage if the shares rise. For instance, a gain of just 10% in the stock could cause both the June 18s and 19s to almost double in value. Tibco's shares continued to advance into Friday afternoon, ending the day up 2.69% to $19.82. The stock is back to a level where it bounced in August 2011 and December 2012, which could be leading some chart watchers to believe that it's at support and poised to move higher again. ...

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Bulls Stay Tuned to CBS

twocents@thestreet.com (OptionMonster) — Fri, 03 May 2013 08:46 GMT

By Pete Najarian, co-founder of OptionMonster ...

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Must See Charts: Natural Gas Futures on a Tear

twocents@thestreet.com (Matt Zeman) — Thu, 02 May 2013 15:40 GMT

NEW YORK (TheStreet) -- Natural gas futures have been on a tear in recent weeks. The market has been trending higher on a steep angle but it is now showing signs of cracking.

I think many people have been wondering just how much natural gas has left in the tank. Although the market is trading well off its 2013 lows, the fact is that the market remains very well supplied.

Now don't get me wrong -- I think the future for natural gas looks good. That being said, trading should not be based on trying to predict the future, but rather trying to take advantage of what price is doing -- nothing more. ...

Bulls Give Questar Time to Rally

twocents@thestreet.com (OptionMonster) — Thu, 02 May 2013 08:48 GMT

By David Russell, reporter at OptionMonster

NEW YORK -- The bulls have already cleaned up in natural-gas company Questar, and Wednesday they came back for more.

OptionMonster's tracking programs detected the purchase of more than 3,000 July 26 calls, most of which priced for 30 cents. Volume was almost twice the strike's previous open interest, which indicates that new money was being put to work. These calls lock in the price where shares can be purchased, so they have the potential to generate significant leverage if the stock rallies. They also provide upside exposure at a low cost, limiting the amount of money that can be lost in a pullback. Questar fell 1.69% to $24.96 Wednesday but is up 26% so far this year. It also lit up our monitors back in January and February, throwing off profits of more than 100% as the shares advanced. ...

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Apple Won't Let Investors Back In

twocents@thestreet.com (Jared Woodard) — Wed, 01 May 2013 12:47 GMT

Apple (AAPL) won't let investors back in. After the stock bottomed on April 19, shares have rallied 15% with nary a dip to buy. I expect more price upside in the short term as managers who dumped their positions in March scramble to add exposure. More importantly, I expect AAPL's option implied volatility to decline in the coming months as expectations for the stock's volatility converge to broader estimates. On Tuesday, AAPL sold $17B in the largest corporate bond offering in history. It's not clear how AAPL will invest its cash, but it seems premature to declare that the company is becoming another slow-growth, Microsoft-like sleeper. Apple's Jony Ive is said to have been leading a redesign of iOS, and the new version is expected this summer, and I won't be sold on the "slower AAPL" thesis unless we see lackluster product launches and no major innovation in 2013. But even if AAPL is entering a new phase fundamentally, changes to the company's capital structure should put a floor under shares and reduce return volatility in the near term. Investors should look for AAPL's option implied volatility to decline relative to Nasdaq 100 implied volatility in the coming months. The attached chart shows that the ratio of one month implied vol estimates for AAPL and for the Nasdaq 100 has increased over the last year. If that relationship reverts to the mean, it would most likely be via a decline in Apple option premiums. In that context, even though AAPL implied vol is near a 6-month low, it's easy to see how lower levels are possible....

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Bulls See a Payout in Paychex

twocents@thestreet.com (OptionMonster) — Wed, 01 May 2013 08:45 GMT

By David Russell, reporter at OptionMonster

NEW YORK -- Some traders are betting that Paychex will make new highs later this year. OptionMonster's tracking programs detected heavy buying in the December 37 calls, with more than 2,500 contracts purchased in volume that dwarfed the previous open interest of just 20 contracts. Premiums rose from $1.22 to $1.40, but most of the options priced in the middle of that range. These calls lock in the price where investors can buy shares in the payroll processor, which is parked at its highest level in almost five years. If it breaks resistance and continues to run, those options stand to generate significant leverage. And if it drops, traders will lose much less money than they would owning shares. ...

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3 Buys Making New 52-Week Highs

twocents@thestreet.com (Robert Weinstein) — Tue, 30 Apr 2013 16:01 GMT

NEW YORK (TheStreet) -- Here's a question to ask yourself the next time you're on the hunt for cheap stocks: Is your goal buying a stock at a low price or buying a stock that will appreciate significantly after you buy it?

If the price you pay is more pertinent to you than the money you can make, then by all means, go ahead and look for poorly performing stocks.

But if you can move past the desire to buy a stock that is cheap compared to where it used to trade and focus on what's cheap today, you just may increase your chances of success in ways you haven't imagined. ...

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Measuring the performance of the S&P

twocents@thestreet.com (Jill Malandrino) — Mon, 29 Apr 2013 13:15 GMT

Aside from the normal ups and downs of the S&P 500 futures, last week's fake attack on Twitter and the CBOE's computer glitch were all part of a very long week for the markets. With two trading days left in April it may not have felt like a good month, but when you look back it actually was. On the first trading day of April the SPM settled at 1555.90, rallied up to the new contract highs at 1593-1594, sold off back down to 1531, taking out the old 1533 low, and popped back up to 1588 last week, leaving the S&P only five to six handles off its contract high and only 12 handles off S&P 1600. Markets end mixed The S&P and the NASDAQ futures snapped a five-day winning streak on Friday, the Department of Commerce numbers came in lower than expected -- 2.5% vs. the 3% forecast -- and a drop in consumer sentiment in April to 76.4 from 78.6 in March helped add to the weakness. Despite the selloff and the late short covering rally, there was just not enough gas left in the tank to push the futures back up on the close. S&P earnings Before earnings started, most analysts predicted a terrible earning season but that's not how it's gone up to this point. With 50% of the S&P 500 companies already reporting results, 69% of those firms have beat expectations and 20% have missed, according to Thomson Reuters. Additionally, if the other 50% of the companies report in line, S&P earnings will be up 3.8% from last year's first quarter. Year-to-date performance The start of 2013 has been an amazing run for the U.S. major indexes. Last week the Dow settled at 14,712, up +1.13% on the week and up +12.27% YTD. The S&P 500 cash settled at 1582.24, up +1.74% on the week and up +10.94% YTD. The Nasdaq settled at 3279, up +2.28% on the week and up +8.60% YTD. The Russell 2000 settled at 935, up +2.49% for the week and up +10.11% YTD. And the CBOE's VIX settled at 13.61%, down -9.08% on the week and down -24.50% YTD. Takes a licking and keeps on ticking If you're wondering why we put up the net changes, there are a lot of reasons, but the main one is how resilient the S&P has been this year. Sure the S&P futures have had some pullbacks, but none as large as the most recent one. We have never seen a rally like the current one. The S&P has not gone go up like it has since the weeks leading up to the 1987 crash. We are well beyond that, but if you look at the overall market (not just during the latest selloff), the S&P futures are still back and filling. No one knows exactly when the S&P is going to trade the big figure at 1600, but rest assured it's not long off. Our view As a whole, Mondays have not had a winning record this year (14 Mondays: 6 up / 7 down / 1 unched ave. gain +6.4 handles ave. loss -13.7 handles) Tuesdays have been the best performing day of the week ( 16 Tuesdays: 13 up / 3 down ave. gain +10.24 handles ave. loss -3.9 handles). Our view is to sell the early rally and buy the pullback. The S&P is loaded with buy stops from 1588.70 up to 1596 and again above 1599 up to 1603-1604. Additionally, Wednesday, the first trading day of May, has the Dow up 12 of the last 15 occasions. As always, use stops and keep an eye on the 10-handle rule. Don't forget to catch MrTopStep on The Closing Print video found under the OptionsTV page (top bar). We report directly from the SPX pits, wrapping up the day and positioning for trade tomorrow. OptionsProfits can be followed on Twitter at twitter.com/OptionsProfits MrTopStep can be followed on Twitter at twitter.com/MrTopStep For LIVE futures chat, more information on the 10-handle rule and futures educational content CLICK HERE FOR A SEVEN-DAY FREE TRIAL.

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Pitney Bowes Rocks Higher With Options

twocents@thestreet.com (OptionMonster) — Mon, 29 Apr 2013 08:48 GMT

By Pete Najarian, co-founder of OptionMonster

NEW YORK -- Pitney Bowes has performed very well this year, and buyers were active last week. ...

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Henry Schwartz Analysis: Live from Las Vegas

twocents@thestreet.com (Henry Schwartz) — Fri, 26 Apr 2013 14:54 GMT

I'm currently attending the Options Industry Council's annual conference, which is taking place in Las Vegas this year. This conference is attended by nearly 500 options professionals, including exchange officials, representatives from the largest broker-dealers and institutional accounts, as well as a mix of industry service providers and journalists, and its a great place to get a glimpse into the future of our markets. One topic discussed yesterday was the potential expansion of the weekly options offering to include options that expire every day of the week, starting with the seven-day term that has proven so successful (and is nearly 25% of the typical daily volume now). While the concept of one-day options has been floated a few times, they have failed to pick up wide support because many in the industry feel such a short-term focus can bring problems, especially in volatile markets or amid rapid 'gap' moves. Yesterday's discussion was about listing options that expire in seven days, and listing them every trading day, so you end up with contracts available to trade that expire every day for the next seven days, permitting a very extreme precision on options timing. This might allow a trader to short options ahead of earnings and be long a straddle after earnings all at the same time as a package (that four-way straddle swap will need a catchy name). If we get these contracts (and I bet we will), the entire concept of 'expiration friday' will become a bit of a relic we can explain to our grandkids. Another interesting issue was that yesterday's Chicago Board Options Exchange (CBOE) floor technical problems were taking place at the same time that CBOE management were taking the stage for a panel. Of course the first question was 'whats going on with your floor?' and while the response was a politically safe 'a software glitch which will be corrected shortly' (and was), the event certainly gave many of the attendees something to talk about. While all the stock and ETF options listed on CBOE are available to trade on other exchanges and therefore did not really cause any problems, the inability for traders and banks to get access to the top tier proprietary SPX and CBOE Volatility Index (VIX) options is a significant issue. One exchange leader I spoke with suggested another exchange should be selected to pick up the listings in just such this case. OptionsProfits can be followed on Twitter at twitter.com/OptionsProfits Henry can be followed on Twitter at twitter.com/henryschwartz

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The Modern Art of Tape Reading: Part 3

twocents@thestreet.com (Skip Raschke) — Thu, 25 Apr 2013 14:19 GMT

Refer back to part 2 of this series. See the list of 6 indicators that I know work for me. We begin with the slow stochastic and the RSI (relative strength indicator). The slow stochastic must be confirmed by the RSI. The RSI tends to lead the slow stochastic. Thus look to the RSI and then see if it confirms any cross-over of the fast line over the slow line of the slow stochastic. A non-confirmation of the RSI relative to the slow stochastic is a red flag, a stop sign of sorts that should tell you to halt the study at that time. I use this methodology in both stock price directions. The trigger value for the RSI is the 50 level, the RSI moving up through 50 or turning down through 50. The edge found here is in knowing how these two indicators work in tandem. Merely knowing the importance of the RSI will keep you from raising the risk probability for any trade. Seeing a slow stochastic cross (the fast line crossing over the slow line) is not a buy or sell signal. In strongly trending bull or bear cycles the slow stochastic might do such crossings more than a few times, yet the stock or index in question does not react to that cross. Those are the times when the RSI did not confirm the cross! Thus the edge found here is in knowing that a trend is still in control until the RSI signals that the trend is in jeopardy of ending. You will at times find the slow stochastic remaining very strong or very weak for what is felt to be an inordinate amount of time relative to your experience when analyzing a certain stock or index. I refer to such chart patterns as either being that of pressing up, or floundering down. When you encounter such a slow stochastic pattern avoid going counter-trend unless the RSI first turns counter-trend. Trying to predict that counter-trend move any other way is best left alone. Taking the contrary trade to a strong trend is equal in all respects to fighting the tape. You have a big edge in simply knowing not to do that! I do not use other technical indicators such Money Flow, MACD, ROC, etc. My scrubbed list works for me. I keep technical analysis simple yet effective. I avoid indicators that I think of as being not relative to the way I trade as well as being possibly redundant information that is already priced into the RSI and slow stochastic. In addition the more you analyze the more time is taken up in the endeavor. Thus you might reach the emotional and mental point where you do not take the trade! Falling into that trap is known as paralysis from analysis. Avoiding that potential problem is in itself an edge. Technical analysis is best considered as being a crude map. Never forget the humorous market adage that Columbus used maps. The edge is found in keeping the technical work simple yet effective. One more edge is having the wisdom and experience to know that the fundamentals will eventually trump the technicals. Part 4 will focus on the edges found in Simple Moving Averages (SMA). OptionsProfits can be followed on Twitter at twitter.com/OptionsProfits.

Energy Bulls Turn to Kodiak Oil

twocents@thestreet.com (OptionMonster) — Thu, 25 Apr 2013 08:41 GMT

By Mike Yamamoto, managing editor of OptionMonster

NEW YORK -- Kodiak Oil & Gas is seeing bullish option activity ahead of its earnings report next week. ...

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Sell Natural Gas Into Resistance

twocents@thestreet.com (Robert Weinstein) — Wed, 24 Apr 2013 10:00 GMT

NEW YORK (TheStreet) -- The average retail investor may follow the SPDR Gold Shares exchange-traded fund more than oil or natural gas, but oil is probably more pertinent.

Investors who own a car require very little convincing of how the price of oil impacts their daily finances. You can follow the price of oil through the United States Oil ETF. Even if you don't own a car, it's easy to see how oil prices matter to you. Everything you buy is either made from oil and/or delivered to the store you purchase from.

Both GLD and USO have recently made new lows for 2013. What may surprise you after viewing an oil or gold chart is that natural gas is not only making new highs for 2013, but new 52-week highs, as measured with the US Natural Gas ETF. ...

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Bulls Take a Shot on Brazil's Braskem

twocents@thestreet.com (OptionMonster) — Wed, 24 Apr 2013 08:46 GMT

By Pete Najarian, co-founder of OptionMonster

NEW YORK -- Braskem is trading near 52-week highs, and Tuesday the option paper was bullish on the Brazilian petrochemical company.

OptionMonster's tracking programs show that traders paid 60 cents and 65 cents for the June 17.50 calls. More than 6,100 traded in volume that dwarfed the strike's previous open interest of just 136 contracts, which shows that this is fresh buying. ...

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Big Bet on Tech

twocents@thestreet.com (Henry Schwartz) — Tue, 23 Apr 2013 19:31 GMT

SPDR Technology Fund (XLK) saw interesting options activity Monday. The ETF is one of nine Select Sector funds that collectively hold all of the components of the S&P 500 and XLK finished up 0.8% to $29.58 on the day. However, the tech fund has been lagging so far in 2013 and is up just 2.5% year-to-date. A big drop in Apple (AAPL) in 2013 is one reason for the underperformance and now some players in the options market appear to be betting on tech ahead of earnings from the technology giant.XLK Daily Contract Volume Source: Trade Alert View Chart

XLK has seriously underperformed the broader market this year. While the S&P 500 is up 9.6% so far, more defensive sectors of the market like utilities, healthcare, and consumer staples names have powered the move to record highs. Cyclical sectors like basic materials, energy and industrials have lagged. A 25% drop on AAPL has weighed on the tech sector....

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