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Don’t get the Flu, COVID-19 | Options Week in Review | Connie Hill | 2-14-20

February 19, 2020


Good afternoon we are on the end of a
week of the market once more and I’m happy you join me here today this is
Connie Hill I’m in for Cameron May I’m gonna take a look at some of the things
that drove the market this week and then we’re gonna take a peek ahead and see
what some of the drivers were or we’re gonna look for I should say coming next
week let’s go through our disclosures and then we’ll go through our agenda as
well options are not suitable for all investors is the special risks inherent
to option trading makes those investors to potentially wrap it in substantial
losses past performance of any security or strategy does not guarantee future
results or success all investing involves risk including risk of loss
alright we’re gonna have a pretty standard agenda today as far as this
class goes we’re going to review the current stock and option conditions
typically we’ll go out to the charts take a look at them see what they’re
telling us then we’re going to spend a little bit of time on the TD Ameritrade
comm site we’re gonna see what the headline news was during the week as
well as today we’re going to look at the economic events that kind of drove some
of that and we’ll look at what earnings announcements were interesting okay and
then really we’re gonna put more of a focus on next week
what are the calendar events for next week what do they plan to be and some
potential earnings and how those might influence the market alright
so let’s hop on over let’s get going let’s go over to thinkorswim if you have
questions please go ahead and type those in for me I’ll try to keep my eye on the
chat button we have some friendly hellos from Rocky
Osbourne rich and John guys are from all over the country I can tell very good
now let’s come over here to our charts I just have a basic chart here you can
tell I just have the price the SPX I don’t even have a moving
average in place here okay sometimes it’s nice to just look at the price
action itself and not some of the busyness that might be going on with
some of the other studies they have there their place but let’s just kind of
see what things look like right now we see let’s look at Monday Monday was the
tenth so this is where we started this was Friday night this little candle here
that’s rad market closed gapped down a little bit
on Monday had a real strong candle day on Monday and then we’re getting pretty
close to the close right now and definitely on the week we’re gonna be up
aren’t we we can see if that’s where we started yeah we definitely are in for an
up week and the the oh the indices up they are making new highs throughout the
week we received another one on the SPX it looks like that was yesterday same
thing on the Dow same thing on the Nasdaq so the markets price action is
continuing to stay fairly strong let’s take a quick look at the Nasdaq cut down
and the SP many times just kind of run in sync with each other
Nasdaq had another high again here 9,000 748 yesterday and the markets I would
say today are flat they were down a little bit they were up a little bit but
just not really moving the needle too much okay there wasn’t a lot of economic
news that came out to really drive it nor any major earnings reports to really
drive it some of those big cap companies when they report earnings yes sometimes
those can influence to a great degree the tone of the market you know your
Google’s your Amazon’s or apples or Netflix those types of companies that
have a decent market cap sites well let’s do this let’s take a look at the
VIX it’s our volatility index it gives us an idea kind of the fearfulness in
the market and the volatile yeah fearfulness in the market it’s
technically measuring the call ratio so people are a little bit more nervous
when they buy puts they’re less nervous about the market when it’s likely to do
when they’re buying causes so that’s why it’s a good measurement for that let me
give us a little history lesson on the VEX we’re gonna go back in time well I
want you to know right now we’re at 14 and 14 compared to where it was a couple
of weeks ago it’s quite a bit lower than when we were up here at 19 and a half 19
okay so it’s pulled back pretty decent but I want to give you some perspective
about what’s high in what small if we come over here and we just pull up a
three-year weekly chart so we going out a little bit more it’s like oh okay yeah
let’s grab my marker here let’s use that and we look back here we can see okay
there’s kind of a high area around 25 kind of a low area that you might even
think of as support and that was a really terrible line I’m sorry you get
the idea about $12 or $9 12-ish measurement at wise okay so if we were
to say well is it currently on the higher end of the lower end of the
volatility definitely sitting out here at the lower end isn’t it if it was up
you know where it was a couple weeks ago and even higher then we might be a
little bit more concerned that it’s at the outer edge of our recent volatility
in the last three years and then we had this spike you guys probably remember it
well we had a spike in volatility the last quarter of 2018 had had a fairly
bullish market and the market sell-off in October November December it finally
bottomed out the day after Christmas December 26th and then it started to
rally again but during that time volatility went higher our normal high
is right now all right so it’s kind of good to have some perspective on that Oh Sharon and Lorraine say higher well now let’s go take a look let’s go
back to TD Ameritrade here like ice not back – I never actually made it there
let’s go over here to TD Ameritrade you know one of the nice things about the TD
Ameritrade site is the news and some of the tools that are available to you
we’re going to spend a little bit of time on news today we’re gonna come down
to research and I guess where it’s gonna come down and click on the news now if
you think to yourself what are the big news items this week and ask yourself
that what do you recall that maybe was the biggest thing you kept hearing about
or seeing about alright I’ll tell you what I think in just a moment but
hopefully it’s meet some of yours as well some of the big things are the
biggest thing I think this week that really didn’t really impact the market
all that much but was in the news so much
it was the coronavirus right at the beginning of the week mark was a little
bit more bullish people were are the updates of the news of new reports of
potential cases started to lag off a little bit and so people started to be
less concerned and less afraid but I did some reading up just to see what the
current numbers were and I guess now instead of calling it the corona flu
virus very calling it the CoV ID 19 which aren’t really sure if that’s the
medical term they’re using or what in any case we have about 15 confirmed
cases in the US so amongst the millions that live in the u.s. very small people
it’s not very small percentage of people I should say that have been confirmed
I’m sure there’s others that are still in the testing stage especially on that
ship off the coast of Japan I think there’s another one in Europe but cases
confirmed globally all right our 64,000 now
so yeah there’s a lot out in the rest of the world that we’re not really seeing
here fortunately we haven’t had too much of an influx of that yet
however 1,400 people have died okay and so if we start to see that creeped out
even more if we start to see that stronger it could impact the global
community because we’re so intertwined with each other more than we ever have
been and as far as the global economy goes Oh Jamie’s giving me a thing here
short for Coronas virus discovery 2019 well thank you for that Jamie I
appreciate that tim says Tim just wishes me a happy Valentine’s Day happy
Valentine’s Day to each of you i if you follow me on Twitter I put a little
thing out there this morning would be kind of interesting to check
out that basically hopefully all of us have a good team that we can call as a
resource of we have a problem in the middle of the night we know we can call
a certain group of individuals all right let’s get that back to that yeah Charles
says the beer distributor wanted that name changed yes I believe Corona was
taking a little bit of hit on that okay yes and Jamie agrees with what Tim had
typed in there as far as the corona virus discovered 2019 all right when we
come over to you this mean news page on TD Ameritrade we see a little update
here and many times in the update you can tell what’s going on or what’s been
driving the market this week or actually today and so this says stocks are mixed
but set for weekly gains just like we would look like out on the S&P
definitely was going to be higher for the week but Venna says as investors
focus on soft retail sales and coronavirus spread so there’s a little
bit of hesitation so if we come down here to the bottom actually I’m going to click into the
article and then I’ll scroll down a little ways on it we’ll get exactly what
that retail news was now I remember as a newer trader not knowing or maybe not
having an idea of how much a news item could impact the government reports that
came out it was like where did that come from and the market sells off on it
right and so this is something you want to keep up on news really drives the
markets alright so here retail sales gains were muted in January and
industrial production declined but consumer confidence was near a 15-year
high in early February so even though so we’re starting to see a little bit of
indicators maybe a little slowing consumers are still fooling pretty good
about things this next paragraph says stocks were mixed Friday afternoon and
like I said it’s just been pretty flat trading as far as the retail sales go
the big gun we’re gonna talk about this in a minute is it’s going to be Walmart
alright Walmart hasn’t reported yet they’ll report next Tuesday after the
Presidents Day holiday all right and so we get down to this
paragraph that basically says we were flat and then we get to this one this is
what’s driving the market ok here is where we get to some meat it says some
cracks have finally shown up in the economy
let’s see January January retail sales showed sluggish activity underscored by
a 3.1 percent drop in sales at clothing stores if you’re looking for a bargain
on clothing maybe now is the time to go because sales are gonna be on more
clearing out that winter merchandise the markets resilience of the last couple of
years has been predicated on the belief that the consumer will continue to do
well alright and so that’s kind of what we’re seeing is the consumer still is
doing quite well where are we seeing some of those reports let me come back
up here I’m going to come down to the calendar
and we’re gonna scroll over here to the economic events that took place this
week and there weren’t I’m gonna say there weren’t a ton until today they
were just kind of sprinkling in some of the economic reports that don’t have a
ton of bearing in them all right and let’s come down to today
all right and this is where we see the retail sales numbers and I’m gonna see
if I can grab my marker here and do this a little bit better and cleaner so the
first one was the retail sells and we always have retail salads – the autos
right and so the actual came in at 0.3% well that’s what they thought it would
do so not anything really big news Weiss okay a little bit of a drop compared to
prior actual was point 2% increase if we look at import prices we’ve got all
these talks going on with China and we’re gonna put tariffs on them for that
this and that and they’re gonna do the same to us and then they back off right
import prices and actually you might want to look at the import prices – oil
came in at 2% so not a huge big gain that looks like this was flat and import
prices – oil was expected to be flat so the fact that it increased a little bit
should just kind of be on our radar usually we don’t see things increase a
huge amount quarter to quarter or month-to-month
okay usually what we do is we’ll see little creeping a little creeping up a
little bit creeping down and so if you wanted to see the history let’s get over
here too so you like our retail sells and you can
do this with any of the reports I’m just gonna pick on it just kind of stretch it
out really nice and big it’s kind of nice because you have a ten-year history
here and you can see what’s been going on the thing that kind of stood out to
me as I was looking at this particular one is it seems like there’s some
resistance so to speak around that 6% level you see that right there just kind
of holding steady there ran out there again recently pulling back but it’s not
you know clear down here in really treacherous areas all right we’re still
up here and what would say is maybe a fairly healthy area all right next week
oops gotta close this one too as we look into next week and what’s on the horizon
as far as economic reports go Tuesday market is closed most government
agencies are going to be closed there are a handful of stocks that are going
to report earnings most of them are out of the country we have a survey that’s
been pushed out to the chat area and so if you haven’t seen this or done this
before what you do is you click on the link in that chat area while the session
is life you won’t be able to access it after the session is over and then what
would like you to do is participate in the survey just give us some feedback
there’s just quick little radio buttons you can select on and give us your
feedback there we always appreciate you taking the time to do that for us all
right next week I wanted to focus more on what we were going to be having on
the 19th which is Wednesday okay producer price index and core PPI is
probably a lot of folks are going to pay more attention to and so we can see what
the consensus is over here and as those reports start coming in on Wednesday
week the actual will will be updated so we can see how they compare and
sometimes you’ll get a little reaction from one and then
another one comes out a little reaction on it but so PPI is going to give us an
idea for having inflation in terms of what it cost producers to manufacture
things housing starts and building permits is something that people have
been watching it’s actually still housing still been pretty strong in fact
our area here we have buildings going up everywhere houses and neighborhoods
popping up all over the place it’s just a really strong area and not all areas
of the country are like that right now that I’m observing that here and then
we’ll have the FOMC minutes come out right at the two-hour mark so a couple
of minutes before the market it or a couple of hours not minutes before the
market would close now I want to come back over here to our earnings reports
and I think there was some that you did with Cameron this past week I’m not
really sure what they were but I want to focus on some that are coming up this
next week all right we are kind of moving to the tail end of earnings we
see retailers and some technologies that kick in here on Monday the markets
closed but you can see there are several companies that will report 27 of them
but again they’re mainly mostly well I guess not all of them are foreign
companies but some of them may be so then Tuesday is a bigger date and as was
mentioned Walmart is going to announce their same-store cells and their release
their numbers okay and it’s expected they may have taken a little bit of a
hit to some of the news has been that with this shorter season for the
holidays shorter shopping time that is that that has impacted some of the
retailers and of course Walmart being one of the biggest retailers usually the
way Walmart goes gives a good idea of how the rest of the retail stores
probably did not though they’re all gonna be identical okay but that is
going to be a big one that’s gonna be for the market opens we can see what the
consensus estimate is on their non-gaap earnings following them or maybe even at
the same time okay Medtronic might be a little bit interesting to watch one
other one I was looking at here is Nettie’s they’re gonna be after the
market looks like they are a big player in the cloud space and cloud computing
space all right so I think because that’s becoming such an industry that is
widely watched and being paid attention to and lots of companies are coming up
all over the place that might be one for us to watch
Wednesday not super big players on Wednesday a couple that I picked out
were Garmin and PBR which is I never can say it probably and do it justice
basically Brazil petroleum I just translated that into English all right
let’s look at Thursday it’s kind of nice if you’re interested on doing some in
doing some earnings plays maybe not getting out right before but giving it
some time to actually have an opportunity to move one way or the other
and sometimes that implied volatility on the options may sometimes continue to
creep up but at other times it might be already be really high let’s come over
here to back to our thinkorswim and I want to just see what Walmart’s
are looking like okay and their options let’s do some collapsing okay so implied
volatility a little bit further out is 27 26 24 in that range and the options
expiring for this week or for next week rather is a little bit higher you see
that thirty seven point seven five so yeah it is a little bit more pricey in
terms of what’s been priced into those options that could spell
possibly do any good having a good selling opportunity alright let’s go
take a look at somebody else I wanted to take a look at Southern and Southern
does a pretty decent volume of shares let’s go pull up southern here and we
can see this is back to our three-year chart we can see what a big trend
downtrend they’ve been on let’s kind of zoom in here more recently six months
still headed down okay this could be on not on the right one sorry that looks
better okay there we go they were really weren’t on a long downtrend even though
that other company was okay so it’s been sideways for a bit it’s had a nice rally
and okay just making sure we’re on our six-month chart look at these green
candles boom – boom – boom – boom – boom if you were a a chart like to look for
for price patterns you might say whoa holy cow we’ve got a huge huge huge
flagpole that raced up there for more than a couple of weeks there and then it
had its pullback sometimes that pullback severe sometimes
it’s not two to five days as ideal sometimes it goes on a little bit longer
so it gives a pullback it goes flat and then what did it do yesterday totally
broke out of this flat pattern in fact if I were gonna say where the higher
days were or the higher points on that day definitely broke out today didn’t
have a lot of follow-through – broke out yesterday didn’t have a lot of
follow-through today or means like I said are coming up on Thursday if we
come over and look at their implied volatility it’s still quite low that
might bode more to buying opportunities instead of selling opportunities if you
just wanted to do something for the earnings call you could doesn’t mean you
have to I mean you should some people completely
avoid trading over earnings and some people like to trade actually I’m liking
the volatility and Walmart a little bit more in terms of pricing in the options
so let’s go back to Walmart and the stocks been fairly flat but it’s been
staying in this tight little range alright we’re going to do something for
that trade get that in before our time is up
okay since it’s going to be on Tuesday if people are doing it just for the
earnings and don’t necessarily want to do it much beyond that they could come
out here and say oh well let’s go ahead and maybe do something a little out of
the money it’s highly liquid very tight spreads we could do you know we could do
a bull put spread some people if they think it’s going to drop because of the
week you can Amin news we could do that but we could also maybe sell an iron
Condor and get both sides of that except that I’m on the wrong strike price let’s
go out a little further and let’s sell an iron Condor I could be I not much
time so we’re not expecting a huge huge run on it so we could do the 114 113 we
could push it back to 112 if we wanted to but we’ll leave that alone and then
on the call side if we were to do is say 123 and 124 let’s let you see that
better so 123 is about a 21 delta so a little
bit further out of the money and so let’s go here with 123 124 so the short
leg will be 123 that sort colleg will just change that and it’s long leg it’s
it’s hedge we’re gonna put in there 124 now on a $1
widespread it it’s a 44 cent credit and I say $1 white spreader on each side but
typically the expectation is that the stocks going to move that direction
as opposed to swinging wildly over one and over the other all those that can
happen but what do we expect implied volatility to come crushing out of it
now there is a little bit of a wider spread I think to accommodate or because
of the higher implied volatility looks like it was filled and I’ll check up on
it on Tuesday morning when we’re all back to the markets after the holiday
weekend there are a couple of more stocks that you might be interested in a
little bit further out we’ve got southern we’ve got back sir we’ve got
formal and a couple of tech stocks that are gaining in popularity easy scalar
and Dropbox so those could be some that you might be interested in all right
well my time is up here this time just always goes so quickly but I hope you
have an idea and I feel for that what’s going on in the economy what’s going on
the market in the conditions volatility is fairly low that means premiums aren’t
gonna be super high more likely than not we looked at the economic events this
week kind of where the headlines were and mainly focused on earnings for next
week as well as some of those economic reports all right
well Barbra Armstrong is going to be up next and we’re gonna have like a little
bit of a half an hour break and then show launch with her trading for a
smaller account I should love you to join her what I’d want you to do is pick
out the the earnings that you think might influence some of your positions
as well as economic events that could influence those as well all right
in closing I just need to remind you but that in order to demonstrate
functionality the platform we need to use actual symbols but TD Ameritrade
does not give recommendation or determine suitability of any security or
strategy any of anything you do in your self-directed account is solely your
responsibility thanks everyone have a
afternoon and weekend bye-bye you

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