My Trader's Journal

S&P 500 Chart – 3 Year Weekly View

Posted on by Alex Fotopoulos

I charted the S&P 500 ($SPX) after the markets closed on Friday, December 17, 2010 when the index finished the week at 1,243.91.

12 thoughts on “S&P 500 Chart – 3 Year Weekly View”

  1. What’s your thoughts on the shippers these days? I see you had positions in DRYS for a while up until mid-2008. I’m quite interested in DSX at the moment. They suspended their dividend in 2008 which is a good thing because it’s helped strengthen up their balance sheet. The dry bulk shippers probably have a period of dificult times still ahead but, as they say, ‘when there’s blood and street….’.

    With the high-beta in the shippers at the moment, it should be pretty easy to take out a high return on Covered Calls to replace the lack of dividends until they’re restored.

    I had a limit order in to sell some Naked Puts on DSX today but they haven’t hit. I’ll be watching it closely over the next two days.

    The trades that did hit today for me were some CSCO Jan Covered Calls and INTC Feb Naked Puts.

  2. Out of any of them DSX is probably the safest bet, but I’m not heading back there yet (which I could end up regretting). I think the downside is probably limited for DSX to around $12 or maybe $11 on a bigger dip. I’d wait for this recent slide to find its footing before opening a new position though. Eventually they’ll start moving up again, it’s just a matter of how much patience you have.
    I think your CSCO and INTC positions are probably safe plays. I’ve thought about getting back into both.

  3. Thanks for the comments Alex. Keep an eye on INTC. It’s well down A/H and may present an opportunity for a good trade at tomorrows open.

  4. Also, just in case you’re interested in the footwear industry, SKX had a bad down day today. I sold some Jan ’10 20 Call Options and was attempting to buy some January ’11 17.50 Call Options but that order didn’t hit. NKE has now plummeted A/H after orders advanced less than analysts expectations. That appears to be bringing SKX down with it so, hopefully, I may get a good opportunity to buy the Calls tomorrow. I’ve been a follower of SKX during their last issues with inventory and they pulled through fine that time. Hopefully, history will repeat itself (after I buy my Calls of course – don’t like the Naked Calls)

  6. My SKX position filled. I purchased Jan ’12 Calls at $4.90. If I’d waited a few minutes longer, I’d have paid $0.15 less but that’s life. So the total trade in SKX for me is:

    Sell Jan ’11 20 Calls @ $0.80
    Buy Jan ’12 17.50 Calls @ $4.90

    For a total debit (after taking commissions into account) of $4.11.

  9. That’s me back in DSX. The order just hit to sell Jan ’11 12.50 Naked Puts at $0.26 each. That’s a potential 2% return in one month after commissions. I only took a half position as it could be a while before the shippers come back. If assigned, I intend to sell Naked Puts for the other half position in addition to Covered Calls on the held position.

    With a basis on the initial batch of $12.25, I don’t think the position will go far wrong as I should be able to drop that basis by at least a buck by February expiry.

  11. Ronan, that’s a good question. As a pure guess, maybe nothing. The spinoff probably won’t have options on it right away. If it does, you might become short those shares too. I didn’t take the time to comb through all of the numbers in your link, but at a glance it looks like the share price of DSX shouldn’t change based on this transaction. I think the number of shares outstanding will change to keep the price where it is on the transaction date. It’s market cap will drop due to fewer shares, but the price shouldn’t. I wouldn’t be shocked if you are assigned the options the day before the spinoff if it is still in the money. Let us know what happens, I can’t recall being in a stock where this has happened to me and I’m very curious now.

  12. Yeah, it is an unusual one. I’ve been doing a little research and found the link below (albeit, it’s not a US stock). In this case, the option symbol changed and the company was split in two – in a similar manner, DSX’s appears to be splitting into DSX and DCIX. If this follows a similar process to that in the link, it looks like the number of options contracts will remain the same but that, instead of being a 100 DSX share entitlement, it will change to 100 of the new DSX and 3.25 of DCIX.

    Based on the current price of DSX options, it doesn’t appear that I’ll lose out by the spin-off. I’ll let you know for sure at some point though. I still intend to keep the current position but won’t be adding until more clarification is available.
    http://www.m-x.ca/f_circulaires_en/171-10_en.pdf

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