Greece And Ukraine Remain At Forefront Of Options Market This Week

This piece contains the opinions of options guru Nic Chahine that do not reflect the opinions of Benzinga.com.

Scoreboard

'Friday the 13th' ended green, capping a strong week for the bulls fueled by repeated pops based on headlines of deals in Greece and Ukraine. Apple Inc. also contributed heavily in its run for new all time highs. So, traders ended up green across the board and in fact had record closes in S&P and Small caps. The Nasdaq closed just 14 points lower than the highest monthly close in NDX during the dotCom bubble (chart below).

Thoughts

EVERYTHING went the way of the bulls last week so it was surprising why traders didn't just blow through the levels earlier and easier. The falling VIX tells that traders are much less fearful of negative headlines. It is my opinion that this blinders-on attitude is a potential downside risk. On Thursday, Larry Summers said that even a rate hike of 0.25 percent could have terrible consequences.If we are this fragile then are we already in deep trouble? Question: Is this 2013 where bulls did not look back all year establishing all-time high after another? Or is it more like 2014 where markets had moves followed by drawbacks so that we net about 10 to 13% in S&P? I don't believe that we are in 2013 mode as this time; we don't have QE and Fed is looking to raise rates.

Variables

Oil is still too elastic though was strong Friday (still off the day's high). At some point, higher oil will become market negative. Maybe the large oil companies can be a tell to timing because of their contribution to indices. Greece: Greece is important and they have leverage so they can raise a stink on Monday. Why? They owe $320 billion or so. As I always say: The more you owe the bank the more power you have in negotiations with the bank. This is why China plays ball with the U.S. because we owe them so much in bonds they bought. Same for Greece in this crisis. They have the eurozone by the neck especially the big ones like Germany and France. 'Grexit' is more likely than most traders realize. Ukraine: Signs of trouble? Headlines read: 'The notorious ultranationalist leader published a statement on his Facebook page Friday, saying that his radical Right Sector movement doesn't recognize the peace deal, signed by the so-called 'contact group' on Thursday and agreed upon by Ukraine, France, Germany and Russia after epic 16-hour talks.' TLT now approaching the cup and handle neckline from which it broke out to 137. I am interested to see how the price action unfolds here. 10-year rates: They held 2%+ all day. no 1.9 print all day. This is bullish markets. Ranges: Except for Apple, all the ranges are playing out within expectations with regards to open interest AND trends. I will update us before the next open where markets are poised to go. NDX: Only 14 points away from the all time high monthly close (dotCom bubble) SPX: All-time high. RUT/IWM: Also all time highs. Although the mega trades expecting 1250/1260 this week were total losers they are expecting 1240 1250 next week.

Tickers:

Apple Inc. AAPL: Still holding some puts through next week. This is to try and capitalize on the possible disappointment sell-off of no deals by Tuesday. Baidu Inc (ADR) BIDU: Nice bounce so if markets hold it could be a decent long. I prefer doing it via a credit put spread. American Express Company AXP: It was suggested Thursday to wait out a day and that was smart for traders as it fell another 3% on Friday. Another day is still needed before catching this knife. Long term surprise: Hearing Google GOOGL and Twitter TWTR more and more frequently in the same headlines. Could there be a deal in the making? Tesla TSLA could be finding footing. Elon Musk fans are many, but most likely loosing patience with his tweets that have often proven detrimental to stock price. Credit put spreads could pay especially if markets hold next week. LESSON: Use a credit spread to partly finance a debit spread. Details in the video. Check out the video below for a full recap of this week's outlook: