Today’s tickers: NKE, BJ, FCX, IVN, CSCO, CROX, JAH, ENER, PSUN

by Andrew Wilkinson - May 9th, 2008 9:44 am

NKE- “Swoosh” went the sound of short volatility this afternoon as option traders took advantage of a momentary blip higher in implied volatility of athletic shoe giant Nike. Shares pulled back 2.5% to $65.10 on no apparent news catalyst today as implied volatility ticked in at 26% - slightly above the 22.8% historic reading. An increase in option trading volume to 8 times the normal level showed traders keen to write the January 65 straddle for a combined premium of $12.10 – fully 18% of the current share price – exceeding existing open interest at the January line. The short straddle strategy is a popular one among traders anticipating minimal share price movement within a given timeline – the trader in this case wagers that Nike shares will remain at current levels heading into the New Year, leaving both positions unexercised.

BJ- This morning’s better-than-expected April sales figures from the likes of Wal-Mart and Costco affirmed the notion that cash-strapped American shoppers are on the hunt for bargains. While the news was good for shares in some big-box retailers, the gains weren’t wholesale. BJ’s Wholesale Club, the East Coast discount and remainders chain, is an instructive case in point. With shares down 2% to $38.15, option volume soared to nearly 9 times the normal level as traders took a defensive stance by positioning in June 40 puts. These puts, which convey the right to sell BJ’s Wholesale Club shares for $40 next month, are nominally in-the-money, but the $3.45 premium requires another $1.60 drop from current levels just to break even. Consider the volatility setup, where the 44% implied volatility reading indicates more than 25% more price risk to …

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Friday Thump?

by Phil - May 9th, 2008 8:35 am

Well, we’re getting our $125 oil pre-market.

It’s funny how we’re getting it as the Wall Street Journal runs a cover of good old fashioned yellow journalism, with Karl Rove-style attacks on Hugo Chavez as they headline: "A cache of controversial computer files closely tying Venezuela’s President Hugo Chávez to communist rebels seeking to topple Colombia’s government appear to be authentic, U.S. intelligence officials say."  Well, when have US Intelligence officials ever steered us wrong before?  This is, by the way, something that has been going on since March, it’s only news today as they need a reason to take oil over $125 but this may be the Journal’s last chance to wave this flag as Interpol (at Columbia’s request) will release an independent analysis next week.

Mr. Chávez has repeatedly said the files were faked by Colombia. "We don’t recognize the validity of any of these documents," Bernardo Álvarez, Venezuela’s ambassador to the U.S., said in a Wednesday interview. "They are false, and an attempt to discredit the Venezuelan government."  FARC itself has suggested the files are fake. A FARC statement published on the Web site of Venezuela’s Information Ministry ridiculed Colombia’s claims about the computer files, saying computers couldn’t have su…

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Thursday Wrap-Up

by Phil - May 8th, 2008 11:45 pm

I’m way behind so I’ll keep this short and not-so-sweet.

Today’s "rally" was stupid, I said so all day.  Even though we closed a full 16 points above my morning target of 12,850, I got very bearish during the day as oil looked poised to test $125 with CNBC running a day-long pump-fest, trotting out every oil bull on the planet to tell us how $200 oil would somehow be great for investors.

Are these guys on crack?  I’m not sure, but I will say it again and again:  There is not enough money on the planet earth to pay for $200 oil without taking that extra $3Tn OUT of the revenues of other industries.  If you couple that with a conservative $2Tn worth of food inflation (caused by oil), then you are talking about a global depression where the only companies that survive are the oil companies. 

Of course that’s ridiculous as one would thing that wiping out every disposable penny on the planet would hurt the demand for oil and drive down prices - but that’s not what energy traders believe!  They are buying July $150 futures contracts in bulk!!!  Forget the fact that we need a war with Iran to justify $150 crude (word is Bush is working very hard on this as we speak) - I am telling you the market cannot handle $125.

I see no justification for this rally and I said to members yesterday as CNBC had a discussion that $120 oil was a good thing for the economy: "Yet another BS justification.  Come on guys - the last time we got this much "good news" about an investment from the media was housing…  Oil $124.33 and a Rebel Attack in the morning should punch us through $125."

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Thursday Morning

by Phil - May 8th, 2008 8:20 am

Tough call today…

The pre-markets (8am) look good but that would be good when compared to our horrible finish yesterday, not good at all compared to Tuesday’s top.  Oil is still at $123 as both the ECB and BOE decided to hold rates steady, not the best outcome for the dollar.  There seems to be a consensus that AIG is going to take down the markets this evening but I don’t see it happening and we may even pick up some AIG calls if they get any cheaper.

TM took down the markets in Asia with a 28% drop in profits as the weak dollar and weak US auto consumer took their toll on the World’s top auto company.  Raw materials are, of course, also up leading Toyota to post their first decline in profits in 7 years.  TM says they expect to earn just 1,250,000,000,000 Yen ($12Bn) for the year or about 100Tn times more than GM.  Small cars are still flying off the lot with Prius sales up 23% and Yaris sales up 58% in the US, mainly the company miscalculated on their truck roll-out (last year’s Superbowl).  We’re going to be happy to take out our callers and stic…

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