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CME Group Put Options Active

www.interactivebrokers.com

Options volume on the provider of futures and options based on interest rates, equity indexes, foreign exchange, energy, agricultural commodities, metals and alternative investment products is well above average on Thursday morning, due in large part to a sizable put spread initiated in the 19Sep’14 expiry contracts. Shares in CME Group (Ticker: CME) are up slightly on the day, trading 0.25% higher at $74.34 as of the time of this writing.

The largest trade on CME today appears to be a bear put spread in which roughly 1,500 of the 19Sep’14 74.0 strike puts were purchased at a premium of $1.44 each against the sale of the same number of the 69.0 strike puts at a premium of $0.26 apiece. The net cost of the trade amounts to $1.18 per contract and establishes a breakeven price of $72.82, which is 2.0% below the last-traded price of the underlying shares. Maximum possible gains of $3.82 are available on the spread in the event that CME Group’s shares drop 6.8% to $69.00 by September expiration in four weeks. The put spread could be a hedge to protect a long position in the underlying stock, or an outright bearish stance on the futures exchange that profits from near-term weakness in the share price. Shares in CME Group last traded below $69.00 in May. Overall options volume on the name is above 4,600 contracts, which is more than three times the average daily reading of around 1,200 contracts.


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Elizabeth Arden Put Option Activity Revisited

www.interactivebrokers.com

It’s an ugly day for investors in Elizabeth Arden, with shares in the name losing roughly one-quarter of its value overnight after the retailer of beauty products and fragrances reported a wider than expected loss and sales that were lower than analysts anticipated. Shares in the name are down more than 23% in the final hour of trading to stand at $14.95.

On Friday of last week we wrote a short note about put option activity on the stock, highlighting activity in the Sep 20.0 strike put options. At the time, shares in RDEN were hovering near $20.17 and the company was a few days away from reporting fourth-quarter earnings. On Friday, it looked like bearish positions were building on RDEN as around 1,500 of the 20.0 strike puts looked to have been purchased at a premium of $1.50 each. The sharp drop in Elizabeth Arden shares today pushed premium on the contracts to more than three times that level during the session. Trading action in the 20.0 puts on Tuesday suggests profit-taking may have kicked in as 1,500 of the puts appear to have been sold at a premium of $5.10 each within the first 30 minutes of the opening bell today.


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Puts In Play On Elizabeth Arden

www.interactivebrokers.com

Shares in beauty products company Elizabeth Arden, Inc. (Ticker: RDEN) are lower on this summer Friday and options contracts changing hands on the name suggest one or more traders are bracing for further declines in the price of the stock in the near future. RDEN shares are off 0.90% at $20.17 as of 11:00 a.m. ET amid a volatile morning for U.S. stocks, which opened in rally-mode before turning negative on reports of escalating Russia/Ukraine tension.

The most traded options on RDEN thus far in the session are the Sep 20.0 strike puts, with volume hovering near 1,500 contracts against open interest of 360 contracts. Time and sales data suggests most of the put options were purchased at a premium of $1.50 each within the first half hour of the opening bell. Put buyers may be looking ahead to Elizabeth Arden’s fourth-quarter earnings report set for release ahead of the open on Tuesday of next week. Put buyers may profit at September expiration in the event that RDEN shares drop more than 8.0% from the current level of $20.17 to breach the effective breakeven price of $18.50. RDEN shares last traded below $18.50 back in September of 2010.

Chart – Elizabeth Arden shares hover near three-year low


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J.C. Penney Options Volume Pops Ahead Of Earnings After The Close

www.interactivebrokers.com

Shares in J.C. Penney Co. Inc. (Ticker: JCP) are on the rise today, up 2.7% on the session at $9.60 ahead of the troubled retailer’s second-quarter earnings report after the closing bell. Options volume is above average prior to the release, with nearly 60,000 contracts in play on the name versus average daily volume of around 48,000 contracts. Trading in put options on JCP is outpacing that in calls as of the time of this writing, with the put/call ratio hovering near 1.4 at last check. The most traded put options on J.C. Penney so far today are the Aug 15 ’14 8.5 strike puts after roughly 20,000 of those contracts were sold at a premium of $0.15 per contract near the start of the trading session. Put sellers walk away with the full amount of premium at expiration this week as long as the options expire out-of-the-money with JCP shares trading above $8.50. If JCP earnings fail to impress and shares fall, however, put sellers risk having stock put to them at an effective price of $8.35 each if the options are exercised, or risk needing to potentially buy-to-close the put position at a higher premium to avoid taking delivery of the underlying stock prior to expiration. Finally, the Aug 22 ’14 9.5 strike puts are also active this morning with around 9,000 contracts in play, but most of these options appear to have been purchased at an average premium of $0.65 each.


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Kate Spade Call Spread Eyes Recovery

www.interactivebrokers.com

Shares in Kate Spade (Ticker: KATE) got crushed on Tuesday, losing roughly 25% of their value to hit a new low of $28.30 after the retailer reported second-quarter earnings prior to the open. The stock is rebounding today, up approximately 7.0% on the session to trade at $31.00 as of 1:00 am ET. Options activity on the clothing and accessories company suggests one strategist is positioning for the price of the underlying to continue to recover in the near term. It looks like the trader purchased a 2,000-lot Sep 31.0/35.0 call spread at a net premium of $1.40 per contract. The strategy makes money if shares in Kate Spade rally another 4.5% over the current price of $31.00 to exceed the average breakeven point at $32.40, with maximum potential profits of $2.60 per contract available in the event that the stock jumps 13% to $35.00 by September expiration.

Chart – KATE shares rebounding from Tuesday’s drop


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Aeropostale Call Options Active

www.interactivebrokers.com

Shares in teen retailer Aeropostale Inc. (Ticker: ARO) earlier rallied to the highest level since June 2nd, perhaps after the stock was rated new ‘hold’ at Wunderlich Securities with an 18-month price target of $3.50 a share. The move in the price of the underlying spurred heavier than usual trading in upside call options on the name, perhaps as some traders take positions ahead of the company’s second-quarter earnings report on August 21st. Shares in ARO are currently up 3.5% at $3.49 after earlier rising as much as 9.0% to $3.68.

The most traded options contracts on Aeropostale thus far in the session are the Jan ’15 3.0 strike in-the-money calls, with volume topping 16,000 contracts as of the time of this writing, versus open interest of just 1,412 contracts. Time and sales data suggests most of the volume was purchased for an average premium of $0.89 per contract. Traders long the 3.0 strike calls stand ready to profit at expiration in the event shares in ARO exceed the average breakeven price of $3.89. As the one-year chart below illustrates, shares in Aeropostale are down roughly 75% since this time last year.

Chart – 1-year performance of shares in Aeropostale


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Kinder Morgan Management Call Buyers Hit The Jackpot

www.interactivebrokers.com

Buyers of call options on Kinder Morgan Management LLC at the end of last week and earlier this month saw huge gains in the value of those positions over the weekend with shares in KMR up 25% in early-afternoon trading to $96.14. News that Kinder Morgan Inc. (Ticker: KMI) plans to consolidate businesses through the acquisition of Kinder Morgan Energy Partners LP (Ticker: KMP), Kinder Morgan Management LLC (Ticker: KMR) and El Paso Pipeline Partners LP (Ticker: EPB), sent shares across these names skyward.

Looking at changes in open interest in options on Kinder Morgan Management, it looks like there were sizable increases in call open interest at the Feb 85.0 strike on Thursday last week and in the Sep 80.0 strike calls on Friday. In the case of the Feb 85.0 strike calls, it looks like 5,000 of the contracts were purchased on Thursday afternoon at a premium of $1.10 each. Today, these call options are changing hands at roughly ten times that amount, or $12.00 apiece. Meanwhile, the Sep 80.0 strike calls were active on Friday afternoon. Time and sales data suggests 1,500 of the 80.0 strike calls were purchased at a premium of $0.55 each. Fast-forward to today’s trade, and the Sep 80.0 strike call options are showing a bid/ask spread of $15.10/$17.90 just before 12:30 p.m. ET. 

The September 80.0 strike call options have only traded 38 contracts so far today, but the February 85.0 strike calls are active with volume approaching 10,500 contracts against total open interest of 17,805 contracts. It looks like much of the volume today is the work of sellers. Perhaps some of the selling represents profit-taking given the massive jump in the value of these now deep in-the-money options contracts.


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Options Pop On Whole Foods

www.interactivebrokers.com

Shares in beleaguered organic and high-end grocer Whole Foods (Ticker: WFM) jumped as much as 6.4% in the first hour of trading to $40.39 to the highest since June 20th. The spike in the price of WFM shares and unconfirmed chatter on Twitter and theflyonthewall.com spurred heavy trading in weekly options on the stock. The most traded contracts are the 08Aug’14 39.0 strike calls, which have traded more than 5,300 times against open interest of roughly 1,300 contracts. Time and sales suggests the bulk of the volume is the work of buyers paying an average premium of $0.48 apiece. First movers paid around $0.20 per contract for around 1,400 of those contracts. Also active are the 08Aug’14 39.5 and 40.0 strike calls, with upwards of 2,300 calls traded at each striking price.

Chart – Whole Foods shares rise; volume in shares, options spike


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Options start trading on El Pollo Loco

www.interactivebrokers.com

Let’s take a look at how options on El Pollo Loco (Ticker: LOCO) are trading on their first day. With less than 90 minutes to go in the trading session, options players have exchanged roughly 2,370 call and put options on LOCO, slightly favoring calls over puts and driving the call/put ratio to roughly 1.2 as of the time of this writing. The most traded contracts are the Aug 35.0 strike puts where roughly 705 lots have changed hands. Elsewhere, it is the Aug 35.0, 40.0 and the Sep 45.0 strike call options that saw much of the action. Call volume at each of these strikes exceeds 200 contracts.

Shares in El Pollo Loco are trading lower today, down 5.0% at $39.12 as of 2:35 p.m. ET, but off the day’s low of $37.55. The stock overall is up more than 100% since opening at $19.00 on July 24th, and well above its IPO price of $15.00.


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JCP Calls Active

www.interactivebrokers.com

J.C. Penney Co. shares are bucking the trend on Friday morning, trading up 2.7% at $9.64 amid a down day for equities. Fresh interest in September expiry call options on the beleaguered department store operator suggest one or more traders are positioning for the price of the underlying to potentially rally sharply during the next seven weeks.

The most traded series in JCP options are the Sep 12.0 strike calls, with upwards of 16,000 contracts in play against open interest of just 758 contracts. Time and sales data suggests most of the volume was purchased at a premium of $0.13 each within the first 10 minutes of the opening bell. Call buyers may profit at expiration next month if shares in JCP soar 26% over the current price of $9.64 to exceed the effective breakeven price of $12.13. Shares in the name last traded above $12.13 in September 2013. J.C. Penney is set to report second-quarter results after the close of trading on August 14th.


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Help One Of Our Own PSW Members

"Hello PSW Members –

This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible.  Feel free to contact me directly at jennifersurovy@yahoo.com with any questions.

Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts.  After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.)  Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.

http://www.youcaring.com/medical-fundraiser/help-get-shadowfax-out-from-the-darkness-of-medical-bills-/126743"

Thank you for you time!

 
 

Zero Hedge

When 'Anti-Government' Violence Erupts, Who Is Really At Fault?

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Submitted by Brandon Smith of Alt-Market blog,

This past week, I have been examining a recently leaked document from the Department Of Homeland Security entitled “Domestic Violent Extremists Pose A Threat To Government Officials And Law Enforcement.” (Yes; the title leaves nothing to the imagination.)

Generally, such documents are not classified. But it is internally accepted within establishment agencies that they should not be shared with the public....



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Phil's Favorites

Argentine peso hits record lows on increased uncertainty

Argentine peso hits record lows on increased uncertainty

Courtesy of SoberLook.com

Argentina is showing signs of stress, as the official exchange rate has the US dollar now quoted 8.4 pesos - a new record.

Chart shows USD appreciating against ARS (source: Investing.com)


The "parallel" exchange rate also hit a record, with the dollar quoted at 14 pesos - a 67% premium to the official rate. Note that before the first devaluation in 2002 (see this ...



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All About Trends

Mid-Day Update

Reminder: David is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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Chart School

Getting Technical: Weekend Update

Courtesy of Doug Short.

Here's the latest weekend update from Serge Perreault, a Chartered Professional Accountant and market technician located near Montreal, Canada. Serge has been following the U.S. market in a series of weekly charts. Here is his update on the S&P 500.

This week, the S&P 500 broke above its previous record close by 3 points, on strong but near-resistance momentum and on below-average volume.

Click for a sharper image

Note: For newcomers to technical analysis, here are brief explanations for the two key indicators that S...



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Insider Scoop

Point72 Still Under A Cloud As President Plans To Step Down

Courtesy of Benzinga.

Related SPY 3 Reasons To Follow The Big Dog In Natural Resources Fed Issues FOMC Minutes from Jul. 29-30th, 2014 Meeting Dow 17K: A Story of Recovery, Perseverance (Fox Business)

Hedge fund giant Point72 Asset Management said its president, Thomas Conheeney, will step down at the end of 2014 and be succeeded by Douglas Haynes, managing director for human capital at Point72.

Formerly known as SAC Capital Advisors,...



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Option Review

CME Group Put Options Active

Options volume on the provider of futures and options based on interest rates, equity indexes, foreign exchange, energy, agricultural commodities, metals and alternative investment products is well above average on Thursday morning, due in large part to a sizable put spread initiated in the 19Sep’14 expiry contracts. Shares in CME Group (Ticker: CME) are up slightly on the day, trading 0.25% higher at $74.34 as of the time of this writing.

The largest trade on CME today appears to be a bear put spread in which roughly 1,500 of the 19Sep’14 74.0 strike puts were purchased at a premium of $1.44 each against the sale of the same number of t...



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Sabrient

Sector Detector: Bullish investors jockey for position as if the correction is over

Courtesy of Sabrient Systems and Gradient Analytics

As many investors enjoy the final weeks of summer, some optimistic bulls seem to be positioning themselves well ahead of Labor Day in anticipation of a fall rally. Indeed, last week’s action was impressive. After only a mere 4% correction, investors continued to brush off the disturbing violence both at home and abroad, and they took the minor pullback as their next buying opportunity. But was that really all the pullback we’re going to get this year? I doubt it. But I also believe that nothing short of a major Black Swan event can send this market into a deep correction.

In this weekly update, I give my view of the current market environment, offer a technical analysis of the S&P 500 chart, review our weekly fundamentals-based SectorCast rankings of the ten U.S. business sectors, and then ...



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OpTrader

Swing trading portfolio - week of August 18th, 2014

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Stock World Weekly

Stock World Weekly

Newsletter writers are available to chat with Members regarding topics presented in SWW, comments are found below each post.

The Stock World Weekly Newsletter is ready to go! View it here: Stock World Weekly. Just put in your user name and password, or take a free trial. 

 

#120692880 / gettyimages.com ...

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Market Shadows

Helen Davis Chaitman Reviews In Bed with Wall Street.

Author Helen Davis Chaitman is a nationally recognized litigator with a diverse trial practice in the areas of lender liability, bankruptcy, bank fraud, RICO, professional malpractice, trusts and estates, and white collar defense. In 1995, Ms. Chaitman was named one of the nation's top ten litigators by the National Law Journal for a jury verdict she obtained in an accountants' malpractice case. Ms. Chaitman is the author of The Law of Lender Liability (Warren, Gorham & Lamont 1990)... Since early 2009, Ms. Chaitman has been an outspoken advocate for investors in Bernard L. Madoff Investment Securities LLC (more here).

Helen Davis Chaitman Reviews In Bed with Wall Street. 

By Helen Davis Chaitman   

I confess: Larry D...



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Digital Currencies

BitLicense Part 1 - Can Poorly Thought Out Regulation Drive the US Economy Back into the Dark Ages?

Courtesy of Reggie Middleton.

An Op-Ed piece penned by Veritaseum Chief Contracts Officer, Matt Bogosian

This past weekend (despite American Airlines' best efforts), Reggie and I made it to the Second Annual North American Bitcoin Conference in Chicago. While there were some very creative (and very ambitious) ideas on how to try to realize the disruptive Bitcoin protocol, one of the predominant topics of discussion was New York Superintendent of Financial Services Benjamin Lawsky's proposed Bitcoin regulations (the BitLicense proposal) - percieved by many participants at the event as an apparent ...



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Pharmboy

Biotechs & Bubbles

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

Well PSW Subscribers....I am still here, barely.  From my last post a few months ago to now, nothing has changed much, but there are a few bargins out there that as investors, should be put on the watch list (again) and if so desired....buy a small amount.

First, the media is on a tear against biotechs/pharma, ripping companies for their drug prices.  Gilead's HepC drug, Sovaldi, is priced at $84K for the 12-week treatment.  Pundits were screaming bloody murder that it was a total rip off, but when one investigates the other drugs out there, and the consequences of not taking Sovaldi vs. another drug combinations, then things become clearer.  For instance, Olysio (JNJ) is about $66,000 for a 12-week treatment, but is approved for fewer types of patients AND...



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Promotions

See Live Demo Of This Google-Like Trade Algorithm

I just wanted to be sure you saw this.  There’s a ‘live’ training webinar this Thursday, March 27th at Noon or 9:00 pm ET.

If GOOGLE, the NSA, and Steve Jobs all got together in a room with the task of building a tremendously accurate trading algorithm… it wouldn’t just be any ordinary system… it’d be the greatest trading algorithm in the world.

Well, I hate to break it to you though… they never got around to building it, but my friends at Market Tamer did.

Follow this link to register for their training webinar where they’ll demonstrate the tested and proven Algorithm powered by the same technological principles that have made GOOGLE the #1 search engine on the planet!

And get this…had you done nothing b...



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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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