Posts Tagged ‘ACI’

Thumbs-Up From Romney Sparks Bullish Activity In Arch Coal Calls

 

Today’s tickers: ACI & NFLX

ACI - Arch Coal, Inc. – Shares in Arch Coal, Inc., which traded down to their lowest levels of the past decade during the month of July, caught a bid on Thursday, energized by positive comments from Republican presidential candidate Mitt Romney during the presidential debate last night. Romney’s comments and the subsequent 8% rally in ACI shares to an intraday high of $6.72 this morning, stoked bullish activity in options on the coal producer as well. Options traders positioning for shares in Arch Coal to extend gains purchased around 5,000 calls at the Nov. $7.0 strike for an average premium of $0.43 apiece. Call buyers profit at expiration next month as long as shares in Arch Coal rally more than 10% to surpass the average breakeven price of $7.43. Bullish activity spread to the higher Nov. $8.0 strike where options players snapped up around 1,000 contracts at an average premium of $0.21 each. Traders long the $8.0 strike calls make money if shares in the coal company surge 22% over Thursday’s high of $6.72 to exceed $8.21 by November expiration. Current volume in Arch Coal options, topping 20,000 contracts as of 12:40 p.m. ET, is more than twice the stock’s average daily volume of 8,849 contracts. Call options comprise most of the volume, with around three calls changing hands on the stock for each single put option in play so far in the session.

NFLX - Netflix, Inc. – Short term bullish bets initiated on Netflix earlier this week have paid off for some options traders, with shares in the provider of online streaming video services soaring more than 20% since Monday morning on positive comments from T2’s Whitney Tilson and other analysts. Trading traffic in upside call options that have one full trading session remaining until expiration indicate some strategists are positioning for shares in NFLX to extend gains into the weekend. Shares in Netflix tacked on 6.6%…
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Michael Kors Options On Trend After Earnings Blowout

 

Today’s tickers: KORS, AMLN & ACI

KORS - Michael Kors Holdings Ltd. – A number of options strategists appear to have benefitted handsomely from bullish positions held in the House of Kors today, with shares in the luxury retailer ballooning on better-than-expected third-quarter earnings. Shares in Michael Kors Holdings Ltd. have more than doubled since the December IPO, trading 22.7% higher on the day at $41.25 as of 11:40 a.m. Options on Kors are abuzz with after-earnings activity, with around 3.6 call options changing hands for each single put option in play. Some traders that placed bullish bets on the retailer in the weeks leading up to earnings in some cases saw the value of their positions sky-rocket. One buyer of a 1,500-lot Feb. $34/$37 call spread at an average net premium of $1.05 per contract on Feb. 9th may reel in maximum possible profits on the position at expiration, given shares in KORS are now trading well above the upper $37 strike. Call open interest in the front month is heaviest at the $33 strike where more than 5,480 positions were opened before today. It looks like most of the volume was generated in a single block of 4,831 calls that traded at $1.15 each on Feb 7th. The calls traded to the middle of the market one week ago with the bid/ask showing $1.05/$1.30. Today, these deep in-the-money calls trade at bid/ask of $8.20/$8.40 as of 12:15 p.m. The impact of better-than-expected earnings on the shares certainly makes for a happy Valentine’s Day for the trader in the event he or she purchased the contracts last week or a rather Grey day were the calls originally sold. Finally, investors positioning for shares in Kors to extend gains snapped up in-the-money calls at the $40 strike in February and March, as well as picked up around 255 calls out at the May $44 strike at an average premium of $1.56 each.…
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Feeding Frenzy Erupts In HPQ Options

 

Today’s tickers: HPQ, MS, ACI & ARIA

HPQ - Hewlett-Packard Co. – Options covering Hewlett-Packard Co. are densely populated today on news the company’s board is meeting to discuss ousting CEO, Léo Apotheker, less than one year after he was hired to replace former-HPQ CEO and current co-President of Oracle, Mark Hurd. Hope that a shakeup may get HPQ back on track, and speculation that the board may select former eBay CEO, Meg Whitman, to head the company, sent shares in the trodden-down stock up as much as 11.7% today to $25.10. Options implied volatility on Hewlett-Packard earlier rose to 56.05%, but currently stands 20.05% higher on the session at 53.47% as of 1:40 pm ET.

Investors have now exchanged more than 205,000 option contracts on HPQ, with much of the activity taking place in the front month. Calls are trading roughly 1.8 times to each single put option in play thus far in the session. In-the-money calls are popular with buyers positioning for shares to appreciate, while out-of-the-money calls suggest more of a mixed picture. Trading traffic in HPQ calls is heaviest at the October $25 strike, where upwards of 26,100 contracts changed hands against open interest of 11,574 positions. The Oct. $25 strike call was bought and sold in roughly equal numbers. Similar two-way trading is apparent in the Oct. $26 and $27 strike calls, but trading in deep out-of-the-money calls in the October contract was dominated by sellers. Meanwhile, investors positioning for shares to potentially surrender today’s gains in the next several weeks to October expiration, snapped up in- and out-of-the-money puts. Volume in the Oct. $23 strike put soared to 30,000 contracts in early-afternoon trade, trumping previously existing open interest of 3,737 lots. Buyers of the bearish options paid an average premium of $0.89 per…
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Arch Coal Set to Rebound?

Today’s tickers: ACI, MHS & JPM

ACI - Arch Coal Inc. – We’re scratching our heads trying to fathom out why an investor is plundering deeply monied put options in Arch Coal on Friday. Shares in the mining behemoth have slumped recently and indeed today have filled a technical gap to the November high at $26.62. Buyers have resumed and the stock could easily land in the black today. Yesterday investors drove shares lower after the company announced the issuance of $1.3 billion worth of fresh stock to be partially used to finance the purchase of International Coal Group later in June. The secondary IPO was offered at a discount to an already weakening market cap to entice buyers and once swallowed, one investor appears to be banking on a recovery. A credit put spread was deployed earlier Friday with an investor taking in a net premium of $1.35 by writing the $30 puts and buying the less costly $28 puts. We can only assume that this bull expects a rebound to lift the stock back above $30 rendering both options worthless leaving him holding the cash.

MHS - Medco Health Solutions Inc. – A rally in healthcare company, Medco saw its shares surge from $51.80 in late-March to $64.92 in mid-May. This week it cratered back to $56.50 before steadying and today its shares stand at $58.27 having lost a contract to provide the Federal Employee Program (FEP) with mail-order and specialty pharmacy benefits. FEP awarded its 2012 contract to CVS Caremark instead and follows the loss of a key contract to provide Calpers employees with health services. A call option butterfly expiring in July has one bold option trader banking on a summer rebound to $65.00. The investor bought 12,000 calls at each of the $60 and $70 strikes…
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Weekly Wrap-Up – Buffett’s Daring Derivative Deal Does Well

I was going to talk about Buffett's annual letter to investors.

Fortunately, I procrastinated and other people did some detailed reporting like Ravi Nagarajan, Andy Fry, Scott Patterson and Joe Del Bruno – who does a great job of pointing out that Berkshire's 4th quarter results were propped up by Buffett's $1.05Bn gains in derivatives betting (something Buffett himself once called "weapons of mass financial destruction" but, as we well know – if you can't beat them…), which accounted for 1/3 of Berkshire's $3.06Bn profits

Buffett's biggest bet was selling a put against the S&P 500 back in March – a move I said at the time was BRILLIANT and Buffett himself now says about his own options trading:  "We are delighted that we hold the derivatives contracts that we do.  To date, we have significantly profited from the float they provide. We expect also to earn further investment income over the life of our contracts."  

What did Buffett do?  Exactly what we teach you to do here at PSW - he took advantage of an irrational move in the markets and SOLD INTO THE EXCITEMENT, getting a fat premium from some sucker that bet the S&P would not hold 666 5 years from now.  Buffett effectively sold $5Bn worth of puts that expires worthless at S&P 700 between 2019 and 2027, putting $5Bn in his pocket and holding aside $1Bn in margin, which is how much he's already ahead on the bet.  Like a good options trader, he has a plan and he's trading his plan, making sure his investment is on track and patiently letting time do it's work as it eats away at the put-holder's premium. 

What about the risk?  Well I can't speak for Buffett's stop-loss technique but we're talking about a company that has (had) $40Bn in cash using their excess margin to make a $5Bn bet that the S&P would not stay below 700 for 10 years.  Buffett and I both tell people – NEVER buy a stock (or sell a put against one) that you are not willing to own for 10 years.  The S&P was 5% below at the time and would have had to drop, perhaps, 20% more to cost him $1Bn so let's call the stop 550 on the S&P where Buffett risked 2.5% of his cash against a posible 400% gain on his $1Bn risk allocation over 10+ years.  While it is true that if the
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Option Bulls Covet Coal-Calls on ACI

Today’s tickers: ACI, MGM, EWJ, HSY, YHOO, TIE & GLD

ACI - Far-term option bulls were not discouraged from establishing optimistic positions on the coal producer today despite the nearly 2% decline in shares during the trading session to $17.84. Investors looking for shares to rally significantly by the start of 2010 purchased 2,000 calls at the January 23 strike for an average premium of 70 cents apiece. ACI would need to rally 33% higher for individuals long these calls to breakeven at $23.70 by expiration. Option traders also picked up 2,000 calls at the April 2010 22 strike for 1.50 per contract. Finally, curious call spreads appeared in the January 2011 contract. The trades were a bit blurred but it seems likely that the activity represents a ratio call spread. If this is the case, the investor responsible for the trade purchased about 3,000 calls at the January 30 strike for 1.40 each. These contracts were spread against the sale of some 6,000 calls at the higher January 35 strike for 93 cents premium. The trader receives a net credit of 46 cents on the transaction. He will retain the full credit and add to that amount if shares rally higher than $30.00 by expiration. Maximum potential profits on the spread amount to 5.00 (excluding the credit received today), achieved in the event that shares of ACI surge a whopping 96% from the current price by expiration in January 2011. – Arch Coal, Inc. –

MGM - The casino operator attracted bullish bets by option traders today amid a more than 7.5% rally in shares to $10.13. Notable near-term call interest was apparent at the September 11 strike price where more than 7,100 lots exchanged hands. Approximately 5,500 of the contracts were purchased for an average premium of 23 cents apiece. Investors long the calls will begin to accrue profits if shares of MGM can rise 11% higher to surpass the breakeven point at $11.23 by expiration in less than two weeks. Traders clearly favored MGM calls over puts during the session as evidenced by the call-to-put ratio of more than 3-to-1 on the stock today. – MGM Mirage, Inc. –

EWJ - The EWJ jumped onto our ‘most active by options volume’ market scanner this afternoon after one investor juggled massive chunks of calls on the stock. Shares of the exchange-traded fund are currently up 0.5% to $10.18. The trader…
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Zero Hedge

JPM's Kolanovic Warns Upcoming Recession Could Be Comparable To 2008 Crisis; Says "Buy Gold, Cash And VIX"

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

By now all of our readers should be familiar with JPM's head quant Marko Kolanovic whose unblemished track record of accurate market calls is not only second to none, but is the equivalent in absolute value terms of Dennis Gartman's consistently wrong calls, which is why we won't spend time introducing him.

Instead we cut right to the chase with the highlights of his latest note released moments before the market close today, in which he lays out the biggest risks to the market, which are as follows:

  • deterioration of sentiment and funda...


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Chart School

Further Losses But No Breakaway

Courtesy of Declan.

The Asian session had set up for big losses, but markets were able to defend against such losses even if finishing with a lower close.

The S&P tagged the January low, but it's hard to see it holding out if there's another challenge on 1,810.


The Nasdaq was able to register a higher close (although below the prior day's close). It probably did enough to negate what is normally a bearish black candlestick, but bulls won't have any confidence until the bearish channel is broken.

...

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Phil's Favorites

Phil on BNN's Money Talk Show

Watch Phil with Kim Parlee on Business News Network's Money Talk

1) Phil gives his outlook for U.S. markets and the US economic economy. Canada may be heading into a recession because the energy is sector dead for years, at least, but the U.S. economy is slowly improving. What is the basis of Phil's 5% rule? Watch the video.

2) Phil explains why oil demand is falling globally and what the implications are for energy-rich economies like Canada. Hint: The TSX (Canada's oil weighted index) is not going to recover. Oil is not going to recover. Oil's not a thing anymore - like wagon wheels. This is why the Saudis aren't holding back on selling their oil. Canada is due for some painful adjustments. 

3) Natural gas - Phil gives the details of his option...



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Market News

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

Treasury Yield Falls to 3-Year Low as Yellen Suggests Rate Delay (Bloomberg)

Treasury 10-year yields dropped to the lowest level since 2012 as falling equities drove investors to the relative safety of government debt and Federal Reserve Chair Janet Yellen said weakening stock prices pose a risk to the economy.

Oil Is the Cheap Date From Hell (Bloomberg)

It’s scary out there. The rout in the stock market that began around Jan. 1 took a turn for the worse early this month. By Feb. 10 the Standard & Poor&r...



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Kimble Charting Solutions

5-Year bull trend is ending, breaking below support

Courtesy of Chris Kimble.

The Power of the Pattern would describe a bull trend, based upon a series of higher lows and higher highs.

Using this definition, the broadest of indices in the states, are “breaking 5-year rising trends!” This could break the heart of the bulls.

CLICK ON CHART TO ENLARGE

This 2-pack reflects that these two broad markets are breaking below “Weekly Closing” 5-year bull trends. When long-term trends break, it is common for selling pressure ...



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Insider Scoop

MRC Global to Sell Oil Country Tubular Goods Business for $48M

Courtesy of Benzinga.

MRC Global Inc. (NYSE: MRC) announced Wednesday, that it has entered into a definitive agreement to sell its U.S. OCTG business to Sooner Pipe, LLC, a subsidiary of Marubeni-Itochu Tubulars America, Inc., for $48 million, subject to certain adjustments. MRC Global's U.S. OCTG sales were approximately $305 million in 2015. As a result of the expected sale, a pre-tax charge of approximately $5.0 million is expected to be recorded in the fourth quarter of 2015. The transaction is expected to close in the first quarter of 2016, subject to customary closing conditions.

Andrew R. Lane, MRC Global's chairman, president and chief executive officer, stated, "The divestiture of our OCTG product line is the culmination of our strategy to reduce our exposure to upstream drilling volatility and to foc...



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All About Trends

Mid-Day Update

Reminder: Harlan 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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OpTrader

Swing trading portfolio - week of February 8th, 2016

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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ValueWalk

Why Most Investors Fail in the Stock Market

 

Why Most Investors Fail in the Stock Market

Courtesy of ValueWalk, by  

Throughout the past 30 days of wild volatility, here’s what I didn’t do.

Panic. Worry. Sell.

In fact, the best I did was add to a couple of positions yesterday. The world was already in an uncertain state for the past 3+ years. It’s just that with the market rising, we pushed the issue to the back of our  mind and ignored it.

If you read Howard Marks latest memo, ...



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Digital Currencies

2016 Theme #3: The Rise Of Independent (Non-State) Crypto-Currencies

Courtesy of Charles Hugh-Smith at Of Two Minds

A number of systemic, structural forces are intersecting in 2016. One is the rise of non-state, non-central-bank-issued crypto-currencies.

We all know money is created and distributed by governments and central banks. The reason is simple: control the money and you control everything.

The invention of the blockchain and crypto-currencies such as Bitcoin have opened the door to non-state, non-central-bank currencies--money that is global and independent of any state or central bank, or indeed, any bank, as crypto-currencies are structurally peer-to-peer, meaning they don't require a bank to function: people can exchange crypto-currencies to pay for goods and services without a bank acting as a clearinghouse for all these transactions.

This doesn't just open t...



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Sabrient

Sector Detector: New Year brings new hope after bulls lose traction to close 2015

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

Chart via Finviz

Courtesy of Sabrient Systems and Gradient Analytics

Last year, the S&P 500 large caps closed 2015 essentially flat on a total return basis, while the NASDAQ 100 showed a little better performance at +8.3% and the Russell 2000 small caps fell -5.9%. Overall, stocks disappointed even in the face of modest expectations, especially the small caps as market leadership was mostly limited to a handful of large and mega-cap darlings.

Notably, the full year chart for the S&P 500 looks very much like 2011. It got off to a good start, drifted sideways for...



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Promotions

PSW is more than just stock talk!

 

We know you love coming here for our Stocks & Options education, strategy and trade ideas, and for Phil's daily commentary which you can't live without, but there's more!

PhilStockWorld.com features the most important and most interesting news items from around the web, all day, every day!

News: If you missed it, you can probably find it in our Market News section. We sift through piles of news so you don't have to.   

If you are looking for non-mainstream, provocatively-narrated news and opinion pieces which promise to make you think -- we feature Zero Hedge, ...



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Pharmboy

Baxter's Spinoff

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

Baxter Int. (BAX) is splitting off its BioSciences division into a new company called Baxalta. Shares of Baxalta will be given as a tax-free dividend, in the ratio of one to one, to BAX holders on record on June 17, 2015. That means, if you want to receive the Baxalta dividend, you need to buy the stock this week (on or before June 12).

The Baxalta Spinoff

By Ilene with Trevor of Lowenthal Capital Partners and Paul Price

In its recent filing with the SEC, Baxter provides:

“This information statement is being ...



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Mapping The Market

An update on oil proxies

Courtesy of Jean-Luc Saillard

Back in December, I wrote a post on my blog where I compared the performances of various ETFs related to the oil industry. I was looking for the best possible proxy to match the moves of oil prices if you didn't want to play with futures. At the time, I concluded that for medium term trades, USO and the leveraged ETFs UCO and SCO were the most promising. Longer term, broader ETFs like OIH and XLE might make better investment if oil prices do recover to more profitable prices since ETF linked to futures like USO, UCO and SCO do suffer from decay. It also seemed that DIG and DUG could be promising if OIH could recover as it should with the price of oil, but that they don't make a good proxy for the price of oil itself. 

Since...



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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!




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